Aim- and TSX-V-listed Mkango has signed a nonbinding term sheet with environment, social and governance-focused company CoTec Holdings, in relation to investments by CoTec into Mkango and Mkango’s subsidiary, Maginito, and in collaboration in downstream rare earth technologies.
The transactions are expected to include several key components, including that CoTec will invest £2-million into Mkango by way of a two-year, unsecured convertible note, providing Mkango with additional working capital as it advances financing discussions for the Songwe Hill rare earths project, in Malawi, and the Pulawy separation plant project, in Poland.
Also, CoTec will invest £1.5-million into Maginito, equating to a 10% equity stake in Maginito for the purposes of strategic investments in downstream rare earth technologies and working capital.
Further, there will be restructuring resulting in Mkango’s wholly-owned subsidiary, Mkango Rare Earths UK becoming a wholly-owned subsidiary of Maginito.
Moreover, in consideration of a four-month exclusivity period, CoTec will advance £500 000, no later than June 20, offsettable against and carrying largely the same terms as the Mkango note.
Mkango and CoTec will also enter into a cooperation agreement regarding future investments in rare earth processing technology opportunities in the US.
The transactions are subject to various conditions, including definitive documentation, restructuring in relation to Mkango UK and approval by the TSX-V.
There can be no certainty that any agreement will be reached nor as to the final terms of the proposed investment, the company notes.
“We are very pleased to take this step towards collaborating with CoTec in the rare earths sector. The proposed investments would increase Mkango’s financial flexibility, creating a strong platform to grow Maginito and for future expansion into the US market, while the integrated development of Songwe and the Pulawy separation plant continues in parallel,” says Mkango CE William Dawes.
Maginito is focused on developing green technology opportunities in the rare earths supply chain, encompassing neodymium (NdFeB) magnet recycling, as well as rare earth alloy, magnet and separation technologies.
Maginito holds a 42% interest in UK rare earth magnet recycler HyProMag, with an option to increase its interest to 49%.
HyProMag has licensed the patented technology of hydrogen processing of magnet scrap, developed in the Magnetic Materials Group at the University of Birmingham.
HyProMag’s strategy is to establish short-loop recycling facilities for NdFeB magnets at Tyseley Energy Park, in Birmingham, in the UK, as well as in other locations to provide a sustainable solution for the supply of NdFeB magnets and alloy powders.
Mkango UK is establishing a pilot plant at Tyseley Energy Park to chemically process recycled hydrogen processing of magnet scrap, or HPMS, NdFeB powder and magnet swarf from a range of scrap sources, complementing the short-loop magnet recycling routes being developed in parallel by HyProMag.