Mr. William Dawes reports

MKANGO SIGNS MINING DEVELOPMENT AGREEMENT WITH MALAWI GOVERNMENT FOR THE SONGWE HILL RARE EARTH PROJECT

Lancaster Exploration Ltd., a British Virgin Islands company, and Lancaster Exploration Ltd., a Malawian company, both 100-per-cent-owned subsidiaries of Mkango, and the Malawian government have signed the mining development agreement (MDA) for the Songwe Hill rare earth project in Malawi. The signing ceremony was held at the Office of the President and Cabinet in Lilongwe, Malawi, during the evening of Friday July 26, 2024.

Highlights:

• Lancaster Exploration (a 100-per-cent-owned subsidiary of Mkango Resources) and the Malawian government have signed a mining development agreement for the Songwe Hill rare earth project in Malawi.
• The signing of the Songwe MDA confirms the fiscal terms applicable to the project and enhances the options to create value for shareholders in the context of the continuing strategic review and engagement with potential strategic investors, development and commercial banks, and offtakers.

Monica Chang'anamuno, MP, Minister of Mining for Malawi, stated: "The signing of the MDA marks a momentous and significant occasion in the history of Malawi's mining sector. It is with great pride and optimism that we sign the MDA between the government of Malawi and Lancaster Exploration Ltd. (Mkango) paving the way to start mining rare earths at Songwe Hill in Phalombe.

"The MDA signed by the government of Malawi is a product of almost two years of hard work. I would like to thank the team at Mkango for their positive partnership spirit during the negotiation period. This agreement is not just a contractual obligation; it symbolizes a renewed partnership, a commitment to sustainable development and a shared vision for a prosperous future for both parties. The journey to this has been marked by diligent negotiations, mutual respect and a deep understanding of the potential that lies beneath our feet.

"The conclusion and signing of this MDA is a testament to what can be achieved when we work together with a common purpose. It will ensure that the benefits of our mineral wealth are shared equitably and that our environmental and social responsibilities are upheld. The MDA we have signed today is a win-win agreement and is based on the belief that government, the mining investor and Malawians share some fundamental interests of benefiting from these future mining activities. On behalf of the Malawi government, I would like to take this opportunity to assure the investors that the government will adhere to its obligations reflected in this MDA.

"I would like to reiterate government's commitment in ensuring that it provides requisite infrastructure to support the mining activities at Songwe Hill and the country in general. The future mining operations at Songwe Hill in Phalombe will have far-reaching impacts on our economy. As we are all aware, mining represents the hopes and dreams of the Malawian people for economic growth, wealth and job creation in line with Vision 2063 and the Agriculture, Tourism and Mining (ATM) Strategy championed by His Excellency the President Dr Lazarus McCarthy Chakwera.

To the management team at Lancaster Exploration Limited (Mkango) I would like to thank you for your unwavering commitment to Malawi. Together, we are not just signing an agreement; we are embarking on a journey towards a brighter, more prosperous future for Malawi. Let this be a shining example of what can be achieved through partnership, perseverance, and a shared vision for a better tomorrow."

Alexander Lemon, president of Mkango, stated: "We are very pleased to announce this major milestone for the company and the nation of Malawi. I am delighted that the MDA has been agreed and signed with the government of Malawi. The project, when developed, is expected to be a game changer and transformational for Malawi, and Mkango welcomes the very strong support it is receiving from the government of Malawi and all stakeholders. When developed, my hope is that Songwe Hill will catalyze a new industrial revolution in Malawi, creating employment opportunities, producing high value-added exports, as well as further unlocking Malawi's mineral potential and new infrastructure developments."

Songwe is one of the very few rare earth projects globally to have completed a definitive feasibility study and hold a signed and approved environmental, social, health impact assessment (ESHIA), which was completed in compliance with IFC Performance Standards and the Global Industry Standard for Tailings Management (2020) (GISTM) adopted for design and management of the tailings storage facility.

The key rare earths being targeted at Songwe are neodymium, praseodymium, dysprosium and terbium, which are all critical for the green transition and are essential to permanent magnets for electric vehicles, wind turbines and many electronic devices.

Key components of the MDA include:

• 5-per-cent royalty of gross revenue;
• 30-per-cent corporate tax rate;
• 10-per-cent non-diluting equity interest in the project to government of Malawi;
• Exemption from customs and excise duties -- Lancaster will be exempted from export duty, import duty, import excise and import VAT (value-added tax) on imports and exports of capital goods as provided in the applicable law;
• 10-year stability period;
• 10-year tax loss carryforward;
• Community development expenditure is an allowable tax deduction.

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

Maginito and Cotec are also rolling out HyProMag's recycling technology into the United States through 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 earth project and an extensive rare earth, uranium, tantalum, niobium, rutile, nickel and cobalt exploration portfolio in Malawi, and the Pulawy rare earth separation project in Poland.

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