Mr. William Dawes reports

MKANGO RELEASES SECOND QUARTER 2024 RESULTS

Mkango Resources Ltd. has released its financial statements and management's discussion and analysis for the three-month period ending June 30, 2024. The reports are available under the company's profile on SEDAR+ and on the company's website.

Recent financings

Subsequent to the quarter-end, the company announced the following financings:

• On Aug. 21, 2024, the company conditionally raised gross proceeds of 1.25 million pounds sterling (approximately $1.58-million (U.S.)) through the issuance, on a private placement basis, of 25 million units of the company at a price of 0.05 pound sterling per unit (approximately 6.3 U.S. cents). A unit consists of one common share of the company and one warrant. Each warrant will entitle the holder to acquire one common share at a price of 0.07 pound sterling (approximately 8.9 U.S. cents) per common share for a period of three years following the closing of the subscription, which is expected to close on or about Sept. 5, 2024. This placing will allow the company to acquire additional equipment for the 2025 commercial development of HyProMag's rare earth magnet recycling operations at Tyseley Energy Park in Birmingham in the United Kingdom and its recycling operation at Pforzheim, Germany, in addition to increasing working capital.
• On Aug. 21, 2024, EIT RawMaterials provided financing of 200,000 euros (approximately $214,111 (U.S.)). This will finance the commencement of process optimization for the Songwe Hill rare earth project in Malawi, a future source of mixed rare earth carbonate feed for the Pulawy project.
• Following the 1.25 million pounds sterling ($1.58-million (U.S.)) raised in August, 2024, from existing shareholders and the investment from EIT, Mkango remains well positioned to cement its leading position and early mover advantage in rare earth magnet recycling.
• On Aug. 29, 2024, it was announced that HyProMag GmbH (HyproMag Germany) is participating in the eight-million-euro-grant-financed Greene project, of which HyProMag Germany will receive 350,125 euros.

Second quarter highlights:

• During the second quarter, Mkango continued to advance its recycling interests in the U.K. and Germany toward commercial production in 2025 via HyProMag. In parallel, the company progressed the continuing feasibility study for HyProMag USA LLC. It is reviewing strategic options for the Songwe Hill rare earth project and Pulawy rare earth separation project in Malawi and Poland, respectively. Discussions are continuing with potential strategic investors, project finance providers, grant funding bodies and other sources, to support recycling scale-up opportunities and further technology rollout.
• During the period, Mkango Rare Earths U.K. Ltd. (Mkango U.K.) successfully commissioned a pilot plant producing separated magnet rare earths (neodymium/praseodymium and dysprosium/terbium carbonates or oxides) via a long-loop recycling process.
• A non-binding memorandum of understanding (MoU) was signed between HyProMag and Envipro Holdings Inc. to launch a collaboration on rare earth magnet recycling in Japan and the U.K.
• Mkango completed a financing of 750,000 pounds sterling ($955,000 (U.S.)) in April, 2024, including a 150,000-pound-sterling ($191,000 (U.S.)) investment by Mkango chief executive officer William Dawes.
• Additionally, the company undertook a significant cost-cutting exercise in the quarter and focused its activities on the recycling business, enabling a 35-per-cent reduction in continuing operating cost requirements for the business.
• Loss after tax for the quarter ended June 30, 2024, was $659,320 (U.S.), compared with $1,085,092 (U.S.) for the quarter ended June 30, 2023.

Other subsequent events:

• On July 15, 2024, the findings of the mid-project review for the bankable feasibility study for HyProMag USA were announced. Canada-based BBA USA Inc. and United States-based PegasusTSI Inc. have been engaged to complete the U.S. feasibility study, and to engineer and design its REE (rare earth element) magnet recycling plants and a production facility in the U.S. HyProMag USA has the potential to supply the U.S. market with a sustainable, long-term domestic supply of neodymium/iron/boron (Nd/Fe/B) permanent magnets to enable the creation of secure, low-carbon and traceable rare earth supply chains. With completion of the U.S. feasibility study expected by the end of 2024, a positive production decision in H1 (first half) 2025 is expected to result in initial revenue from HyProMag USA in H2 (second half) 2026.
• In late July, 2024, Lancaster Exploration Ltd., a British Virgin Islands company, and Lancaster Exploration Ltd., a Malawi company, both 100-per-cent-owned subsidiaries of Mkango-and the government of Malawi signed the mineral development agreement (MDA) for the Songwe Hill rare earth project (Songwe Hill) in Malawi. This is expected to enable further value to be unlocked from the Songwe Hill and Pulawy rare earth separation plant projects as part of the company's continuing evaluation of strategic options for these assets. The feasibility study for Songwe Hill and subsequent work identified a number of areas for potential cost optimization, and the company continues to evaluate these and other cost reduction opportunities in light of the currently weak rare earth market pricing environment.

Near-term catalysts:

• Completion of HyProMag USA feasibility study is targeted by the end of 2024. The scope of operations comprises a hub and spoke model, with three HPMS spokes and one magnet manufacturing hub located in Texas. A production decision for HyProMag USA is expected in H1 2025.
• Full commissioning of the short-loop HPMS recycling plant in the U.K. and initial commercial sales of NdFeB by HyProMag are targeted for Q1 2025.
• HyproMag Germany first commercial production in Germany is targeted for 2025.

Investor webinar

The company will host an investor webinar on Thursday, Sept. 5, 2024, at 5 p.m. U.K. time (12 p.m. Eastern Time). Please register and submit any questions on-line.

Webinar:  Mkango corporate update, September, 2024, by Share Talk

About Mkango Resources Ltd.

Mkango is listed on the 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 Germany, focused on short-loop rare earth magnet recycling in the U.K. and Germany, respectively, and a 100-per-cent interest in Mkango U.K., 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 U.S. via the 50/50-owned HyProMag USA.

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.

We seek Safe Harbor.