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Mkango Resources Ltd (2)
Symbol MKA
Shares Issued 268,453,574
Close 2024-07-15 C$ 0.08
Market Cap C$ 21,476,286
Recent Sedar Documents

Mkango, Cotec's HyProMag feasibility study 50% complete

2024-07-15 17:24 ET - News Release

Also News Release (C-CTH) Cotec Holdings Corp

Mr. Will Dawes of Mkango Resources reports

MID-PROJECT UPDATE FOR HYPROMAG USA FEASIBILITY STUDY

Cotec Holdings Corp. and Mkango Resources Ltd. have released the findings of the mid-project review for the bankable feasibility study for HyProMag USA LLC, a Delaware corporation. Canada-based BBA USA Inc. and United States-based PegasusTSI Inc. have been engaged to complete the HyProMag USA bankable feasibility study to engineer and design its REE (rare earth element) magnet recycling plants and a production facility in the United States.

The feasibility study will be completed during fourth quarter 2024. HyProMag USA has the potential to supply the U.S. market with a sustainable, long-term domestic supply of neodymium/iron/boron (NdFeB) permanent magnets to enable the creation of secure, low-carbon and traceable rare earth supply chains.

The key findings are:

  • Feasibility study is now 50 per cent complete:
    • Technology and design requirements for HyProMag's continuing commissioning of the Tyseley facility in the United Kingdom, and associated pilot plant design and operating criteria have been successfully transferred to the U.S.-based feasibility study;
  • Production:
    • Targeted production capacity of a minimum of 500 tonnes per annum NdFeB magnets with the option to expand to 800-tonne-per-annum NdFeB magnets production;
    • Opportunities to produce a range of additional NdFeB alloy products such as alloy powders, pellets and strip cast flakes are also being considered, as well as the recycling of swarf;
  • Project definition rating index (PDRI):
    • Level of definition is more than sufficient to complete the current feasibility study and move to the detailed design following the completion of the current study phase;
  • Value engineering:
    • Design, layout and critical equipment sourcing have been challenged for reliable and cost-effective project implementation;
    • Identified opportunities to further optimize the project;
  • Capital estimate:
    • Association for the Advancement of Cost Engineering (AACE) Class 3 estimate to be confirmed in Q4 2024 with the completion of the feasibility study;
  • Site selection:
    • Four short-listed hub site options located in Fort Worth, Texas, have been identified. Approximate size of the hub site is 90,000 square feet;
    • Request-for-proposal (RFP) process for Fort Worth has commenced to select preferred choice. Final site selection to be completed in Q4 2024;
    • Initial spoke facilities targeting sites in South Carolina and Nevada;
  • Permitting:
    • Baseline permitting for the Fort Worth, Texas, hub facility to commence in Q1 2025. Completion of permitting is expected within nine months;
  • Project schedule:
    • Notice to proceed targeted in Q1 2025;
    • First U.S. magnet production targeted in second half of 2026;
  • Supply and offtake:
    • High-level engagement with potential feed supply and product offtakers providers has commenced;
  • Funding:
    • Focused discussions with U.S. federal and state government bodies to support funding and incentive opportunities have been launched.

Julian Treger, Cotec chief executive officer, commented: "We are very pleased with the progress of the feasibility study; the learnings from HyProMag's facilities in the U.K. and Germany have been invaluable to PegasusTSI and BBA, and support an accelerated project schedule targeting first magnets in H2 2026. In parallel with the feasibility study, the company is now focused on securing funding from the U.S. government. HyProMag USA's proposed U.S. facility fully meets the requirements of the U.S. Defence Production Act (DPA) Title III to provide a secure, long-term, commercial-scale magnet recycling and production facilities in the United States. HyProMag USA is supported by the minerals security partnership (1), which aims to accelerate the development of secure, diverse and sustainable supply chains for critical minerals. As the feasibility study progresses, HyProMag USA will be adding resources to support the production rollout. We are very excited the business can be used as a platform to support the revitalizing of U.S. magnet production, metallization and skills development in the United States, a strategic priority for the U.S. government."

Will Dawes, Mkango CEO, commented: "The mid-project review has further highlighted the opportunity we have in the United States, and we are very excited to see the HyProMag USA feasibility study progressing on track. The plant design has significant embedded optionality and opportunities to process and produce a wide range of feeds and NdFeB products, respectively, complementing the growing cluster of rare earth processing and manufacturing in Texas. This development provides a strong platform for growth in North America, underpinned by HyProMag's [hydrogen processing of magnetic scrap] recycling technology, which provides the solution for unlocking the supply chain for rare earth magnet recycling."

HyProMag USA plans to develop a low-cost, low-carbon, sustainable rare earth magnet recycling and production business underpinned by HyProMag's patented hydrogen processing of magnet scrap (HPMS) recycling technology. HyProMag has sublicenced the HPMS technology to HyProMag USA, which is 50 per cent owned by Cotec and 50 per cent owned by Maginito.

The feasibility study will be based on a hub-and-spoke model using three HPMS vessels and one magnet manufacturing hub which will based in Fort Worth, Texas. The feasibility study will include the completion of sufficient engineering design works to support an AACE Class 3 capital estimate, as well as final site selection to be completed in Q4 2024 and site permitting completed by Q4 2025 in line with the initial project schedule. This targets initial revenue in H2 2026. Environment and permitting studies will be supported by U.S.-based Weston Solutions Inc.

Following completion of the feasibility study, Cotec and Mkango will make a joint decision in the first half of 2025 as to whether HyProMag USA will proceed with the construction of the U.S. project. Cotec is responsible for financing the feasibility study and the project development costs. Financing provided by Cotec would be in the form of shareholder loans to HyProMag USA.

In parallel, HyProMag USA is working on securing U.S. government funding, U.S. state financial grants and incentives, and strategic partnerships with U.S. companies for feed supply and recycled NdFeB magnet offtake.

HyProMag is commercializing HPMS recycling technology in the United Kingdom, Germany and United States. HyProMag is also evaluating other jurisdictions and recently launched a collaboration with Envipro on rare earth magnet recycling in Japan. HPMS technology was developed at the University of Birmingham, underpinned by approximately $100-million (U.S.) of research and development funding, and has major competitive advantages versus other rare earth magnet recycling technologies, which are largely focused on chemical processes but do not solve the challenges of liberating magnets from end-of-life scrap streams -- HPMS provides this solution.

About Mkango Resources Ltd.

Mkango is listed on the AIM (Alternative Investment Market) and the TSX Venture Exchange. Mkango's corporate strategy is to become a market leader in the production of recycled rare earth magnets, alloys and oxides, through its interest in Maginito Ltd., which is owned 79.4 per cent by Mkango and 20.6 per cent by Cotec, and to develop new sustainable sources of neodymium, praseodymium, dysprosium and terbium to supply accelerating demand from electric vehicles, wind turbines and other clean energy technologies.

Maginito holds a 100-per-cent interest in HyProMag, and a 90-per-cent direct and indirect interest (assuming conversion of Maginito's convertible loan) in HyProMag GmbH, focused on short-loop rare earth magnet recycling in the U.K. and Germany, respectively, and a 100-per-cent interest in Mkango Rare Earths UK Ltd., focused on long-loop rare earth magnet recycling in the U.K. via a chemical route.

Maginito and Cotec are also rolling out HyProMag's recycling technology into the United States via the 50/50 owned HyProMag USA LLC joint venture company. HyProMag is also evaluating other jurisdictions and recently launched a collaboration with Envipro on rare earth magnet recycling in Japan.

Mkango also owns the advanced-stage Songwe Hill rare earths project, and an extensive rare earths, uranium, tantalum, niobium, rutile, nickel and cobalt exploration portfolio in Malawi, and the Pulawy rare earths separation project in Poland. Discussions with the government of Malawi in relation to the mining development agreement for Songwe Hill are continuing.

About Cotec Holdings Corp.

Cotec is a publicly traded investment issuer listed on the TSX-V and the OTCQB, and trades under the symbol CTH and CTHCF, respectively. Cotec is an environmental, social and governance (ESG) focused company investing in innovative technologies that have the potential to fundamentally change the way metals and minerals can be extracted and processed for the purpose of applying those technologies to undervalued operating assets and recycling opportunities, as it transitions into a mid-tier mineral resource producer.

Cotec is committed to supporting the transition to a lower-carbon future for the extraction industry, a sector on the cusp of a green revolution as it embraces technology and innovation. It has made four investments to date and is actively pursuing operating opportunities where current technology investments could be deployed.

(1) See U.S. Department of State website.

We seek Safe Harbor.

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