REG - Mkango Resources Ltd - MKANGO RAISES £3.5M (C$5.7M)

Mkango ResourcesAnnouncement

13/02/2023 07:00

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RNS Number : 6482P  Mkango Resources Limited  13 February 2023

 

 

 

 

MKANGO RESOURCES LTD.

550 Burrard Street

Suite 2900

Vancouver

BC V6C 0A3

Canada

 

MKANGO RAISES £3.5M (C$5.7M) TO CATALYSE NEAR TERM MINING AND RECYCLING
MILESTONES

 

Highlights

·      Mkango Resources ("Mkango" or the "Company") has conditionally
raised gross proceeds of £3.5 million (C$5.7 million) through its joint
brokers SP Angel Corporate Finance LLP ("SP Angel") and Alternative Resource
Capital ("ARC"), together with Merlin Partners LLP, with proceeds focused on
catalysing near term milestones for the Company's mining and recycling assets:
 

o  Finalisation of the Mine Development Agreement ("MDA") for the Songwe Hill
Rare Earths Project ("Songwe") with the Government of Malawi. This follows the
definitive feasibility study announced in July 2022 and approval of the
Environment, Social and Health Impact Assessment ("ESHIA") announced in
January 2023

o  Kick-start development of a new rare earth magnet recycling facility in
Germany by HyProMag GmbH with minimum capacity of 100 tonnes per year ("tpa")
of NdFeB comprising recycled sintered magnets, alloys and powders with first
production targeted for 2024. This complements the similar sized plant being
developed at Tyseley Energy Plant in the UK by HyProMag Limited and the
University of Birmingham, where first production is targeted for second half
of 2023

·      Mkango is continuing to advance discussions with potential
lenders and strategic investors for the Songwe Hill Rare Earths Project in
Malawi and the Pulawy Separation Project in Poland (the "Projects")

o  The Projects will now be developed sequentially with initial focus on
stand-alone development of Songwe to produce a mixed rare earth carbonate -
next milestone is MDA approval, which is a key step towards project financing
and development

o  Economic studies to date indicate the Pulawy Separation Project can add
significant value, and financing options to complete the feasibility study and
develop as a stand-alone project continue to be evaluated

·      Bacchus Capital Advisers has been appointed to provide strategic
and corporate finance advice, including strategic financing options for Songwe
and Pulawy

London / Vancouver: February 13, 2023 - Mkango Resources Ltd. (AIM/TSX-V: MKA)
is pleased to announce that it has conditionally raised gross proceeds of
£3.5 million (approximately C$5.7 million) via a placing and subscription
totalling 28,000,000 new common shares without par value each in the Company
(the "Placing Shares") at a price of 12.5 pence ("p") (approximately C$0.205)
per Placing Share (the "Placing").

William Dawes, Chief Executive of Mkango stated: "I am very pleased to welcome
new institutional and private investors to the shareholder base and thank
existing shareholders for their strong support for this oversubscribed fund
raising. This positions the Company for some major upcoming milestones, as
negotiations for the Mine Development Agreement approach their conclusion, and
to capitalise on its early mover advantage in rare earth magnet recycling with
potential for near term production."

Prof. Carlo Burkhardt, Co-founder and Director of HyProMag GmbH stated: "We
are very pleased that Mkango Resources is sharing this journey with us as we
scale up operations in Germany. This investment enables us to stay at the
forefront of rare earth magnet recycling in Europe and creates a strong
platform for future growth in the region."

HyProMag GmbH

In connection with the Placing, Mkango subsidiary, Maginito Limited
("Maginito"), has entered into a convertible loan agreement (the "Convertible
Loan") with HyProMag's German subsidiary, HyProMag GmbH, to acquire up to a
50% interest, which will, if converted, result in Maginito holding a direct
and indirect (via its 42% interest in HyProMag Limited) interest in HyProMag
GmbH of 66.8%. Under the terms of the Convertible Loan, Mkango 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 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 a production
facility in Baden-Württemberg State with a minimum capacity of 100tpa NdFeB
(neodymium, iron, boron) comprising recycled rare earth sintered magnets,
alloy pellets and powders. First production is targeted for 2024.

The initial production facility in Germany will be a similar size to the £4.3
million (approximately C$7.0m) project being developed by HyProMag Limited and
the University of Birmingham at Tyseley Energy Park in the UK, funded by
Driving the Electric Revolution - an Industrial Strategy Challenge Fund
challenge delivered by UK Research and Innovation, with first production
targeted for second half of 2023.

Mine Development Agreement

The Malawi Ministry of Justice has appointed a London based international law
firm with mining expertise to carry out a final review of the MDA. The Company
is focused on concluding an agreement that is beneficial for both the Nation
of Malawi and all of Mkango's stakeholders.

The Placing

Mkango has conditionally raised gross proceeds of £3.5 million (approximately
C$5.7 million) via a placing and subscription totalling 28,000,000 Placing
Shares at a price of 12.5p (approximately C$0.205) per Placing Share
("Placing"). The net proceeds after fees is £3.3 million (approximately C$5.4
million). The issue price equates to a discount of 21.3% to the trailing
five-day volume weighted average price ("VWAP") of Mkango's shares on AIM. The
Company intends to use the net proceeds of the Placing to provide matched
funding (invested via the abovementioned convertible loan) to unlock grants
for HyProMag GmbH, enabling progression to first production in Germany, costs
associated with finalising the MDA and Mining Licence for the Songwe Hill Rare
Earths Project in Malawi, and for working capital.

The Placing is expected to close on or around 27(th) February, 2023 and is
subject to the receipt of all necessary approvals including the approval of
the TSX-V, and admission of the Placing Shares to trading on AIM.

The Placing Shares will rank pari passu with the existing shares and
application has been made for the Placing Shares to be admitted to trading on
AIM ("Admission"). It is expected that Admission will become effective and
dealings in the Placing Shares will commence at 8:00am on or around 27(th)
February, 2023. The Placing 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 Placing 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,
its issued and outstanding share capital will consist of 243,206,548 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 Placing, Mkango has agreed to pay, at completion of the
Placing, commissions of up to 5% in cash and 5% in non-transferable broker
warrants, in each case with reference to cash raised by each of SP Angel, ARC
and Merlin Partners LLP. In addition, SP Angel and ARC will be entitled to a
corporate finance fee of £10,000 (approximately C$16,393) and £7,500
(approximately C$12,295), respectively. In addition, SP Angel will be paid
settlement fees totalling £3,000 (approximately C$4,918). The broker warrants
will have a term of 12 months from issue and an exercise price of £0.125
(approximately C$0.205). The total number of broker warrants to be issued on
completion of the Placing is 1,400,000. Payment of the commissions (and
issuance of the warrants) to the brokers 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.

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 Mkango Resources Limited

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 developing Songwe Hill in Malawi with a Feasibility Study completed
in July 2022. 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. 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%.

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)

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
"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, ,governmental action relating to COVID-19, COVID-19 and other
market effects on global demand and pricing for the metals and associated
downstream products for which Mkango is exploring, researching and developing,
factors relating the development of the Pulawy Separation Plant, the
production facilities in Baden-Württemberg State and Tyseley Energy Park (the
"Plants"), including the outcome and timing of the completion of the
feasibility studies, cost overruns, complexities in building and operating the
Plants, changes in economics and government regulation, the positive results
of feasibility studies and delays in obtaining financing or governmental
approvals for, and the impact of environmental and other regulations relating
to, Songwe and the Plants. 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

 

BlytheRay

Financial Public Relations

Tim Blythe

UK: +44 207 138 3204

 

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

 

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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