Mkango Subsidiary Maginito Completes the Acquisition of a 25% Interest in Hypromag, a University of Birmingham Spinout Focused on Rare Earth Magnet Recycling

LONDON and VANCOUVER, British Columbia, Jan. 10, 2020 (GLOBE NEWSWIRE) -- Mkango Resources Ltd. (AIM/TSX-V: MKA) (the "Company" or "Mkango") is pleased to announce that its subsidiary, Maginito Limited (“Maginito”), has completed the acquisition of an initial 25% interest in HyProMag Limited (“HyProMag”), a private, United Kingdom-based company focused on rare earth magnet recycling, as previously announced on 23 September 2019 (the “Transaction”). Maginito has invested an initial £300,000 for a 25% interest in HyProMag, and has an option to invest a further £1 million to increase its interest up to 49%.

Maginito is 75.5% owned by Mkango, which is completing a Feasibility Study for the Songwe Hill rare earths project in Malawi, and 24.5% owned by Talaxis Limited (“Talaxis”), a wholly-owned subsidiary of Noble Group Holdings Limited (“Noble”) focused on technology metals investment and development. Maginito is a related party of Mkango, Talaxis and Noble.

Consistent with Maginito’s strategy focused on downstream opportunities relating to the rare earths supply chain, the Transaction will generate potential synergies, such as first right to supply primary production if required for blending with recycled production from HyProMag, as well as product offtake and marketing rights, leading to enhanced marketing flexibility and access to downstream markets for rare earth permanent magnets, which are critical materials for electric vehicles, wind turbines, consumer electronics and other technology applications.

Highlights of the Transaction include:

• HyProMag has licenced a patented process for extracting and demagnetising neodymium iron boron (“NdFeB”) alloy powders from magnets embedded in scrap and redundant equipment named HPMS (Hydrogen Processing of Magnet Scrap). This was originally developed within the Magnetic Materials Group (“MMG”) at the University of Birmingham (“UoB”).
• Maginito has invested £300,000 for an initial 25% interest in HyProMag and provided a £200,000 convertible loan facility, both of which will be fully funded from Maginito’s existing cash resources which are earmarked for such strategic investments. Maginito has a four-year option to increase its interest in HyProMag to up to 49% by investing an additional £1 million. Maginito has a right of first refusal to acquire the balance of HyProMag.
• The founding directors of HyProMag, comprising Professor Emeritus Rex Harris, former Head of the MMG, Professor Allan Walton, current Head of the MMG, and two Honorary Fellows, Dr John Speight and Mr David Kennedy, are leading world experts in the field of rare earth magnetic materials, alloys and hydrogen technology, and have significant industry experience. Pursuant to the Transaction, HyProMag has appointed William Dawes, a Director of Maginito and CEO of Mkango, to join the Board of HyProMag.
• Maginito’s initial investment of £300,000 will fully satisfy HyProMag’s matched funding requirements for the three year, £2.6 million Innovate UK grant funded project, “Rare-Earth Recycling for E-Machines” (“RaRE”), which aims to establish a pilot rare earth magnet recycling facility at Tyseley Energy Park, Birmingham (“Tyseley”), to produce sintered rare earth (NdFeB) magnets for use in new electric motor designs for automotive use, and includes Advanced Electrical Machines Research Limited and UoB as collaborators.

William Dawes, Chief Executive of Mkango stated: “We are very pleased to become a substantial shareholder of HyProMag via Maginito and look forward to working with the HyProMag team, supporting the future growth of the company and development of this very exciting technology. We see rare earth magnet recycling as a major growth industry, complementing the development of new sustainable primary production, such as Mkango’s advanced stage Songwe Hill rare earths project in Malawi. This investment further enhances Mkango’s role in developing a robust and sustainable electric vehicle and clean technology supply chain for global markets.”