Mkango Resources Ltd (AIM:MKA, TSX-V:MKA, OTC:MKNGF) announced a proposed £3.5mln investment by CoTec Holdings Corp, an ESG-focused investor in innovative technologies, and said the companies agreed to collaborate on future investments in rare earth processing technology opportunities in the US.
CoTec will invest £2mln in Mkango through a two-year, unsecured convertible note with 5% interest, convertible into Mkango shares at 27p each.
The investment will provide Mkango with additional working capital as it advances financing discussions for the Songwe Hill rare earths project in Malawi and the Pulawy separation plant project in Poland.
CoTec will also acquire a 10% stake in Mkango's subsidiary, Maginito Ltd, for £1.5mln, giving CoTec a strategic investment in downstream rare earth technologies.
“We are very pleased to take this step towards collaborating with CoTec in the rare earths sector,” said Mkango chief executive William Dawes.
“The proposed investments would increase Mkango's financial flexibility, creating a strong platform to grow Maginito and for future expansion into the US market, whilst the integrated development of Songwe and the Pulawy separation plant continues in parallel."
Maginito is focused on developing green technology opportunities in the rare earths supply chain, encompassing neodymium (NdFeB) magnet recycling and innovative rare earth alloy, magnet and separation technologies.
"Our collaboration with, and investment in, Mkango and Maginito are consistent with CoTec's focus on investing in innovative, green and scalable technologies in the mineral extraction industry," said CoTec chief executive Julian Treger.
CoTec will advance £500,000, no later than June 20, in consideration of a four-month exclusivity period.
Mkango also said its wholly owned subsidiary, Mkango Rare Earths UK Ltd, will become a wholly owned subsidiary of Maginito.