Dual-listed rare earths developer Mkango Resources said on Tuesday that it had signed definitive agreements with Canada-based mining issuer CoTec Holdings for a £2-million convertible loan, a £1.5-million equity investment in Maginito, and subject to closing, a cooperation agreement regarding future investments in rare-earth processing technology opportunities in the US.
Mkango said TSX-V-listed CoTec will subscribe for shares in green technology company Maginito, equivalent to a 10% equity stake, for an investment of £1.5-million (C$2.47-million) with a closing date not later than March 15.
On the Maginito investment closing, CoTec and Mkango would enter into a shareholders agreement with respect to Maginito pursuant to which CoTec would have the right to one Maginito board seat for so long as CoTec continues to hold at least a 5% shareholding in Maginito, increasing to two board seats if CoTec holds at least a 20% shareholding in Maginito.
Further, CoTec will invest an additional £452 500 (C$744 181) for an aggregate investment of £2-million (C$3.29-million) by way of a convertible loan to Mkango, bearing 5% interest, compounded annually.
The convertible loan is secured over the shares held by Mkango in Maginito. The principal loan amount may be converted at 27p for each Mkango, while the interest will be converted at the higher of 27p a share and the price of shares at the time of conversion.
Provided that the Maginito investment closing occurs, CoTec has the option to convert the principal amount and interest into Maginito shares giving it an effective interest, post conversion, of 20.6% of Maginito.
Should Maginito increase its interest in HyProMag from 42% to 100%, CoTec must exercise either the CoTec Maginito conversion right or the Mkango conversion right within 120 days following such acquisition.
Further, Mkango announced that, subject to the Maginito investment closing, Maginito and CoTec would enter into a cooperation agreement regarding future investments in rare earth processing technology opportunities in the US.
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 with an option to increase its interest to 49%.
HyProMag's strategy is to establish short loop recycling facilities for NdFeB magnets at Tyseley Energy Park in Birmingham, UK, and other locations to provide a sustainable solution for the supply of NdFeB magnets and alloy powders for a wide range of markets.
Mkango Rare Earths UK,, a subsidiary of Mkango, is establishing a pilot plant at Tyseley Energy Park to chemically process recycled HPMS NdFeB powder and magnet swarf 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. In connection with the Maginito Investment Closing, Mkango UK will become a subsidiary of Maginito.
Edited by: Creamer Media Reporter
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