REG - Mkango Resources Ltd - MAGINITO TO ACQUIRE RARE EARTH MAGNET RECYCLER

Mkango ResourcesAnnouncement

16/05/2023 07:00

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RNS Number : 4718Z  Mkango Resources Limited  16 May 2023

 

 

 

 

MKANGO RESOURCES LTD.                                                                    COTEC HOLDINGS CORP.

550 Burrard Street                                                                                           755 Burrard Street

Suite 2900                                                                                                                         Suite 428

Vancouver                                                                                                                        Vancouver

BC V6C 0A3                                                                                                                            V6Z 1X
Canada                                                                                                                                  Canada

MAGINITO TO ACQUIRE PIONEERING RARE EARTH MAGNET RECYCLER HYPROMAG

 

HIGHLIGHTS:

 

§ Maginito (Mkango 90%; CoTec 10%) to increase ownership in HyProMag from 42%
to 100% for £1 million (C$1.69 million) in cash and £1 million (C$1.69
million) in Mkango shares, and a further £3 million (C$5.07 million) payable
in four tranches of Mkango common shares subject to production and other
milestones in the UK, Germany and US

§ Cash component to be funded from the recent £1.5 million (C$2.54 million)
investment by CoTec into Maginito as announced on 16 March 2023

§ Maginito to hold a 100% interest in HyProMag and 90% interest in HyProMag
GmbH, post-acquisition and conversion of previously announced convertible
loan, respectively

§ Targeting first production from the UK in 2023 and Germany in 2024, with
parallel technology roll-out into the US

§ Major competitive advantages in rare earths magnet recycling sector,
underpinned by approximately US$100m (C$135m) of research and development
("R&D") expenditure at the University of Birmingham ("UoB") and with
associated project partners:

§ Access to highly energy efficient, patented Hydrogen Processing of Magnet
Scrap ("HPMS") technology

§ Ability to manufacture rare earth magnets with significantly reduced carbon
footprint

§ Maginito and CoTec have launched the roll-out of HPMS into the US:

§ Evaluating the development of recycling, chemical processing, alloy and
magnet manufacturing

§ Scoping studies and site selection underway ahead of feasibility studies

§ CoTec and Maginito to form 50/50 joint venture for US developments, with
CoTec to fund feasibility study and project development costs

§ Ongoing discussions with US Government, potential customers and recycling
partners

London / Vancouver: May 16, 2023 - Mkango Resources Ltd. (AIM/TSX-V: MKA) (the
"Company" or "Mkango") is pleased to announce that it has entered into an
agreement to increase its ownership in HyProMag Limited ("HyProMag") from 42%
to 100% for a cash and share consideration (the "Transaction"). The
Transaction is conditional upon the approval of the TSX Venture Exchange and
approval pursuant to the UK's National Security and Investment (NSI) Act.
Approval of the latter is expected no later than the third quarter of 2023.

The consideration payable to the selling HyProMag shareholders (the "Vendors")
on completion of the Transaction will comprise £1m (C$1.69m) in cash and the
issue of 9,742,031 Mkango common shares equivalent to £1m (C$1.69m) at a
price equal to 10.2648 pence based on the volume weighted average price of a
Mkango common share on the AIM Market of the London Stock Exchange ("AIM") for
the 10 business days ended on the date prior to the date of the share purchase
agreement. In addition, up to a further £3m (C$2.54m) may be payable to the
Vendors in four tranches, either in cash or in Mkango common shares (at
Mkango's option), conditional upon the achievement by HyProMag of certain
production milestones in the period to 30 June 2026. The shares issued on
completion will have a one-year lock up and the shares issued on milestones
will have a six-month lock up.

William Dawes, CEO of Mkango, commented: "Since acquiring our initial interest
in HyProMag in 2020, we have seen the company go from strength to strength,
de-risking and further scaling-up the patented HPMS rare earth magnet
recycling technology, building the team and developing further industry
partnerships, all against the backdrop of growing interest in recycling and
sustainable rare earth supply chains. We look forward to working closely with
the HyProMag team as we continue to support the growth of the business."

David Kennedy, Director of HyProMag, commented: "Building on the legacy of
innovation in rare earth permanent magnets and hydrogen technologies pioneered
by the late Prof. Rex Harris at the University of Birmingham, we founded
HyProMag in 2018 with Rex as a founding shareholder. Our aim was to accelerate
the commercialisation of the HPMS process, and our collaboration with Mkango
has supported the company's growth and enabled the participation in major
collaborative projects on rare earth magnet recycling. We look forward to the
next phase of growth at Tyseley Energy Park, scaling up the technology and
showcasing rejuvenation of Birmingham's industrial heritage, in parallel with
the international roll-out."

Julian Treger, CEO of CoTec, commented: "This transaction is a major step
forward for Maginito as it seeks to move into production over the short to
medium term in the United Kingdom, Germany and the United States. We look
forward to supporting and working with Mkango, Maginito and the HyProMag team
to roll out this innovative and highly energy efficient recycling technology,
both as a Maginito shareholder and as a partner in the United States."

Rare earth magnets play a key role in clean energy technologies including
electric vehicles and wind turbine generators, and they are also a key
component in electronic devices including mobile phones, hard disk drives and
loudspeakers. The development of domestic sources of recycled rare earths in
UK, Germany, United States and other jurisdictions via HPMS is a significant
opportunity to fast-track the development of sustainable and competitive
recycled rare earth magnet production.

Mkango CEO, William Dawes, together with CoTec President and CEO, Julian
Treger, will be hosting a webinar tomorrow, Wednesday 17 May 2023, at 16:00 pm
BST (8 AM PT) to discuss the acquisition of HyProMag as well as an update on
the collaboration between Mkango Resources and CoTec. To register for the
event, please follow the link https://my.6ix.com/yI6r87uh
(https://my.6ix.com/yI6r87uh) .

Maginito

Maginito is focused on developing green technology opportunities in the rare
earths supply chain, encompassing neodymium (NdFeB) magnet recycling as well
as innovative rare earth alloy, magnet, and separation technologies.

Following the Transaction, Maginito will hold a 100% interest in HyProMag
Limited focused on short loop rare earth magnet recycling in the UK, a 90%
direct and indirect interest (assuming conversion of Maginito's recently
announced convertible loan) in HyProMag GmbH, a company focused on short loop
rare earth magnet recycling in Germany, and a 100% interest in Mkango Rare
Earths UK Ltd ("Mkango UK"), a company focused on long loop rare earth magnet
recycling in the UK via a chemical route. A new US subsidiary, to be jointly
owned by Maginito and CoTec, is expected to be formed to develop rare earth
recycling opportunities in the United States.

In March 2023, CoTec invested £1.5 million (C$2.54 million) into Maginito,
and Maginito and CoTec agreed to collaborate on the commercialisation of
downstream rare earth technologies in the United States. Mkango UK was at the
same time transferred to become a subsidiary of Maginito. In connection with
CoTec's investment, John Singleton, Chief Operating Officer of CoTec, was
appointed to the Board of Maginito.

HyProMag

HyProMag was founded in 2018 by the late Professor Emeritus Rex Harris, former
Head of The Magnetic Materials Group ("MMG") within the School of Metallurgy
and Materials at the University of Birmingham, Professor Allan Walton, current
Head of the MMG, and two Honorary Fellows, Dr John Speight and Mr David
Kennedy, leading world experts in the field of rare earth magnetic materials,
alloys and hydrogen technology, with significant industry experience. The HPMS
process for extracting and demagnetising NdFeB alloy powders from magnets
embedded in scrap and redundant equipment was originally developed within the
MMG and subsequently licenced to HyProMag. The MMG has been active in the
field of rare earth alloys and processing of permanent magnets using hydrogen
for over 40 years. Originated by Professor Emeritus Rex Harris, the hydrogen
decrepitation method, which is used to reduce NdFeB alloys to a powder, is now
ubiquitously employed in worldwide magnet processing.

Under the terms of the Transaction, the founding Directors and management of
HyProMag will continue to provide support and work closely with Mkango and
Maginito to further scale-up and roll-out the HPMS technology.

HyProMag is establishing short loop recycling facilities for NdFeB magnets at
Tyseley Energy Park in Birmingham, UK and other locations using the patented
HPMS process to provide a sustainable solution for the supply of NdFeB magnets
and alloys for a wide range of markets including, for example, automotive and
electronics. Short loop magnet recycling is expected to have a significant
environmental benefit, requiring an estimated 88% less energy versus primary
mining to separation to metal alloy to magnet production. The plant at Tyseley
Energy Park is being developed together with the UoB, with a minimum capacity
of 100tpa NdFeB (neodymium, iron, boron). This £4.3 million (C$7.27 million)
project is being funded by Driving the Electric Revolution, an Industrial
Strategy Challenge Fund challenge delivered by UK Research and Innovation
("UKRI"). HyProMag is the primary industrial user and operator of the plant.
First production is targeted for late 2023, which follows successful piloting
at the UoB in 2022 as featured on BBC Midlands News:
https://youtu.be/9P-dsNCffWw (https://youtu.be/9P-dsNCffWw) .

HyProMag's loss for the year ended 31 December 2022 was £151,411 (C$155,855)
as a result of R&D expenditures on its recycling projects.

HyProMag GmbH

In November 2021, HyProMag established an 80%-owned subsidiary in Germany,
HyProMag GmbH, to roll out commercialisation of HPMS technology into Germany
and Europe. HyProMag GmbH is 20% owned (10% following conversion of the
HyProMag GmbH convertible loan) by Professor Carlo Burkhardt of Pforzheim
University, co-ordinator of the €14m (C$20.58m) SusMagPro (www.susmagpro.eu
(http://www.susmagpro.eu) ) and €13m (C$19.11m) REEsilience
(www.reesilience.eu (http://www.reesilience.eu) ) EU funded recycling
projects, with approximately 40 partners across the European supply chain.

HyProMag GmbH is developing a similar sized plant to that at Tyseley Energy
Park. Initial capacity is expected to be a minimum of 100tpa NdFeB, comprising
recycled rare earth sintered magnets and alloys and will be the first in
Germany using the patented HPMS process, with first production targeted for
2024. Maginito has entered into a convertible loan agreement (the "HyProMag
GmbH Convertible Loan") with HyProMag GmbH. Under the terms of the HyProMag
GmbH Convertible Loan, Maginito has granted HyProMag GmbH a loan facility for
€2.5 million (C$3.68 million) available to be drawn down in accordance with
an agreed investment plan and convertible into a 50% equity interest in
HyProMag GmbH.

This investment by Maginito will contribute to the matched funding
requirements to unlock the €3.7 million (C$5.44 million) grants announced by
Mkango on November 23, 2022, for development of the production facility in
Baden-Württemberg State.

Mkango UK

Mkango UK is establishing a pilot plant at Tyseley Energy Park (the "Mkango UK
Pilot Plant") to chemically process recycled HPMS NdFeB powder and magnet
swarf (i.e. the powder produced from grinding and finishing magnets) from a
range of scrap sources including electronic waste, electric motors and wind
turbines, complementing the short loop magnet recycling routes being developed
in parallel by HyProMag. The £1.1 million (C$1.86 million) pilot plant
programme is being developed as part of the SCREAM Project
(https://scream-uk.com/ (https://scream-uk.com/) ), for which 70% of the costs
are being funded by UK Research and Innovation (UKRI) as part of the Driving
the Electric Revolution challenge.

About Mkango

Mkango's corporate strategy is to develop new sustainable primary and
secondary sources of neodymium, praseodymium, dysprosium and terbium to supply
accelerating demand from electric vehicles, wind turbines and other clean
technologies. This integrated Mine, Refine, Recycle strategy differentiates
Mkango from its peers, uniquely positioning the Company in the rare earths
sector. Mkango is listed on the AIM and the TSX-V.

Mkango is developing its flagship Songwe Hill rare earths project ("Songwe")
in Malawi with a Definitive Feasibility Study completed in July 2022 and an
Environmental, Social and Health Impact Assessment approved by the Government
of Malawi in January 2023. Malawi is known as "The Warm Heart of Africa", a
stable democracy with existing road, rail and power infrastructure, and new
infrastructure developments underway.

In parallel, Mkango and Grupa Azoty PULAWY, Poland's leading chemical company
and the second largest manufacturer of nitrogen and compound fertilizers in
the European Union, have agreed to work together towards development of a
rare earth Separation Plant at Pulawy in Poland (the "Pulawy Separation
Plant"). The Pulawy Separation Plant will process the purified mixed rare
earth carbonate produced at Songwe Hill.

Through its ownership of Maginito (www.maginito.com (http://www.maginito.com/)
), Mkango is also developing green technology opportunities in the rare earths
supply chain, encompassing neodymium (NdFeB) magnet recycling as well as
innovative rare earth alloy, magnet, and separation technologies.

Mkango also has an extensive exploration portfolio in Malawi, including the
Mchinji rutile exploration project, the Thambani
uranium-tantalum-niobium-zircon project and Chimimbe nickel-cobalt project.

For more information, please visit www.mkango.ca (http://www.mkango.ca)

About CoTec Holdings Corp.

CoTec is a publicly traded investment issuer listed on the TSX-V under the
ticker CTH, and the OTCQB under the ticker CTHCF. The company is an
ESG-focused company investing in innovative technologies that have the
potential to fundamentally change the way metals and minerals can be extracted
and processed for the purpose of applying those technologies to undervalued
operating assets and recycling opportunities, in rare earths, low carbon iron
ore (green steel) and copper as the company seeks to transition into a
mid-tier mineral resource producer. CoTec is committed to supporting the
transition to a lower carbon future for the extraction industry, a sector on
the cusp of a green revolution as it embraces technology and innovation.

For more information, please visit www.cotec.ca (http://www.cotec.ca) .

Market Abuse Regulation (MAR) Disclosure

The   information contained within   this announcement is deemed by
the Company to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014 ('MAR') which has been incorporated into
UK law by the European Union (Withdrawal) Act 2018. Upon the publication
 of this announcement via Regulatory Information Service, this inside
information is now considered to be in the public domain.

Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking statements (within the meaning of
that term under applicable securities laws) with respect to Mkango and CoTec.
Generally, forward looking statements can be identified by the use of words
such as "plans", "expects" or "is expected to", "scheduled", "estimates"
"intends", "anticipates", "believes", or variations of such words and phrases,
or statements that certain actions, events or results "can", "may", "could",
"would", "should", "might" or "will", occur or be achieved, or the negative
connotations thereof. Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the plans,
intentions or expectations upon which they are based will occur. By their
nature, forward-looking statements involve numerous assumptions, known and
unknown risks and uncertainties, both general and specific, that contribute to
the possibility that the predictions, forecasts, projections and other
forward-looking statements will not occur, which may cause actual performance
and results in future periods to differ materially from any estimates or
projections of future performance or results expressed or implied by such
forward-looking statements. Such factors and risks include, without limiting
the foregoing, the availability of (or delays in obtaining) financing to
develop Songwe Hill, the Tyseley Recycling Plant, the HyProMag GmbH Recycling
Plant, the Mkango UK Pilot Plant, the Pulawy Separation Plant, governmental
action and other market effects on global demand and pricing for the metals
and associated downstream products for which Mkango is exploring, researching
and developing, geological, technical and regulatory matters relating to the
development of Songwe Hill, the ability to scale the HPMS and chemical
recycling technologies to commercial scale, competitors having greater
financial capability and effective competing technologies in the recycling and
separation business of Maginito and Mkango, availability of scrap supplies for
Maginito's recycling activities, government regulation (including the impact
of environmental and other regulations) on and the economics in relation to
recycling and the development of the Tyseley Recycling Plant, the HyProMag
GmbH Recycling Plant, the Mkango UK Pilot Plant, the Pulawy Separation Plant
and future investments in the United States pursuant to the proposed
cooperation agreement between Maginito and CoTec, the outcome and timing of
the completion of the feasibility studies, cost overruns, complexities in
building and operating the plants,  and the positive results of feasibility
studies on the various proposed aspects of Mkango's, Maginito's and CoTec's
activities. The forward-looking statements contained in this news release are
made as of the date of this news release. Except as required by law, the
Company and CoTec disclaim any intention and assume no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable law.
Additionally, the Company and CoTec undertake no obligation to comment on the
expectations of, or statements made by, third parties in respect of the
matters discussed above.

 

For further information on Mkango, please contact:

Mkango Resources Limited

 

William Dawes                                   Alexander
Lemon

Chief Executive Officer                  President

will@mkango.ca                               alex@mkango.ca

Canada: +1 403 444 5979

www.mkango.ca (http://www.mkango.ca)

@MkangoResources

 

SP Angel Corporate Finance LLP

Nominated Adviser and Joint Broker

Jeff Keating, Kasia Brzozowska

UK: +44 20 3470 0470

 

Alternative Resource Capital

Joint Broker

Alex Wood, Keith Dowsing

UK: +44 20 7186 9004/5

 

Bacchus Capital Advisers

Financial Adviser

Richard Allan

UK: +44 203 848 1642

UK: +44 7857 857 287

richard.allan@bacchuscapital.co.uk (mailto:richard.allan@bacchuscapital.co.uk)

 

Tavistock Communications

PR/IR Adviser

Jos Simson, Cath Drummond

UK: +44 (0) 20 7920 3150

mkango@tavistock.co.uk

 

For further information on CoTec, please contract:

 

CoTec Holdings Corp.

Braam Jonker

Chief Financial Officer

braam.jonker@cotec.ca

Canada: +1 604 992-5600

 

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