Aim- and TSX-V-listed Mkango Resources will restore its ownership of the Songwe Hill rare earths project, in Malawi, to 100%, which chairperson Derek Linfield says will strengthen the company's position as a future integrated supplier of rare earths.

Mkango and Talaxis, a subsidiary of Noble Group, have entered into an agreement for Mkango to acquire Talaxis' 49% interest in Lancaster Exploration, which owns the Songwe Hill project, as well as Talaxis' 24.5% interest in Maginito, which holds a 25% interest in rare earths magnet recycler HyProMag, for about 54.17-million shares valued at about £13-million.

On completion of the transaction, Mkango will own 100% of Lancaster and Maginito, in addition to its existing wholly owned interests in Mkango Polska, which is developing a rare earth separation plant in Poland, and three other exploration licences in Malawi.

Mkango states that restoring full ownership over Songwe Hill brings the company's structure in line with that of its peers, while also providing greater transparency to investors.

The simplification of the ownership structure is also expected to offer greater optionality in terms of securing development funding for the project, including the potential introduction of additional strategic investors or development partners.

Further, the increased ownership of Maginito provides greater exposure to HyProMag and the rare earth recycling market, which the Mkango board expects to have substantial growth potential.

The greater integration between Mkango's mining, separation and recycling businesses is also expected to result in improved synergies along the value chain.

Talaxis, meanwhile, will benefit from any share price upside as Mkango advances its projects.

"Talaxis has strongly supported the advancement of Songwe Hill and Maginito since its initial investments in 2017, subsequent to which Mkango has grown downstream, adding investments in recycling through HyProMag and the separation plant in Poland. At the same time, market conditions for rare earths have improved markedly.

"We believe this transaction delivers a better platform to create value and a structure more aligned with the strategies of both companies. We look forward to Talaxis' continued support as we progress towards development of Songwe Hill and our other projects," says Linfield.

In addition to the transaction with Talaxis, Mkango has also conditionally raised about £5.52-million from new and existing shareholders. This includes a proposed £700 000 investment by Linfield.

The funds will be used to complete a feasibility study for Songwe Hill, which is expected to be completed in the first quarter of 2022.

The transaction and share placement are subject to various conditions precedent.

Among those is that Mkango must secure investor approval for the proposed investment by Linfield, as well as the proposed participation in the share placement by Resource Early Stage Opportunities Company – a related party.

Mkango has scheduled its annual general meeting, along with a special meeting of shareholders, to vote on these matters on October 6.