MKANGO RESOURCES LTD.
550 Burrard Street
Suite 2900
Vancouver
BC V6C 0A3
Canada
MKANGO RAISES £750,000 (C$1.3M) TO
ADVANCE RARE EARTH MAGNET RECYCLING IN UNITED KINGDOM AND GERMANY,
AND LAUNCHES STRATEGIC REVIEW
Highlights
· Mkango Resources ("Mkango" or
the "Company") has conditionally raised gross proceeds of £750,000
(C$1.3M) via a direct Company subscription from existing
shareholders, including a £150,000 investment by Mkango CEO William
Dawes
· Use of proceeds include the
acquisition of additional equipment to underpin HyProMag's
transition to first commercial sales of recycled NdFeB at Tyseley
Energy Park in Birmingham, UK targeted for H2 2024, and orders of
long lead time equipment in Germany, unlocking additional grant
funding
· Discussions are ongoing with
potential strategic investors, project finance providers, grant
funding bodies and other sources to finance recycling scale-up
opportunities and further technology roll-out
· The Company has completed a
significant cost cutting exercise in recent months, whilst
streamlining operations to focus on recycling, which has enabled a
significant reduction in the ongoing capital requirements for the
business
· Mkango is launching a review
of strategic options for its advanced stage Songwe Hill Rare Earth
Project in Malawi and Pulawy Rare Earth Separation Project in
Poland
London / Vancouver: March 25, 2024 - Mkango Resources Ltd. (AIM/TSX-V: MKA) is pleased to
announce that it has conditionally raised gross proceeds of
£750,000 (approximately C$1.3 million) through the issuance, on a
private placement basis, of 15,000,000 common shares of the Company
(the "Subscription Shares") at a price per Subscription Share of 5
pence ("p") (approximately C$0.086) (the
"Subscription").
William Dawes, Chief
Executive of Mkango stated: "Mkango sounded out the market
in January of this year with a view to considering a fund raising
to pursue all of Mkango's existing business lines. Given the share
price decline during this period, the Company has decided to
minimise shareholder dilution at the current share price by raising
a relatively small amount of money from existing shareholders and
myself in order to enable the Company to achieve key milestones for
HyProMag. In addition, to ensure enough financial runway to achieve
these goals, the Company has implemented a cost cutting exercise
which will materially reduce the Company's monthly cash burn.
As part of this process, the Company
has decided to launch a review of strategic options for its Songwe
Hill Rare Earths Project in Malawi as well as the Pulawy Rare
Earths Separation Project in Poland. Mkango believes this strategic
review will help maximise returns for its shareholders whilst it
seeks to expand its recycling business."
Recycling Near-Term Milestones
HyProMag is commercialising Hydrogen
Processing of Magnet Scrap ("HPMS") recycling technology in the UK,
Germany and United States. HPMS technology
was developed at the University of Birmingham, underpinned by
approximately US$100 million 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 the
solution.
Near term milestones for the
recycling business include full commissioning of the recycling
plant in the UK with initial commercial sales of NdFeB by HyProMag
targeted for H2 2024, commissioning of the pilot scale (chemical
route) recycling plant in UK to produce rare earth oxides and
carbonates in H1 2024 and completion of the USA Feasibility Study
in H2 2024. Initial production in the UK is targeted at 25-30tpa
NdFeB with significant expansion potential.
Based on scaled-up production
scenarios for the recycling business, scoping studies to date
indicate potential to generate annual revenue of up to US$50m per
site and strong margins at current prices across multiple
production centres starting with the UK (100-350tpa), followed by
Germany (126-380tpa) and the United States (500tpa), with other
jurisdictions such as Japan and Canada being evaluated.
The proposed operating configuration
for UK and Germany operations are similar and comprise a Hydrogen
Processing of Magnet Scrap (HPMS) recycling vessel, a powder
processing plant, presses, sintering furnaces and other magnet
manufacturing equipment to produce NdFeB alloys, sintered blocks
and finished magnets.
As announced previously, the
proposed operating configuration for the United States operations
is a modular, hub and spoke model, with the initial deployment of
three Hydrogen Processing of Magnet Scrap (HPMS) recycling vessels
at the spokes and a central hub comprising of rare earth (NdFeB)
alloy and magnet manufacturing, subject to the outcome of the
recently commenced USA Feasibility Study which is being funded by
CoTec Holdings Inc ("CoTec").
The
Subscription
Mkango has conditionally raised
gross proceeds of £750,000 (approximately C$1.3 million) through
the issuance, on a private placement basis, of 15,000,000
Subscription Shares at a price per Share of 5p (approximately
C$0.086). The net proceeds of the Subscription after fees is
expected to be £720,000 (approximately C$1.2 million). The issue
price equates to a discount of 25.7% and 21.8% to the trailing
five-day volume weighted average price ("VWAP") of Mkango's shares
on AIM and TSX-V respectively. The Company intends to use the net
proceeds of the Subscription to acquire additional equipment for
the UK recycling business to underpin HyProMag's transition to
first commercial sales of recycled NdFeB in the UK targeted for H2
2024, orders of long lead time equipment in Germany, and to fund
ongoing recycling and corporate costs.
William Dawes, CEO and a director of
the Company, has agreed to subscribe for 3,000,000 Subscription
Shares, for £150,000. Following the Subscription, William
Dawes will be the beneficial owner of, and will directly or
indirectly control, a total of 12,521,443 Shares in the Company,
which will represent 4.66% per cent. of the enlarged share capital
of the Company (post-completion of the entire Subscription).
Following completion of the Subscription, William Dawes will hold
3,975,238 Shares in his own name, with 8,546,205 of the Shares
controlled through Leo Mining & Exploration Limited, a company
in which William Dawes is a Director and of which he owns 17.3% of
the issued and outstanding shares.
Following the Subscription,
Resources Early Stage Opportunity Company Ltd will be the
beneficial owner of a total of 15,999,747 Shares in the Company,
which represents 5.96% per cent of the enlarged share
capital.
The Subscription is expected to
close on or around 10th April, 2024 and is subject to
the receipt of all necessary approvals including the approval of
the TSX-V, and admission of the Subscription Shares to trading on
AIM.
The Subscription Shares will rank
pari passu with the Company's existing shares and application has
been made for the Subscription Shares to be admitted to trading on
AIM ("Admission"). It is expected that Admission will become
effective and dealings in the Subscription Shares will commence at
8:00am on or around 10th April, 2024. The Subscription
Shares will be subject to a statutory hold period in Canada
expiring on the date that is four months and one day from issuance
of the Subscription Shares, and will also be listed for trading on
the TSX-V, provided that approval of such listing from the TSX-V is
obtained.
In accordance with the Disclosure
Guidance and Transparency Rules (DTR 5.6.1R) the Company hereby
notifies the market that immediately following Admission of the
Subscription Shares, its issued and outstanding share capital will
consist of 268,453,574 shares. The Company does not hold any shares
in treasury. Shareholders may use this figure as the denominator
for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest
in, the Company under the Financial Conduct Authority's Disclosure
and Transparency Rules.
In connection with the Subscription, Mkango has
agreed to pay, at completion of the Subscription, commissions of 5%
in cash and 5% in non-transferable broker warrants to Jub Capital
Management LLP ("Jub Capital") on funds raised by Jub Capital. The
broker warrants will have a term of 3 years from issue and an
exercise price of 5p each (approximately C$0.086). The
total number of broker warrants to be issued on completion of the
Subscription is 600,000. Payment of the commissions (and issuance
of the warrants) to Jub Capital is subject to acceptance of the
TSX-V. The shares issuable pursuant to exercise
of the broker warrants will be subject to a statutory hold period
in Canada expiring on the date that is four (4) months and one day
from issuance of the warrants. SP Angel Corporate Finance LLP
will be paid a corporate finance fee of £3,000.
The issuance of the Subscription
Shares to William Dawes, CEO and a director of Mkango, constitutes
a related party transaction under Multilateral Instrument 61-101 -
Protection of Minority Security Holdings in Special Transactions
("61-101"). The issuance of the Subscription Shares to
William Dawes is exempt from the formal valuation requirements of
Section 5.4 of MI 61-101 pursuant to Subsection 5.5(b) of MI 61-101
as no securities of the Company are listed on certain exchanges
specified by MI 61-101. The issuance of the Subscription
Shares to William Dawes is also exempt from the minority
shareholder approval requirements of Section 5.6 of MI 61-101
pursuant to Subsection 5.7(1)(a) of MI 61-101 as, at the time such
issuance was agreed to, neither the fair market value of the
issuance matter of the issuance nor the consideration therefor
exceeded 25% of Mkango's fair market capitalisation. The
issuance of the Subscription Shares to William Dawes was approved
by the board of directors of Mkango, with William Dawes abstaining
from voting.
Related party transaction under the AIM Rules for Companies
(the "AIM Rules")
As William Dawes is a director of
the Company, his participation in the Subscription also constitutes
a related party transaction pursuant to Rule 13 of the AIM Rules.
The directors of Mkango, other than William Dawes, consider, having
consulted with SP Angel Corporate Finance LLP, the Company's
nominated adviser, that the terms of Mr Dawes' participation in the
Subscription, are fair and reasonable insofar as the Company's
shareholders are concerned.
About Mkango Resources Ltd.
Mkango is listed on the AIM and the TSX-V. 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 Limited ("Maginito"), 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 UK
and Germany, respectively, and a 100 per cent interest in Mkango
Rare Earths UK Ltd ("Mkango UK"), focused on long loop rare earth
magnet recycling in the UK 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.
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 ongoing.
For more information, please
visit www.mkango.ca
Market Abuse Regulation (MAR) Disclosure
The information contained within this
announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ('MAR') which has been
incorporated into UK law by the European Union (Withdrawal) Act
2018. Upon the publication of this
announcement via Regulatory Information
Service, this inside information is now considered to be in the
public domain.
Cautionary Note Regarding Forward-Looking
Statements
This news release contains forward-looking statements
(within the meaning of that term under applicable securities laws)
with respect to Mkango. Generally, forward looking statements can
be identified by the use of words such as "targeted", "plans",
"expects" or "is expected to", "scheduled", "estimates" "intends",
"anticipates", "believes", or variations of such words and phrases,
or statements that certain actions, events or results "can", "may",
"could", "would", "should", "might" or "will", occur or be
achieved, or the negative connotations thereof. Readers are
cautioned not to place undue reliance on forward-looking
statements, as there can be no assurance that the plans, intentions
or expectations upon which they are based will occur. By their
nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties, both general and
specific, that contribute to the possibility that the predictions,
forecasts, projections and other forward-looking statements will
not occur, which may cause actual performance and results in future
periods to differ materially from any estimates or projections of
future performance or results expressed or implied by such
forward-looking statements. Such factors and risks include, without
limiting the foregoing, receipt of TSX-V approval for the
Subscription, the availability of (or delays in obtaining)
financing to develop Songwe Hill, and the various recycling plants
in the UK, Germany and the US as well as the separation plant in
Poland, governmental action and other market effects on global
demand and pricing for the metals and associated downstream
products for which Mkango is exploring, researching and developing,
geological, technical and regulatory matters relating to the
development of Songwe Hill, the ability to scale the HPMS and
chemical recycling technologies to commercial scale, competitors
having greater financial capability and effective competing
technologies in the recycling and separation business of Maginito
and Mkango, availability of scrap supplies for recycling
activities, government regulation (including the impact of
environmental and other regulations) on and the economics in
relation to recycling and the development of the various recycling
and separation plants of Mkango and Maginito and future investments
in the United States pursuant to the cooperation agreement between
Maginito and CoTec, the outcome and timing of the completion of the
feasibility studies, cost overruns, complexities in building and
operating the plants, and the positive results of feasibility
studies on the various proposed aspects of Mkango's, Maginito's and
CoTec's activities. The forward-looking statements contained in
this news release are made as of the date of this news release.
Except as required by law, the Company disclaims any intention and
assume no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by applicable law. Additionally,
the Company undertakes no obligation to comment on the expectations
of, or statements made by, third parties in respect of the matters
discussed above.
For further
information on Mkango, please contact:
Mkango Resources
Limited
William
Dawes
Alexander Lemon
Chief Executive
Officer
President
will@mkango.ca
alex@mkango.ca
Canada: +1 403 444 5979
www.mkango.ca
@MkangoResources
SP Angel Corporate
Finance LLP
Nominated Adviser and Joint Broker
Jeff Keating, Caroline Rowe, Kasia Brzozowska
UK: +44 20 3470 0470
Alternative Resource
Capital
Joint Broker
Alex Wood, Keith Dowsing
UK: +44 20 7186 9004/5
Tavistock
Communications
PR/IR Adviser
Jos Simson, Cath Drummond
UK: +44 (0) 20 7920 3150
mkango@tavistock.co.uk
The TSX Venture Exchange has
neither approved nor disapproved the contents of this press
release. Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy any equity or other securities of
the Company in the United States. The securities of the Company
will not be registered under the United States Securities Act of
1933, as amended (the "U.S. Securities Act") and may not be offered
or sold within the United States to, or for the account or benefit
of, U.S. persons except in certain transactions exempt from the
registration requirements of the U.S. Securities
Act.
NOTIFICATION AND PUBLIC DISCLOSURE OF TRANSACTIONS BY PERSONS
DISCHARGING MANAGERIAL RESPONSIBILITIES AND PERSONS CLOSELY
ASSOCIATED WITH THEM:
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1
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Details of the person discharging managerial responsibilities
/ person closely associated
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a)
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Name
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William Dawes
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2
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Reason for the notification
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a)
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Position/status
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Chief Executive Officer
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b)
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Initial notification
/Amendment
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Initial
Notification
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3
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Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
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a)
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Name
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Mkango Resources
Ltd
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b)
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LEI
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213800RPILRWRUYNTS85
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4
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Details of the transaction(s): section to be repeated for (i)
each type of instrument; (ii) each type of transaction; (iii) each
date; and (iv) each place where transactions have been
conducted
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a)
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Description of the financial
instrument, type of instrument
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common shares of nil par value
each
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Identification code
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ISIN: CA60686A4090
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b)
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Nature of the transaction
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Subscription
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c)
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Price(s) and volume(s)
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Price(s)
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Volume(s)
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5 pence
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3,000,000
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d)
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Aggregated information
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N/A - single transaction as above
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- Aggregated volume
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- Price
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e)
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Date of the transaction
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25 March 2024
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f)
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Place of the transaction
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Outside a trading venue
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