Mkango Resources Ltd (AIM:MKA, TSX-V:MKA, OTC:MKNGF) told investors it is very excited about opportunities for growth in the United States for its rare earth recycling venture, in partnership with CoTec.
The HyProMag vehicle (79.4% owned by Mkango, 20.6% owned by CoTec) has now begun planning for the feasibility study, slated to be completed by mid-2024.
It envisages a modular, ‘hub and spoke’ approach comprising an initial deployment of three recycling vessels using ‘Hydrogen Processing of Magnet Scrap’ (or HPMS), using a central manufacturing hub hosting a rare earth (NdFeB) alloy and magnet facility.
Initial predictions include the potential for US$50 million a year of revenue based on an operation that produces some 500 tonnes of product per year. Potential operating scenarios could target EBITDA margins between 35% and 40%, the company added.
Moreover, the company noted that current rare earth market prices are subdued and this is reflected in current modelling, which suggests further economic upsides to the envisaged project should prices recover to their higher previous levels.
“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 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."
Julian Treger, CoTec chief executive, added: “We are very pleased with the progress and the results of the scoping studies. HyProMag US continues to benefit from front-end engineering and development of the plants in the UK and Germany, which significantly de-risks the US operations.
"As the planning for the Feasibility Study commences with our partner Mkango, CoTec is focused on the operational roll-out of the HyProMag technology. HyProMag's exciting recycling technology offers a long-term, sustainable and low carbon solution for the supply of domestic REE magnets.
“Discussions with the US government, potential customers and recycling partners have commenced and are ongoing."
The HPMS technology was developed at the University of Birmingham, backed by around US$100 million of research and development funding, and it is said to provide major competitive advantages compared to other rare earth magnet recycling technologies.
Among the benefits is that HPMS solves the challenges of liberating magnets from end-of-life scrap streams.