CoTec Holdings Corp. and Mkango Resources Ltd. announced that CoTec and Maginito Limited have entered into a binding letter agreement pursuant to which they have agreed a 50:50 joint venture in relation to the United States roll-out of HyProMag?s rare earth magnet recycling technology. HyProMag?s technology will be sublicenced to the new Joint Venture company, HyProMag US, on formation.

HyProMag is 100% owned by Maginito Limited, which is owned on a 90:10 basis by Mkango and CoTec. HyProMag is commercialising rare earth magnet recycling using Hydrogen Processing of Magnet Scrap (HPMS) technology in the UK, Germany and United States, with first production expected in the UK in 2023 and in Germany in 2024. Revenue from the US Joint Venture is targeted for 2025/2026.

The Joint Venture will initially be focused on completing a scoping study and a bankable feasibility study for the deployment of three HPMS vessels utilizing the HyProMag technology and one magnet manufacturing facility in the US (combined the US Project). The Feasibility Study is expected to be completed in 2024. Following completion of the Feasibility Study, CoTec and Mkango would make a joint decision on whether the Joint Venture will proceed with the construction of the US Project.

CoTec will fund the initial operations of the Joint Venture, including the costs of the Feasibility Study. If the Joint Venture proceeds with the construction of the US Project, CoTec will also be responsible for funding all the development costs of the US Project, with a total expected funding of £30 million to £50 million during the first three years post completion of the Feasibility Study, subject to results of the Feasibility Study. All funding provided by CoTec would be in the form of shareholder loans.

CoTec and Mkango also expect that the Joint Venture will seek US government funding for the US Project. The parties have agreed that certain long lead items could be pre-ordered to expedite, subject to approval, the development of the US Project. A comprehensive joint venture agreement dealing with all other commercial aspects of the US Project, consistent with the terms of the existing cooperation agreement between CoTec and Mkango, will be agreed by the parties in parallel with the completion of the Feasibility Study.