Mkango Resources and CoTec Holdings Collaborate on Rare Earth Technologies

Aim- and TSX-V-listed Mkango Resources Ltd. has signed a non-binding term sheet with CoTec Holdings regarding CoTec's Holdings in Mkango and its subsidiary Maginito, as well as cooperation in downstream rare earth technologies.

These transactions are expected to include several key components, including CoTec's investment of £2 million in two-year unsecured convertible notes to provide additional working capital to Mkango as it moves forward with financing discussions for the Songwe Hill rare earths project in Malawi and the Pulawy separation plant project in Poland.

In addition, CoTec will invest £1.5 million, equivalent to 10% of Maginito, in Maginito for strategic investments in downstream rare earth technologies and working capital. Further, the Company will restructure so that Mkango Rare Earths UK, a wholly owned subsidiary of Mkango, becomes a wholly-owned subsidiary of Maginito.

Moreover, CoTec will make an advance payment of £500,000 by June 20, which can be offset against a note from Mkango on substantially the same terms. Mkango and CoTec will also enter into a collaboration agreement for future opportunities to invest in rare earth processing technology in the US.

The transactions are subject to various conditions, including final documentation, restructuring in connection with Mcango UK, and approval by the Toronto Stock Exchange. The company noted that it is not certain that any agreement will be reached or the final terms of the proposed investment.

"We are very pleased to be partnering with CoTec Holdings in the rare earth sector to jointly develop downstream rare earth technologies, and the proposed investment will increase Mkango's financial flexibility and create a strong platform for Maginito's growth and future expansion into the U.S. market, while the integrated development of the Songwe and Pulawy separation plants continues," said William Dawes, CEO of Mkango Resources.

Maginito is focused on developing green technology opportunities in the rare earth supply chain, including neodymium (NdFeB) magnet recycling, as well as rare earth alloys, magnets, and separation technologies. Maginito holds a 42% interest in HyProMag, a UK-based rare earth magnet recycler, with the ability to increase its interest to 49%.

HyProMag has acquired patented technology for hydrogen treatment of magnet scrap developed by the Magnetic Materials Group at the University of Birmingham. HyProMag's strategy is to establish a short-loop recycling facility for NdFeB magnets at Tyseley Energy Park in Birmingham, UK, and elsewhere, to provide a sustainable solution for the supply of NdFeB magnets and alloy powders.

Mcango UK is setting up a pilot plant at Tyseley Energy Park to chemically treat magnet scrap or HPMS, NdFeB powder, and magnet flakes from a range of waste sources to complement the magnet recycling route being developed by HyProMag.

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