REG - Mkango Resources Ltd - HYPROMAG USA FEASIBILITY STUDY RESULTS

Mkango ResourcesAnnouncement

25/11/2024 07:00

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RNS Number : 4842N  Mkango Resources Limited  25 November 2024

 

 MKANGO RESOURCES LTD.  COTEC HOLDINGS CORP.
 550 Burrard Street     755 Burrard Street
 Suite 2900               Suite 428
 Vancouver              Vancouver
 BC V6C 0A3             V6Z 1X6
 Canada                 Canada

 

HYPROMAG USA FEASIBILITY STUDY DEMONSTRATES ROBUST ECONOMICS AND THE
OPPORTUNITY TO DEVELOP A MAJOR NEW, DOMESTIC SOURCE OF RECYCLED RARE EARTHS
MAGNETS FOR THE UNITED STATES

 

London / Vancouver: November 25, 2024 - CoTec Holdings Corp. (TSXV: CTH;
OTCQB: CTHCF) ("CoTec") and Mkango Resources Ltd. (AIM/TSX-V: MKA) ("Mkango")
are pleased to announce the results of an independent Feasibility Study (the
"Feasibility Study") for HyProMag USA, LLC, ("HyProMag USA or the Project") on
the development of a state-of-the art rare earth magnet recycling and
manufacturing operation in the United States.

 

The Project is underpinned by the patented Hydrogen Processing of Magnet Scrap
("HPMS") technology developed at the University of Birmingham Magnetic
Materials Group and being commercialized by HyProMag in the United States,
United Kingdom and Germany. The HPMS process recovers neodymium iron boron
("NdFeB") permanent magnets from end-of-life scrap streams in the form of a
demagnetized NdFeB metallized alloy powder for remanufacture into recycled
NdFeB magnets with a significantly reduced carbon footprint, and has major
competitive advantages versus other magnet recycling methods using chemical
processes.

 

Sintered NdFeB magnets will be produced in the United States using materials
sourced in the United States, contributing to security of NdFeB permanent
magnet supply and enabling economical, traceable, domestic U.S. production of
recycled NdFeB magnets (DFARS compliant(( 1 ))) supporting the defense,
aerospace, automotive, medical science, hyperscale data centers, robotics, and
energy transition industries.

 

Highlights

·   Positive Feasibility Study results for state-of-the art rare earth
magnet recycling and manufacturing operation in the United States (the
"Project"), with a central Dallas Fort Worth ("DFW"), Texas hub supported by
two pre-processing spoke sites in the eastern and western regions of the
United States:

o  US$262 million post-tax Net Present Value (NPV) 2  and 23% real internal
rate of return (IRR) based on current market prices 3 (,  4 )

o  US$503 million post-tax NPV(2) and 31% real IRR based on forecast market
Prices 5 (,4)

o  Low all-in sustaining Cost (AISC) of US$19.6 per kg of NdFeB product which
compares to current weighted average market prices of US$55 per kg of NdFeB
products, the latter reflects underlying prevailing low rare earth prices with
significant scope for price recovery

o  Expansion potential with the inclusion of a third HPMS vessel within three
years following commissioning for an additional capital cost of approximately
US$7 million

o  A 3D fly through of the Project feasibility design can be found at
HyProMag USA Facility Flythrough (https://www.youtube.com/watch?v=ggpP9DK830M)

·    Production of 750 metric tons per annum of recycled sintered NdFeB
magnets and 291 metric tons per annum of associated NdFeB co-products (total
payable capacity - 1,041 metric tons  NdFeB) over a 40 year operating life

·     Up-front capital cost of the Project is US$125 million (inclusive of
a 10% contingency margin and Class 3 AACE estimated detailed design study and
engineering costs) over a 1.7 year construction phase

·    Payback 6   is achieved at current market prices in 3.9 years at a
profitability index ("PI") 7  of 2.1, at forecast market prices payback is
achieved in 3.1 years at a PI of 4.0

·    First Revenue targeted in Q1 2027 with a Notice to Proceed ("NTP")
expected in mid-2025 following completion of Detailed Engineering Design and
Value Engineering phase, which will commence shortly and include:

o  Evaluation of significant opportunities to optimize construction and
operational efficiency, and to reduce capital expenditure and operating costs,
as well as to expand production

o  Parallel product and operational testing in the UK at the University of
Birmingham Magnetic Materials Group ("MMG") pilot plant and in conjunction
with HyProMag commercial developments in UK and Germany

o  Completion of commercial arrangements with potential feed supply and
product off taker - discussions with several potential parties underway

o  Continued discussions with federal, state and municipal governments, in
relation to financing opportunities and other economic incentives including
carbon price premiums which could improve economics

·    Project will help secure the re-vitalization of NdFeB magnet
production in the United States with the creation of approximately 90 jobs
across Texas, South Carolina and Nevada

·    Minviro Limited 8  has been commissioned to complete an ISO-14067
compliant "Product Carbon Footprint" analysis of sintered materials by the end
of Q4 2024 using the results of the Feasibility Study

·  HyProMag USA is targeting 10% of U.S domestic demand for NdFeB magnets
within five years of commissioning - design is modular, can be replicated and
accelerated to facilities in eastern and western United States

·     The Feasibility Study was undertaken by a multidisciplinary team
appointed by CoTec and Mkango and led by independent engineers, Canada-based
BBA USA Inc. ("BBA") and U.S. based PegasusTSI Inc. ("PegasusTSI") with other
independent experts and support from University of Birmingham, HyProMag Ltd
and HyProMag GmbH

Julian Treger, CoTec CEO commented: "We are very pleased with the results of
the independent Feasibility Study, which further demonstrates the advanced
commercialization potential of HyProMag's technology. HyProMag has the
capacity to provide the United States with a secure domestic source of
permanent magnets to accelerate the revitalizing of U.S. magnet production,
metallization, and skills development, a strategic priority for the U.S.
Government."

"The Detailed Engineering Design phase is expected to deliver further cost
savings and design improvements which should enhance the project's metrics
even further. The company is now focused on securing funding from the U.S.
Government, financing, off-take and feed supply. The end-to-end process of
recycling end-of-life NdFeB magnets into new sintered NdFeB magnets is
supported by the Minerals Security Partnership 9  which aims to accelerate the
development of secure, diverse, and sustainable supply chains for critical
minerals. We are very excited the business can be used as a platform to create
a market leading position for low cost, low carbon magnet recycling."

Will Dawes, Mkango CEO commented: "This is a major milestone for HyProMag,
further validating the HPMS technology and opportunity to roll-out into the
United States. Our strategy to develop rare earth magnet recycling and
manufacturing hubs in the United States, UK, Germany and, in the future, Asia,
is aligned with the evolving geopolitical environment through the development
of more robust rare earth supply chains for the respective domestic markets,
while catalyzing new centers of excellence in magnetic materials and
cross-fertilization of skills across jurisdictions and between industry and
academia."

Ownership

HyProMag is 100 per cent owned by Maginito Limited ("Maginito"), which is
owned on a 79.4/20.6 per cent basis by Mkango and CoTec. HyProMag USA is owned
50:50 by CoTec and Maginito.

Detailed Engineering Design and Value Engineering

Following completion of the Feasibility Study, the Project will now proceed to
the Detailed Engineering Design and Value Engineering phases.

The Detailed Engineering Design will include the completion of sufficient
engineering design works to support a AACE Class 1 capital estimate, as well
as final site selection is expected to be completed in H1 2025 and site
permitting targeted for completion by Q4 2025 in line with the initial project
schedule. This targets initial revenue in Q1 2027. Environmental and
permitting studies are supported by U.S. based Weston Solutions, Inc.
Following completion of the Detailed Engineering Design, a NTP decision will
be taken mid-2025 as to whether HyProMag USA will proceed with the
construction of the Project.

Detailed Engineering Design will focus on optimization of construction and
operational efficiency and identifying potential improvements that could lead
to substantial capital expenditure and operating cost savings. It will also
encompass definition and optimization of the third HPMS expansion case. In
parallel with Detailed Engineering Design and Value Engineering, product and
operational testing will continue in the UK at the University of Birmingham
Magnetic Materials Group (MMG) pilot plant in conjunction with HyProMag
commercial developments in UK and Germany.

The data used to develop the processing flowsheet is based on historical test
work and magnet production at the HPMS Pilot vessel through the MMG at the
University of Birmingham in the UK, which developed the HPMS technology being
commercialized by HyProMag. Additional test work will be undertaken to further
optimise the flowsheet, particularly in the HPMS operations. The capital and
operating costs will be refined in line with the expected improvements to the
overall process flowsheet, which will influence long-lead capital items. A
formal request for proposal ("RfP") process will also be undertaken as part of
the Detailed Engineering Design phase of the Engineering, Procurement,
Construction Management ("EPCM") contract to solicit final vendor quotes to
improve the accuracy of the capital cost estimate. The detailed engineering
considers a "one contractor" approach who is appointed to develop and build
the complete process plants.

In parallel, HyProMag USA is working towards securing potential U.S.
Government funding, U.S. State financial grants and incentives and strategic
partnerships with U.S. companies. Significant progress was achieved in the
areas of feed supply and recycled NdFeB magnet offtake during the Feasibility
Study and the Project is now able to proceed with securing long term
commercial agreements.

CoTec is responsible for funding the Detailed Engineering Design, Value
Engineering and the project development costs. Funding provided by CoTec would
be in the form of shareholder loans to HyProMag USA.

The Feasibility Study

The Project will use a "hub-and-spoke" operational model, with the central,
DFW, Texas hub supported by two pre-processing spoke sites in eastern and
western United States.

The Feasibility Study is based on the development of a state-of-the-art
40-year magnet manufacturing facility in DFW, Texas, capable of producing up
to 750 metric tons payable of sintered NdFeB magnets and 291 metric tons of
associated NdFeB co-products (total payable capacity - 1,041 metric tons
NdFeB) annually. First Revenue is targeted in Q1 2027 with a Notice to Proceed
(the "NTP") expected in mid- 2025 following completion of the Detailed
Engineering Design phase.

The Feasibility Study demonstrates robust economics at Current Prices and
indicates a significant upside based on the forecast recovery in the rare
earths market. Based on a current market prices, derived from current market
pricing for the various products, the Feasibility Study indicates a post-tax
NPV 10  of US$262 million and real IRR of 23% (pre-tax NPV US$343 million and
real IRR of 27%) at a real discount rate of 7.0%. Based on forecast market
prices, the Feasibility Study indicates an post-tax NPV of US$503 million and
real IRR of 31% (pre-tax NPV of US$647 milliion and real IRR of 36%) at a real
discount rate of 7.0%.

The up-front capital cost of the Project is US$125 million (inclusive of a 10%
contingency margin and Class 3 AACE 11  estimated detailed design study and
engineering costs). The current market price payback 12  is achieved in 3.9
years at a profitability index ("PI") of 2.1 13 , whilst at Forecast Prices,
payback is achieved in 3.1 years at a PI of 4.0.

The Project has a low all-in Sustaining Cost of cost production at US$19.6 per
kg of NdFeB which compares to current market prices of US$55 per kg of NdFeB
product.

Production at the hub facility is readily expandable with the inclusion of a
third HPMS vessel within three years following commissioning for an additional
capital cost of approximately US$7 million - the third HPMS vessel is expected
to supply excess HPMS NdFeB payable powder to the U.S market for the
developing domestic magnet production industry.

The main products are sintered magnet materials split between blocks and
finished magnets at magnet grades that have been previously demonstrated at
the University of Birmingham pilot facility 14 . These include DFARS compliant
products and will support a closed loop system in the United States whereby
end-of-life U.S.-sourced NdFeB magnets are recycled into new magnets via
HyProMag's short-loop process.

The Project will therefore provide a long-term, traceable source of permanent
magnets for U.S industry including applications for electric vehicles, wind
turbines, and many electronic devices critical for U.S. critical mineral
supply chains and the energy transition. Furthermore, the Project will help
secure the re-vitalization of NdFeB magnet production in the United States
with the creation of approximately 90 jobs in relation to magnet
manufacturing, further catalyzing the developing rare earth industry ecosystem
in Texas and the cross fertilization of skills, training and R&D between
the United States, UK and Europe.

The key Feasibility Study metrics of the Project are summarized in Table 1.
The Feasibility Study did not incorporate prospects for potential economic
support from governments, funding opportunities, or other economic incentives
which could improve the economics and influence a future updated detailed
design engineering and investment decision.

Table 1: Feasibility Study Key Metrics in US$

 Assumptions                                                 Unit                         Current Prices  Forecast Prices
 Project Duration (Life of Asset)                            Years                        40              40
 Average annual system capacity                              Metric tons NdFeB per annum  1,147           1,147
 Average annual payable production                           Metric tons NdFeB per annum  1,041           1,041
 Average total payable Sintered Magnets                      Metric tons NdFeB per annum  750             750
 Average total payable co-products excluding residual scrap  Metric tons NdFeB per annum  291             291
 Economic Assumptions
 Weighted average price (Life of Asset)                      US$/Kg                       55              94
 Capital Cost
 Construction period                                         Years                        1.7             1.7
 Initial CAPEX (excl. closure and sustaining)                US$ million                  125.3           125.3
 Sustaining CAPEX                                            US$ million per annum        0.21            0.21
 Operating cost per metric ton
 Transport Cost (Spoke to Hub)                               US$/kg NdFeB                 0.46            0.46
 Royalty Cost                                                US$/kg NdFeB                 0.23            0.69
 TOTAL AISC(( 15 )) LIFE OF ASSET                            US$/kg NdFeB                 19.63           31.86

 

Basis of Feasibility Study

Feasibility design and economic analysis thereof was undertaken for the
Project. A system capacity of 1,147 metric tons per annum has been used as a
basis for the Feasibility Study.

The process begins with scrap pre-processing at the spoke facilities located
in the eastern and western United States, where electronic and industrial
scrap containing NdFeB magnets is pre-processed, sorted, and prepared for HPMS
at the hub. This pre-processed material is then transported to the central hub
in DFW for HPMS and magnet manufacturing.

At the DFW hub in Texas, the HPMS system uses hydrogen to extract NdFeB powder
from the scrap material in a series of controlled reactions that occur at near
atmospheric pressure. This method minimizes energy consumption and reduces
environmental impact compared to conventional extraction methods. Following
extraction, the NdFeB alloy powder undergoes conventional magnet manufacturing
to produce high-performance magnets that meet industry standards.

Economic analysis has been performed in accordance with the process design and
schedule, metallurgical testing, and product payability analysis developed in
the study, and the estimates and analyses therein have been prepared to a
Class 3 AACE Feasibility level.

Processing Design

The proposed plant is based on both historical, and 2022 to 2024 pilot test
work at the University of Birmingham together with the approximate US$100
million of historical R&D expenditure and the significant know-how and
related intellectual property for HPMS.

HyProMag USA will produce NdFeB permanent magnets in the United States using
recycled end of life NdFeB magnets embedded in electronic and industrial scrap
as the source material. The HPMS process liberates embedded rare earth
permanent magnets, in the form of a demagnetised NdFeB powder, from any
electrical drive, be it including hard disk drives ("HDD"), electric motors,
MRI magnetic units, speakers and other end-of-life assemblies containing
NdFeB, enabling recovery of the NdFeB whilst leaving behind the associated
casing materials. These casing materials are recovered and sent to any
suitable scrap recycling plant for processing. The recovered NdFeB magnet
material can be fed back into any point in the rare earth supply chain, the
preferred and principal route for HyProMag being short-loop magnet
manufacturing which is facilitated by HPMS.  In the short-loop magnet
manufacturing process, the recovered NdFeB magnet material is treated and
reformed into blocks that can then be shaped and magnetized for use in
equipment requiring permanent rare earth magnets of the NdFeB composition. Any
scrap material produced from the shaping of the magnet blocks will be recycled
for use within the plant or sold to third parties. The only waste products
from the process are the casing materials housing the rare earth magnets,
which are recycled, and minor discharges of steam and inert gases.

 

Figure 1:  A simple Block Flow Diagram of the magnet recycling and production
operation

Pre-Processing technology

Maginito and Inserma Anoia S.L ("Inserma") have entered into a binding and
exclusive agreement to collaborate on the optimization, commercialization and
roll-out of pre-processing technologies for HyProMag in the United Kingdom,
Germany, the United States and other regions. The technologies autonomously
pre-process scrap such as hard disk drives to remove the NdFeB magnet
containing component which can be processed via HPMS to deliver purified alloy
powder on a very large scale.

 

The latest mobile Inserma unit for HDD can be co-located at hyperscale data
centers, shredding, recycling or HyProMag facilities. These Inserma units
rapidly remove (at <3 seconds per HDD) the Voice Coil Motor ("VCM")
containing the rare earth magnet, providing a highly concentrated feed for
subsequent HPMS by HyProMag - the simultaneous removal of the center spindle
also facilitates downstream shredding of the rest of the HDD. A 3D flythrough
of the Inserma units both in the HyProMag USA facility and also within a
United Sates hyperscale data center can be found at HyProMag USA with Inserma
HDD Pre Processing Fly Through (https://www.youtube.com/watch?v=bqYq3JzZoMM) ,
Data Center with HyProMag USA + Inserma Technology
(https://www.youtube.com/watch?v=gTytB48FFgo)

 

The goal of the collaboration is to enable deployment of hundreds of
pre-processing units, across multiple jurisdictions, providing pre-processing
solutions for a range of end-of-life applications, including HDDs,
loudspeakers and electric motors, and generating feed for HyProMag's short
loop rare earth magnet recycling process.

 

Project Site, Infrastructure and Services

Site selection was focused on locating a site in DFW, Texas for the hub.  DFW
was identified as a suitable location to build the magnet recycling operation
based on its central location in the U.S., its sizable e-waste recycling
activities, proximity to national rail roads and interstate highways and ease
of doing business there.  DFW also has other existing and developing magnet
and rare earth related businesses in the area.

A selection criteria approach was used to determine potential site locations
within the DFW area. The potential site is approximately 100,000 square feet
in area, 36 feet in height and utilizes a pre-existing factory storage unit
with basic utilities fully installed. The Project design assumes the site will
be secured through long term leases in Q1 2025.

The logistics for the project include two main satellite spokes: Satellite
Spoke 1, potentially located in Las Vegas, or Reno, Nevada and a Satellite
Spoke 2, potentially located in South Carolina. The transportation process
from each Satellite Spoke to the hub employs intermodal (truck and rail)
transportation.

Power supply will be provided through local utility providers. The current
Project design is assuming grid sourced power, however where possible the
Project will contract renewably sourced power when it is available.

Supply of Hydrogen, Nitrogen, and Argon at the DFW hub will be provided
through specialized companies which provide industrial gases in liquid form.
These gases will be delivered and stored on-site in dedicated tanks equipped
with vaporizers to ensure the conversion from liquid to gas as needed for the
operations in a "over the fence" solution.

 

Figure 2:  Map of the United States showing planned locations of HyProMag
USA's operations and functions.

Capital Costs

Initial capital expenditure (CAPEX) costs for the Project are based on a
system capacity of 1,147 metric tons per annum with a nominal payable
production capacity of approximately 1,041 metric tons per annum of which 750
metric tons per annum are sintered blocks and finished magnets.  CAPEX costs
are estimated at US$125 million, including EPCM costs, future Detailed
Engineering Design study costs and a 10% contingency.

Sustaining capital over the life of asset (40 years) is estimated at US$9.4
million. Closure cost is estimated at $1M resulting in total life of asset
CAPEX cost of US$134.8 million.

Table 2: Capital Costs

 Description                             US$ (M)
 Hub Plant                               95.0
 Spoke Pre-Processing                    6.0
 Indirect Costs (DE Study and EPCM)      13.5
 Estimated Sub-Total Cost                114.5
 Contingency 10%                         10.9
 Total Estimated Initial CAPEX           125.4
 Sustaining (over life of asset)         8.4
 Closure cost                            1.0
 ESTIMATED TOTAL CAPEX OF LIFE OF ASSET  134.8

 

Operating Costs

The operating costs include manpower to run the overall operations, power and
utilities, materials handling, scrap feed, transport of the scrap materials
from the Spoke pre-processing sites to the Hub in DFW, Texas and G&A.

Table 3: Operating costs

 Area                                              US$/kg (current prices) 16   US$/kg (Forecast Prices) (4)
 Pre-processing - Spokes x2                        1.84                         1.84
 Processing - Hub (includes feed supply)           16.23                        28.00
 Transport from Spoke to Hub                       0.46                         0.46
 G&A                                               0.67                         0.67
 Royalty                                           0.23                         0.69
 ESTIMATED TOTAL AVE. OPEX US$/kg (LIFE OF ASSET)  19.43                        31.66

 

Economic Analysis and Sensitivity Analysis

Table 4: Economic Results

 Economic Assumptions                    Unit          Current Prices  Forecast Prices
 Weighted average price (Life of Asset)  US$/kg NdFeB  55              94
 Revenue (Life of Asset)                 US$M          2,325           3,941
 EBITDA (Life of Asset)                  US$M          1,528           2,642
 Pre-Tax NPV at 7% discount rate         US$M          343             647
 Pre-Tax real IRR                        %             27%             36%
 Post-Tax NPV 7% discount rate           US$M          262             503
 Post-Tax real IRR                       %             23%             31%
 Payback                                 years         3.9             3.1
 PI                                                    2.1             4.0

 

A sensitivity analysis was performed whereby initial infrastructure capital
cost, annual operating costs and product selling price were individually
varied between +/-15% to determine the impact on Project IRR and NPV between 0
and 10 % discount rates.

Results are presented in Table 5 and 6. The project financials are most
sensitive to the product selling price followed by operating costs and finally
initial capital expenditures.

Table 5: Sensitivity Analysis (US$, Million, Post Tax) - Current Prices

          Base Case               CAPEX                                           Current prices                                  LOA OPEX
                                  15%                     -15%                    15%                     -15%                    15%                     -15%
 IRR      23%                     20%                     26%                     27%                     19%                     22%                     24%
 NPV
 0%              1,113                   1,097                   1,128                   1,362                      864                  1,049                   1,177
 5%                 380                     365                     396                     479                     281                     355                     406
 7%                 262                     246                     277                     336                     187                     243                     281
 10%                154                     139                     169                     206                     102                     141                     167

 

Table 6: Sensitivity Analysis (US$, Million, Post Tax) - Forecast Prices

          Base Case  CAPEX         Forecast prices     LOA OPEX
                     15%    -15%   15%       -15%      15%    -15%
 IRR      31%        28%    35%    36%       26%       30%    32%
 NPV
 0%       2,005      1,990  2,021  2,416     1,594     1,939  2,071
 5%       711        695    726    870       552       684    737
 7%       503        487    518    621       384       483    522
 10%      314        299    330    396       233       300    328

 

Project Timeline and Phased Execution

The Project is strategically phased to ensure cost-effective development,
operational efficiency, and flexibility for future expansion.  Next steps:

1.          Detailed Design and Engineering (2025): The Detailed
Engineering Design will include the completion of sufficient engineering
design works to support a AACE Class 1 capital estimate to complete the
bankable Feasibility Study as well as final site selection to be completed in
H1 2025 and the commencement of site permitting.

2.         Site Development and Facility Construction (2025-2026): The
initial phase includes site preparations and facility construction at the DFW
hub and two spoke locations. The DFW hub will be equipped with purpose-built
infrastructure for HPMS recycling, magnet alignment, and sintering operations.
The modular layout supports scalability, allowing for future expansion as
demand for NdFeB magnets grows. The spoke facilities in east and west United
States will focus on sorting and initial processing of NdFeB-containing scrap
to reduce transportation costs and streamline material flow to the DFW hub.

3.           Equipment Installation and Commissioning (2026):
Construction will follow to equipment installation, including HPMS vessels,
sintering furnaces, alignment presses, and auxiliary systems. Each piece of
equipment will be tested and calibrated to meet quality and operational
standards. The commissioning phase verifies that the facility operates as
designed, ensuring smooth transitions between production stages and mitigating
risks of downtime.

4.          Initial Production Ramp-Up (2027): The Project's first
production phase is expected to begin Q1 2027, with a gradual increase in
output to stabilize operations and optimize equipment performance. Initial
production volumes will be dedicated to fulfilling contracts with key
customers in sectors such as defense, renewable energy, and electronics.

5.       Full Operational Capacity and Modular Expansion (2027 Onward): By
H2 2027, the Project aims to reach full capacity at 750 metric tons per year,
positioning HyProMag USA as a major player in the U.S. NdFeB magnet market.
The facility's modular design supports phased expansions, allowing for the
addition of processing lines and spoke sites as demand increases. This
flexible approach allows HyProMag to scale up with minimal disruption and
align production with market growth, particularly in EVs, wind energy, and
defense.

6.      Modular Expansion (2030 Onward): By 2030 potential installation of
the third HPMS vessel, debottlenecking and expansion of system capacity.

7.          Regional expansion (2030 Onward): HyProMag USA is targeting
10% of the U.S domestic demand 17  (#_edn17) within five years of
commissioning - design is modular, can be replicated and accelerated to
facilities on eastern and western United States. Any legislation to support
recycling will further accelerate expansion.

 

Qualified Persons and Data Verification

The independent Qualified Persons are Professional Engineers employed by BBA,
Pegasus TSI and Weston Solutions who are responsible for Engineering Design,
Processing, Infrastructure, Transportation, Services, Capital Costs, Operating
Costs, Project Timeline, Permitting and Economic Analysis and Sensitivity.

The Qualified Persons have reviewed and approved the scientific and technical
content of this news release.

About HyProMag

HyProMag is commercializing HPMS recycling technology in the UK, Germany and
United States. HyProMag is also evaluating other jurisdictions, and in
mid-2024 launched a collaboration with Envipro on rare earth magnet recycling
in Japan. HPMS technology was developed at the Magnetic Materials Group (MMG)
at University of Birmingham, underpinned by approximately US$100 million of
research and development funding, and has major competitive advantages versus
other rare earth magnet recycling technologies, which are largely focused on
chemical processes but do not solve the challenges of liberating magnets from
end-of-life scrap streams - HPMS provides this solution.

The MMG is internationally recognized for its work on the circular economy of
rare earth magnets. The group has made major contributions to research and
industrial application of hydrogen for processing of magnets. Professor
Emeritus Harris pioneered the initial work on hydrogen decrepitation (HD),
currently used worldwide to produce magnets, and co-authored the 1986 paper on
the world's first hydrogen based sintered magnet. Today, almost all NdFeB
magnet production and recycling methods take advantage of the HD process.

About CoTec Holdings Corp.

CoTec is a publicly traded investment issuer listed on the Toronto Venture
Stock Exchange ("TSX- V") and the OTCQB and trades under the symbol CTH and
CTHCF respectively. CoTec is an environment, social, and governance
("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, as it transitions 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. It has made four investments to date and
is actively pursuing operating opportunities where current technology
investments could be deployed.

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

About Mkango Resources Ltd.

Mkango is listed on the AIM and the TSX-V. Mkango's corporate strategy is to
become a market leader in the production of recycled rare earth magnets,
alloys and oxides, through its interest in Maginito Limited ("Maginito"),
which is owned 79.4 per cent by Mkango and 20.6 per cent by CoTec, and to
develop new sustainable sources of neodymium, praseodymium, dysprosium and
terbium to supply accelerating demand from electric vehicles, wind turbines
and other clean energy technologies.

Maginito holds a 100 per cent interest in HyProMag and a 90 per cent direct
and indirect interest (assuming conversion of Maginito's convertible loan) in
HyProMag GmbH, focused on short loop rare earth magnet recycling in the UK and
Germany, respectively, and a 100 per cent interest in Mkango Rare Earths UK
Ltd ("Mkango UK"), focused on long loop rare earth magnet recycling in the UK
via a chemical route.

Maginito and CoTec are also rolling out HyProMag's recycling technology into
the United States via the 50/50 owned HyProMag USA LLC joint venture company.
HyProMag is also evaluating other jurisdictions, and recently launched a
collaboration with Envipro on rare earth magnet recycling in Japan.

Mkango also owns the advanced stage Songwe Hill rare earths project and an
extensive rare earths, uranium, tantalum, niobium, rutile, nickel and cobalt
exploration portfolio in Malawi, and the Pulawy rare earths separation project
in Poland.

For more information, please visit www.mkango.ca (about%3Ablank)

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 the Recycling Plants being developed by Maginito in the UK, Germany
and the US (the "Maginito Recycling Plants"), the implementation of matters
set out in the Feasibility Study, 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, 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 Maginito
Recycling Plants 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 because 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, Caroline Rowe

UK: +44 20 3470 0470

 

Alternative Resource Capital

Joint Broker

Alex Wood, Keith Dowsing

UK: +44 20 7186 9004/5

 

For further information on CoTec, please contract:

 

CoTec Holdings Corp.

Braam Jonker

Chief Financial Officer

braam.jonker@cotec.ca

Canada: +1 604 992-5600

 

The TSX Venture Exchange has neither approved nor disapproved the contents of
this press release. Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of this release.

This press release does not constitute an offer to sell or a solicitation of
an offer to buy any equity or other securities of the Company in the United
States. The securities of the Company will not be registered under the United
States Securities Act of 1933, as amended (the "U.S. Securities Act") and may
not be offered or sold within the United States to, or for the account or
benefit of, U.S. persons except in certain transactions exempt from the
registration requirements of the U.S. Securities Act.

 1  U.S. Defense Federal Acquisition Regulations (DFARS)

 2  7% real discount rates. NPVs are calculated by discounting real US dollar
cash flows from 2025

 3  Current market prices ("Current Prices") for all NdFeB products sold in
the U.S, excluding residual scrap, derived from U.S. 2024 price quotes, over
the life of the asset

 4  NPV does not include the economic benefit of any government or state
incentives, carbon pricing

 5  Forecast market prices ("Forecast Prices") are the prices for all NdFeB
products sold in the U.S, excluding residual scrap feed, with the rare earth
price component thereof derived from the latest rare earth oxide price
forecasts from Q4 (2024) Adamas Intelligence, over the life of the asset

 6  Payback defined as the period required to payback initial capital from
first production

 7  The profitability index is a measure of the capital efficiency of a
project and is defined as the project's NPV divided by the project capital
incurred to reach first production

 8  https://www.minviro.com/

 9 
https://www.state.gov/joint-statement-on-the-minerals-security-partnership-announce-support-for-mining-processing-and-recycling-projects/

 10  Discount rates are in real US dollars, NPV's are calculated by
discounting real US dollar cash flows

 11  Association for the Advancement of Cost Engineering (AACE) - Class 3
Estimate include contingency of 10%

 12  Payback defined as the period required to payback initial capital from
first production

 13  The profitability index is a measure of the capital efficiency of a
project and is defined as the project's NPV divided by the project capital
incurred to reach first production

 14 
https://mkango.ca/news/hypromag-commissioning-update-for-the-uks-first-commercial-scale-rare-earth-magnet-recycling-and-manufacturing-plant-at-tyseley/

 15  All In Sustaining Cost per kilogram of product sold

 16  Unit cost calculated as a function of total payable production excluding
residual scrap

 17 
https://www.energy.gov/sites/default/files/2022-02/Neodymium%20Magnets%20Supply%20Chain%20Report%20-%20Final.pdf

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