Mkango and CoTec Sign Definitive Agreements to Invest in Mkango, Maginito and to Collaborate in Rare Earth Technologies in United States - Seite 2

£2,000,000 Convertible Loan

CoTec has agreed to invest by no later than February 3, 2023 an additional £452,500 (C$744,181) for an aggregate investment of £2,000,000 (C$3,289,200) by way of a convertible loan to Mkango, bearing 5% interest, compounded annually. The Convertible Loan is secured over the shares held by Mkango in Maginito and the terms supersede all previous convertible notes issued by Mkango to CoTec. The Convertible Loan is convertible (both principal and interest) by CoTec (“Mkango Conversion Right”) at any time prior to the maturity date of the Convertible Loan, which is 60 days following the earliest of:

       a)   two years following the date of the Convertible Loan;

b)   the execution of definitive documentation providing for the financing, in whole or substantial part, of the development of the Songwe Hill Rare Earths Project (“Songwe Hill”) in Malawi;

       c)   the sale of all or any material portion of Songwe Hill;

       d)   the execution of any agreement with a party pursuant to which such party is entitled to acquire greater than 50% of Songwe Hill; or

       e)   the date on which any party acquires greater than 50% of the shares of Mkango

(the “Longstop Date”).

The principal amount of £2,000,000 (C$3,289,200) (the “Principal Amount”) may be converted at 27 pence per Mkango share with interest to be converted at the higher of 27 pence per Mkango Share and the price of the Mkango Shares at the time of conversion. The conversion price is subject to customary anti-dilution adjustments.

Provided that the Maginito Investment Closing occurs, CoTec has the option to convert the Principal Amount and interest into Maginito Shares giving it an effective interest, post conversion, of 20.6% of Maginito (“CoTec Maginito Conversion Right”).

In the event that Maginito increases its interest in HyProMag Limited (“HyProMag”) from 42% to 100%, CoTec is required to exercise either the CoTec Maginito Conversion Right or the Mkango Conversion Right within 120 days following such acquisition, if any.

If the Convertible Loan is not converted prior to the Longstop Date, the Company will be required to repay the loan within 60 days following the Longstop Date, provided however that if the Maginito Investment Closing does not occur prior to 15 March 2023, the repayment date for the Convertible Loan will be extended by one year.