Mkango reports progress on HyProMag's US ambitions

Mkango Resources, alongside CoTec Holdings, updated the market on the incorporation of HyProMag’s rare earth magnet recycling technology in the United States on Tuesday.

The AIM-traded firm said HyProMag, primarily owned by Mkango and partially by CoTec, is set to explore the feasibility of the technology’s application across US operations.

It said the feasibility study, set to be concluded by mid-2024, was imperative for finalising the operational strategy in the US.

The intended operational design for US operations was a modular, hub-and-spoke model involving an initial installation of three ‘hydrogen processing of magnet scrap’ (HPMS) recycling vessels - the spokes - and a central hub focused on the manufacture of NdFeB alloy and magnets, pending the outcomes of the feasibility study.

Mkango said scoping studies showed an array of production scenarios could be viable.

That would encompass the production of finished magnets, sintered blocks, and alloy products while using up to 100% recycled NdFeB feed.

With an assumed production of 500 tonnes per year of NdFeB magnets and a blended product price of $100 per kilogram, there was potential to generate annual revenues of up to $50m.

Moreover, a targeted EBITDA margin of between 35% and 40% could be realised under various scenarios, demanding an estimated minimal capital expenditure of $30m.

The current subdued market conditions and rare earth prices still hinted at a potential uplift regarding the existing pricing scenario as market conditions ameliorated, alongside further developmental scope optimisation.

Mkango said the US operations’ design basis, product suite, and operating parameters would undergo further verification, refinement, and de-risking as the recycling and magnet manufacturing facilities were inaugurated and production started at Tyseley Energy Park in the United Kingdom.

Tyseley’s first production of rare earth magnets was slated for this year and was being bankrolled by the UK Research and Innovation’ Driving the Electric Revolution’ challenge.

“We are very excited about opportunities for growth in the United States and look forward to working with CoTec and HyProMag as we continue to scale-up and roll-out the HPMS rare earth magnet recycling technology,” said Mkango chief executive officer Will Dawes.

“HPMS has potential to unlock the supply chain for rare earth magnet recycling and it’s fantastic to see this UK developed, homegrown, innovative technology continuing to gain traction internationally.”

At the close on Thursday, shares in Mkango Resources were down 5.88% at 8p.

Reporting by Josh White for Sharecast.com.