REG - Mkango Resources Ltd - MKANGO RAISES £750,000 TO ADVANCE MAGNET RECYCLING

Mkango ResourcesAnnouncement

25/03/2024 07:00

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RNS Number : 0581I  Mkango Resources Limited  25 March 2024

 

 

 

 

MKANGO RESOURCES LTD.

550 Burrard Street

Suite 2900

Vancouver

BC V6C 0A3

Canada

 

MKANGO RAISES £750,000 (C$1.3M) TO ADVANCE RARE EARTH MAGNET RECYCLING IN
UNITED KINGDOM AND GERMANY, AND LAUNCHES STRATEGIC REVIEW

 

Highlights

·      Mkango Resources ("Mkango" or the "Company") has conditionally
raised gross proceeds of £750,000 (C$1.3M) via a direct Company subscription
from existing shareholders, including a £150,000 investment by Mkango CEO
William Dawes

·      Use of proceeds include the acquisition of additional equipment
to underpin HyProMag's transition to first commercial sales of recycled NdFeB
at Tyseley Energy Park in Birmingham, UK targeted for H2 2024, and orders of
long lead time equipment in Germany, unlocking additional grant funding

·      Discussions are ongoing with potential strategic investors,
project finance providers, grant funding bodies and other sources to finance
recycling scale-up opportunities and further technology roll-out

·      The Company has completed a significant cost cutting exercise in
recent months, whilst streamlining operations to focus on recycling, which has
enabled a significant reduction in the ongoing capital requirements for the
business

·      Mkango is launching a review of strategic options for its
advanced stage Songwe Hill Rare Earth Project in Malawi and Pulawy Rare Earth
Separation Project in Poland

London / Vancouver: March 25, 2024 - Mkango Resources Ltd. (AIM/TSX-V: MKA) is
pleased to announce that it has conditionally raised gross proceeds of
£750,000 (approximately C$1.3 million) through the issuance, on a private
placement basis, of 15,000,000 common shares of the Company (the "Subscription
Shares") at a price per Subscription Share of 5 pence ("p") (approximately
C$0.086) (the "Subscription").

William Dawes, Chief Executive of Mkango stated: "Mkango sounded out the
market in January of this year with a view to considering a fund raising to
pursue all of Mkango's existing business lines. Given the share price decline
during this period, the Company has decided to minimise shareholder dilution
at the current share price by raising a relatively small amount of money from
existing shareholders and myself in order to enable the Company to achieve key
milestones for HyProMag. In addition, to ensure enough financial runway to
achieve these goals, the Company has implemented a cost cutting exercise which
will materially reduce the Company's monthly cash burn.

As part of this process, the Company has decided to launch a review of
strategic options for its Songwe Hill Rare Earths Project in Malawi as well as
the Pulawy Rare Earths Separation Project in Poland. Mkango believes this
strategic review will help maximise returns for its shareholders whilst it
seeks to expand its recycling business."

Recycling Near-Term Milestones

HyProMag is commercialising Hydrogen Processing of Magnet Scrap ("HPMS")
recycling technology in the UK, Germany and United States. HPMS technology was
developed at the 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 the
solution.

Near term milestones for the recycling business include full commissioning of
the recycling plant in the UK with initial commercial sales of NdFeB by
HyProMag targeted for H2 2024, commissioning of the pilot scale (chemical
route) recycling plant in UK to produce rare earth oxides and carbonates in H1
2024 and completion of the USA Feasibility Study in H2 2024. Initial
production in the UK is targeted at 25-30tpa NdFeB with significant expansion
potential.

Based on scaled-up production scenarios for the recycling business, scoping
studies to date indicate potential to generate annual revenue of up to US$50m
per site and strong margins at current prices across multiple production
centres starting with the UK (100-350tpa), followed by Germany (126-380tpa)
and the United States (500tpa), with other jurisdictions such as Japan and
Canada being evaluated.

The proposed operating configuration for UK and Germany operations are similar
and comprise a Hydrogen Processing of Magnet Scrap (HPMS) recycling vessel, a
powder processing plant, presses, sintering furnaces and other magnet
manufacturing equipment to produce NdFeB alloys, sintered blocks and finished
magnets.

As announced previously, the proposed operating configuration for the United
States operations is a modular, hub and spoke model, with the initial
deployment of three Hydrogen Processing of Magnet Scrap (HPMS) recycling
vessels at the spokes and a central hub comprising of rare earth (NdFeB) alloy
and magnet manufacturing, subject to the outcome of the recently commenced USA
Feasibility Study which is being funded by CoTec Holdings Inc ("CoTec").

The Subscription

Mkango has conditionally raised gross proceeds of £750,000 (approximately
C$1.3 million) through the issuance, on a private placement basis, of
15,000,000 Subscription Shares at a price per Share of 5p (approximately
C$0.086). The net proceeds of the Subscription after fees is expected to be
£720,000 (approximately C$1.2 million). The issue price equates to a discount
of 25.7% and 21.8% to the trailing five-day volume weighted average price
("VWAP") of Mkango's shares on AIM and TSX-V respectively. The Company intends
to use the net proceeds of the Subscription to acquire additional equipment
for the UK recycling business to underpin HyProMag's transition to first
commercial sales of recycled NdFeB in the UK targeted for H2 2024, orders of
long lead time equipment in Germany, and to fund ongoing recycling and
corporate costs.

William Dawes, CEO and a director of the Company, has agreed to subscribe for
3,000,000 Subscription Shares, for £150,000.  Following the Subscription,
William Dawes will be the beneficial owner of,  and will directly or
indirectly control, a total of 12,521,443 Shares in the Company, which will
represent 4.66% per cent. of the enlarged share capital of the Company
(post-completion of the entire Subscription). Following completion of the
Subscription, William Dawes will hold 3,975,238 Shares in his own name, with
8,546,205 of the Shares controlled through Leo Mining & Exploration
Limited, a company in which William Dawes is a Director and of which he owns
17.3% of the issued and outstanding shares.

Following the Subscription, Resources Early Stage Opportunity Company Ltd will
be the beneficial owner of a total of 15,999,747 Shares in the Company, which
represents 5.96% per cent of the enlarged share capital.

The Subscription is expected to close on or around 10(th) April, 2024 and is
subject to the receipt of all necessary approvals including the approval of
the TSX-V, and admission of the Subscription Shares to trading on AIM.

The Subscription Shares will rank pari passu with the Company's existing
shares and application has been made for the Subscription Shares to be
admitted to trading on AIM ("Admission"). It is expected that Admission will
become effective and dealings in the Subscription Shares will commence at
8:00am on or around 10(th) April, 2024. The Subscription Shares will be
subject to a statutory hold period in Canada expiring on the date that is four
months and one day from issuance of the Subscription Shares, and will also be
listed for trading on the TSX-V, provided that approval of such listing from
the TSX-V is obtained.

In accordance with the Disclosure Guidance and Transparency Rules (DTR 5.6.1R)
the Company hereby notifies the market that immediately following Admission of
the Subscription Shares, its issued and outstanding share capital will consist
of 268,453,574 shares. The Company does not hold any shares in treasury.
Shareholders may use this figure as the denominator for the calculations by
which they will determine if they are required to notify their interest in, or
a change to their interest in, the Company under the Financial Conduct
Authority's Disclosure and Transparency Rules.

In connection with the Subscription, Mkango has agreed to pay, at completion
of the Subscription, commissions of 5% in cash and 5% in non-transferable
broker warrants to Jub Capital Management LLP ("Jub Capital") on funds raised
by Jub Capital. The broker warrants will have a term of 3 years from issue and
an exercise price of 5p each (approximately C$0.086). The total number of
broker warrants to be issued on completion of the Subscription is 600,000.
Payment of the commissions (and issuance of the warrants) to Jub Capital is
subject to acceptance of the TSX-V. The shares issuable pursuant to exercise
of the broker warrants will be subject to a statutory hold period in Canada
expiring on the date that is four (4) months and one day from issuance of the
warrants.  SP Angel Corporate Finance LLP will be paid a corporate finance
fee of £3,000.

The issuance of the Subscription Shares to William Dawes, CEO and a director
of Mkango, constitutes a related party transaction under Multilateral
Instrument 61-101 - Protection of Minority Security Holdings in Special
Transactions ("61-101").  The issuance of the Subscription Shares to William
Dawes is exempt from the formal valuation requirements of Section 5.4 of MI
61-101 pursuant to Subsection 5.5(b) of MI 61-101 as no securities of the
Company are listed on certain exchanges specified by MI 61-101.  The issuance
of the Subscription Shares to William Dawes is also exempt from the minority
shareholder approval requirements of Section 5.6 of MI 61-101 pursuant to
Subsection 5.7(1)(a) of MI 61-101 as, at the time such issuance was agreed to,
neither the fair market value of the issuance matter of the issuance nor the
consideration therefor exceeded 25% of Mkango's fair market capitalisation.
The issuance of the Subscription Shares to William Dawes was approved by the
board of directors of Mkango, with William Dawes abstaining from voting.

Related party transaction under the AIM Rules for Companies (the "AIM Rules")

As William Dawes is a director of the Company, his participation in the
Subscription also constitutes a related party transaction pursuant to Rule 13
of the AIM Rules. The directors of Mkango, other than William Dawes, consider,
having consulted with SP Angel Corporate Finance LLP, the Company's nominated
adviser, that the terms of Mr Dawes' participation in the Subscription, are
fair and reasonable insofar as the Company's shareholders are concerned.

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.

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. Discussions with the Government of Malawi in relation to the Mining
Development Agreement for Songwe Hill are ongoing.

For more information, please visit www.mkango.ca (http://www.mkango.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. Generally,
forward looking statements can be identified by the use of words such as
"targeted", "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, receipt of TSX-V approval for the Subscription, the
availability of (or delays in obtaining) financing to develop Songwe Hill, and
the various recycling plants in the UK, Germany and the US as well as the
separation plant in Poland, 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 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 various recycling and separation plants of Mkango and Maginito and
future investments in the United States pursuant to the 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 disclaims
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
undertakes 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, Kasia Brzozowska

UK: +44 20 3470 0470

 

Alternative Resource Capital

Joint Broker

Alex Wood, Keith Dowsing

UK: +44 20 7186 9004/5

 

Tavistock Communications

PR/IR Adviser

Jos Simson, Cath Drummond

UK: +44 (0) 20 7920 3150

mkango@tavistock.co.uk

 

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.

NOTIFICATION AND PUBLIC DISCLOSURE OF TRANSACTIONS BY PERSONS DISCHARGING
MANAGERIAL RESPONSIBILITIES AND PERSONS CLOSELY ASSOCIATED WITH THEM:

   1    Details of the person discharging managerial responsibilities / person closely

      associated

 a)     Name                                                         William Dawes

 2      Reason for the notification

 a)     Position/status                                              Chief Executive Officer

 b)     Initial notification /Amendment                               Initial Notification

 3      Details of the issuer, emission allowance market participant, auction

      platform, auctioneer or auction monitor

 a)     Name                                                          Mkango Resources Ltd

 b)     LEI                                                          213800RPILRWRUYNTS85

 4      Details of the transaction(s): section to be repeated for (i) each type of

      instrument; (ii) each type of transaction; (iii) each date; and (iv) each
        place where transactions have been conducted
 a)     Description of the financial instrument, type of instrument  common shares of nil par value each

        Identification code                                          ISIN: CA60686A4090

 b)     Nature of the transaction                                     Subscription

 c)     Price(s) and volume(s)                                                         Price(s)  Volume(s)

                 5pence   3,000,000

 d)     Aggregated information                                       N/A - single transaction as above

        - Aggregated volume

        - Price

 e)     Date of the transaction                                      25 March 2024

 f)     Place of the transaction                                     Outside a trading venue

 

 

 

 

 

 

 

 

 

 

 

d)

 

Aggregated information

N/A - single transaction as above

- Aggregated volume

- Price

e)

 

Date of the transaction

25 March 2024

f)

 

Place of the transaction

Outside a trading venue

 

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