REG - Mkango Resources Ltd - COMPLETION OF £1.5 MILLION INVESTMENT BY COTEC

Mkango ResourcesAnnouncement

16/03/2023 07:00

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RNS Number : 1268T  Mkango Resources Limited  16 March 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

 

 

COMPLETION OF £1.5 MILLION INVESTMENT BY COTEC INTO MAGINITO LIMITED AND
CO-OPERATION AGREEMENT SIGNED FOR DEVELOPMENT OF RARE EARTH TECHNOLOGIES IN
THE UNITED STATES

 

Highlights

·    CoTec invests £1.5 million (C$2.5 million) in Mkango's subsidiary,
Maginito Limited ("Maginito"), for a 10% equity interest and John Singleton,
Chief Operating Officer of CoTec, has been appointed to the Board of Maginito

·     Maginito now uniquely positioned in complementary short loop and
long loop technologies to recycle rare earth NdFeB magnets through its
existing interests in HyProMag and HyProMag GmbH, as well as in Mkango
subsidiary, Mkango UK, which has been transferred from Mkango to Maginito

·      Major competitive advantages in the rare earth recycling sector:

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

o  capability to manufacture rare earth magnets with a significantly reduced
carbon footprint

·      Near term production pipeline:

o  short loop recycling plants to be commissioned in UK and Germany in 2023
and 2024, respectively

o  pilot plant for long loop recycling via chemical processing targeted for
commissioning in 2023

o  scoping and feasibility studies for USA and other regions proceeding in
parallel

·    Mkango and CoTec will collaborate in the development of rare earth
technology opportunities in the United States with ongoing scoping studies
evaluating recycling, chemical processing, alloys and magnet manufacturing

London, U.K. and Vancouver, CANADA - 16 March, 2023 - Mkango Resources Ltd.
(AIM/TSX-V: MKA) (the "Company" or "Mkango") and CoTec Holdings Corp (TSX-V:
CTH) ("CoTec") are pleased to announce that they have closed the previously
announced £1.5 million investment (the "Investment") by CoTec into Mkango's
subsidiary, Maginito Limited ("Maginito"). In connection therewith, Maginito
and CoTec have agreed to collaborate on the commercialisation of downstream
rare earth technologies in the United States and Mkango Rare Earths UK Ltd
("Mkango UK") has been transferred to become a subsidiary of Maginito.

Maginito now holds a 42% interest in HyProMag Limited ("HyProMag") focused on
short loop rare earth magnet recycling in the UK, a 66.8% 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 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 technology opportunities in the United States.

William Dawes, Chief Executive of Mkango stated: "This is an exciting
milestone for Mkango and we look forward to working closely with CoTec through
a shared vision for Maginito to create a large-scale, international business
focused on downstream rare earth technologies and recycling. Maginito will
also benefit from potential synergies with Mkango's development of primary
rare earths production in Malawi and Poland. The restructuring of Maginito
facilitates future access to capital and creates a strong platform for its
scale-up, international roll-out and further partnership opportunities."

Julian Treger, Chief Executive of CoTec stated: "We are glad to have closed
this Investment and are now keen to work swiftly with Mkango to roll-out
production into North America. Underpinned by unique green processing
technologies, our development strategy will be very helpful to establish US
independence in the rare earth realm and we hope to make further announcements
in the coming months to update the market on this process. These plants are
also expected to start generating revenues for CoTec in relatively short
order, demonstrating how our growth strategy of applying scalable
revolutionary technologies to create profitable green commodity extraction
assets works in practice."

£1,500,000 Maginito Investment

CoTec has subscribed for shares in Maginito (the "Maginito Shares"),
equivalent to a post-issuance 10% equity stake, for an investment of £1.5
million (C$2.5 million).

CoTec and Mkango have entered into a shareholders' agreement with respect to
Maginito, pursuant to which CoTec has the right to one Maginito Board seat for
so long as CoTec continues to hold at least a five percent (5%) shareholding
in Maginito, increasing to two Maginito Board seats if CoTec holds at least a
twenty percent (20%) shareholding in Maginito, as well as customary minority
investor rights and protections. Under a previously announced £2 million
(C$3.3 million) convertible loan from CoTec to Mkango, CoTec has the right to
either convert the loan into Mkango shares at 27p per share or into 10.6% of
Maginito Shares. If it chooses the option to convert the loan into Maginito
Shares, it will hold a 20.6% interest in Maginito.  Additionally, Mkango and
Maginito have entered into a management agreement whereby Mkango will continue
to manage Maginito.

Appointment of John Singleton to the Board of Maginito

In connection with the Investment John Singleton, Chief Operating Officer of
CoTec, has been appointed to the Board of Maginito, joining Mkango Chief
Executive William Dawes and Mkango President Alexander Lemon. Mr Singleton has
over twenty years' experience in the mining industry. He started his career at
De Beers Consolidated Mines in South Africa as a Senior Geotechnical Engineer,
followed by 13 years at Rio Tinto Plc. During his time at Rio Tinto Mr
Singleton gained extensive operational, commercial and technical experience
across multiple product groups and served in several senior leadership
positions in Business Evaluation and Corporate Development. Most recently he
was Head of Corporate Development at Centamin Plc. His experience includes
business development, strategy and capital planning, mergers and acquisitions,
assessment of investment opportunities, project development and valuation. Mr
Singleton has worked globally across multiple commodities and has led several
multi-discipline teams. He is a Fellow of the Royal Geological Society and
holds a BSc from the University of Bristol and an MSc in Engineering Geology
from Imperial College London.

United States Co-operation Agreement

Mkango and CoTec have entered into a co-operation agreement regarding future
investments in rare earth processing technology opportunities in the United
States. Scoping studies are underway to determine optimal sites there, and to
evaluate the scope of potential rare earth developments, which may include
recycling, chemical processing and the production of alloys and magnets.

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.

About 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.

Maginito holds a 42% interest in UK rare earth (NdFeB) magnet recycler,
HyProMag (www.hypromag.com (http://www.hypromag.com/) ) with an option to
increase its interest to 49%. Hypromag has licensed the patented technology
called HPMS (Hydrogen Processing of Magnet Scrap) developed in the Magnetic
Materials Group (MMG) at the University of Birmingham.

HyProMag's strategy is to establish short loop recycling facilities for NdFeB
magnets at Tyseley Energy Park in Birmingham, U.K. (the "Tyseley Recycling
Facilities") and other locations 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. The plant at Tyseley Energy Park is being
developed together with the University of Birmingham, with a minimum capacity
of 100tpa NdFeB (neodymium, iron, boron) and first production is targeted for
2023. This £4.3 million project is being funded by Driving the Electric
Revolution, an Industrial Strategy Challenge Fund challenge delivered by UK
Research and Innovation ("UKRI").

In November 2021, HyProMag established an 80%-owned subsidiary in Germany,
HyProMag GmbH, to rollout commercialisation of HPMS technology into Germany
and Europe. HyProMag GmbH is developing a similar sized plant to that at
Tyseley Energy Park (the "HyProMag GmbH Recycling Facility"). 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, to acquire up to a 50% interest. Under the terms of
the HyProMag GmbH Convertible Loan, Maginito has granted HyProMag GmbH a loan
facility for €2.5 million (approximately C$3.6 million) available to be
drawn down in accordance with an agreed investment plan and convertible into a
50% interest in HyProMag GmbH.

This investment by Maginito (which will be funded in part by proceeds from
Mkango's recently completed £3.5 million placing) will contribute to the
matched funding requirements to unlock the €3.7 million (approximately C$5.3
million) grants announced by Mkango on November 23, 2022, for development of
the production facility in Baden-Württemberg State.

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 pilot plant programme is being
developed as part of the SCREAM Project (https://scream-uk.com/). 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 Market of the London Stock Exchange
("AIM") and the TSX Venture Exchange ("TSX-V").

Mkango is developing its Songwe Hill rare earths project ("Songwe") in Malawi
with a 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. 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, 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) .

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

 

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.

 

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