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REG - Mkango Resources Ltd - MAGINITO COMPLETES ACQUISITION OF HYPROMAG

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RNS Number : 1209I  Mkango Resources Limited  03 August 2023

 

 

 

 

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

 

MAGINITO COMPLETES ACQUISITION OF PIONEERING RARE EARTH MAGNET RECYCLER
HYPROMAG

 

HIGHLIGHTS:

 

§ Maginito (Mkango 90%; CoTec 10%) completes transaction to increase its
ownership in HyProMag to 100%

-      £1 million (C$1.7 million) cash consideration, funded from
existing working capital in Maginito; and

-      9,742,031 Mkango shares equivalent to £1m (C$1.7m) at a price per
share of 10.26 pence

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

London / Vancouver: August 3, 2023 - Mkango Resources Ltd. (AIM/TSX-V: MKA)
(the "Company" or "Mkango") is pleased to announce that, further to the
previous announcement on May 16, 2023, Maginito Limited ("Maginito") has
completed the transaction to increase its ownership in HyProMag Limited
("HyProMag") to 100% for a cash and share consideration (the "Transaction").

The consideration payable to the selling HyProMag shareholders (the "Vendors")
comprises £1m (C$1.7m) in cash and the issue of 9,742,031 Mkango common
shares (the "Consideration Shares") equivalent to £1m (C$1.7m) at a price
equal per share 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 May 14, 2023, being the date prior to the
date of the share purchase agreement.

In addition, up to a further £3m (C$5.1 m) 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 Consideration Shares are subject to a
one-year lock up (which includes the four month plus one day statutory hold
period applicable in Canada, which expires on December 3, 2023) and the shares
which may be issued on milestones will have a six-month lock up (and a
statutory hold period applicable in Canada, which will expire four months plus
one day after issuance, if any).

Mkango has closed the Transaction as an "Expedited Acquisition" under
applicable rules of the TSX Venture Exchange (the "TSX-V").  Mkango intends
to seek TSX-V approval for the Transaction in accordance with the rules
applicable to Expedited Acquisitions.

Under the terms of the Transaction, if Maginito is listed on a recognised
stock exchange, Mkango is entitled to transfer shares of Maginito held by
Mkango equivalent in value to the milestone payments (instead of issuing
Mkango shares) to the Sellers, upon the attainment of the milestones.

Admission to trading on AIM and Total Voting Rights

Application has been made for the Consideration Shares, which will rank pari
passu with the existing common shares of no par value each ("Common Shares")
of the Company, to be admitted to trading on AIM ("Admission") and it is
expected that Admission of the Consideration Shares will become effective and
dealings will commence at 8:00 a.m. BST on or around August 4, 2023.

Following the issue of these Placing Shares, the total issued share capital of
the Company will consist of 253,172,896 Common Shares.  The Company does not
hold any Common Shares in Treasury. Therefore, the total current voting
rights in the Company following Admission will be 253,172,896 and this
figure may be used by shareholders in the Company as the denominator for the
calculations by which they will determine if they are required to notify their
interest in, or a change in their interest in, the share capital of the
Company under the FCA's Disclosure Guidance and Transparency Rules.

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.

As a result of completion of the Transaction, Maginito holds a 100% interest
in HyProMag 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$2.6 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 ("UoB"), 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 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$7.3 million)
project is being funded by Driving the Electric Revolution, an Industrial
Strategy Challenge Fund challenge delivered by UK Research and Innovation
("UKRI"). The focus of the project is to take the HPMS technology to a greater
scale and efficiency with revolutionary new design of processing equipment and
extensive automation of processing methods for inert atmosphere powder
handling and pressing. 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://youtube/9P-dsNCffWw) .

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. The remaining 20% equity interest is owned by Professor Carlo
Burkhardt of Pforzheim University.

HyProMag GmbH is developing a similar sized plant to that at Tyseley Energy
Park and will be the first in Germany using the patented HPMS process. First
production is targeted for 2024. Maginito has entered into a convertible loan
agreement (the "Convertible Loan") with HyProMag GmbH. Under the terms of the
Convertible Loan, Maginito has granted HyProMag GmbH a loan facility for
€2.5 million (C$3.7 million) available to be drawn down in accordance with
an agreed investment plan. Upon conversion of the Convertible Loan, Maginito's
direct and indirect equity interest in HyProMag GmbH will increase from 80% to
90%.

This investment by Maginito will contribute to the matched funding
requirements to unlock the €3.7 million (C$5.40 million) grants announced by
Mkango on November 23, 2022, for development of the production facility in
Baden-Württemberg State.

About Mkango Resources Ltd.

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

 

The TSX Venture Exchange has neither approved nor disapproved the contents of
this press release. Neither the TSX Venture Exchange nor its Regulation
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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.

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