Mkango has raised proceeds which will be used to kickstart development of a new rare earth magnet recycling facility, in Germany, with a minimum capacity of 100 t/y of neodymium, iron and boron
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Aim-listed Mkango Resources has conditionally raised gross proceeds of £3.5-million, or C$5.7-million, through a placing through its joint brokers SP Angel Corporate Finance and Alternative Resource Capital, together with Merlin Partners, with proceeds to be used for catalysing near-term milestones at the company's mining and recycling assets.
The targeted milestones include finalisation of the mine development agreement (MDA) for the Songwe Hill rare earths project, in Malawi. This follows the definitive feasibility study announced in July last year and approval of the environmental-, social- and health-impact assessment announced in January.
The proceeds will also be used to kickstart development of a new rare earths magnet recycling facility, in Germany, with a minimum capacity of 100 t/y of neodymium, iron and boron comprising recycled sintered magnets, alloys and powders with first production targeted for 2024. The facility is being developed by HyProMag GmbH.
In connection with the placing, Mkango’s subsidiary Maginito has entered into a convertible loan agreement 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 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 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 in grants announced by Mkango on November 23, for development of a production facility in the Baden-Württemberg state.
This complements the similar sized plant being developed at the Tyseley Energy Plant, in the UK, by HyProMag and the University of Birmingham, where first production is targeted for the second half of the year.
Mkango says it is continuing to advance discussions with potential lenders and strategic investors for Songwe Hill, as well as the Pulawy Separation project, in Poland.
The projects will now be developed sequentially with initial focus on standalone development of Songwe to produce a mixed rare earths carbonate – the next milestone is MDA approval, which is noted to be a key step towards project financing and development.
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. Mkango says it is focused on concluding an agreement that is beneficial for both the country and all of Mkango’s stakeholders.
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 standalone project continue to be evaluated.
Bacchus Capital Advisers has been appointed to provide strategic and corporate finance advice, including strategic financing options for Songwe Hill and Pulawy.
“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 MDA approach their conclusion, and to capitalise on its early mover advantage in rare earth magnet recycling with potential for near term production,” says Mkango CE William Dawes.
“We are very pleased that Mkango 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,” comments HyProMag cofounder and director Professor Carlo Burkhardt.