Canada-based Mkango Resources has signed an all-stock deal worth £13m with its joint venture partner Talaxis to regain 100% ownership of the Songwe Hill rare earths project in Malawi.
As per the terms of the deal, Mkango Resources will acquire the 49% stake held by the Noble Group subsidiary in Lancaster Exploration, the joint venture, which owns the rare earths project.
The Canadian firm will also acquire Talaxis’ stake of 24.5% in Maginito, which has an interest of 25% in HyProMag, a rare earths magnet recycler.
Upon closing of the deal, Mkango Resources will also get full ownership of Maginito in which it already has a stake of 75.5%. This will be in addition to the company’s existing 100% interests in Mkango Polska and three exploration licences in Malawi, which include the Mchinji exploration project.
Mkango Polska is focused on developing a rare earth separation plant in Poland.
Talaxis will be issued 54.1 million shares of Mkango Resources as consideration for the deal. As a result, Talaxis will increase its stake in Mkango Resources from 11.3% to 32.6%.
Noble Group corporate development head Stephen Motteram said: “With the increasing electrification of the global economy, Talaxis sees significant growth in the permanent magnet market, especially from EVs and wind power.
“This corporate reorganisation allows Talaxis to better share in the upside from Mkango’s integrated Mine, Refine, Recycle strategy, which includes the recently announced and highly attractive Pulawy Separation Plant project in Poland and Mkango’s strategic interest in rare earths magnet recycler, HyProMag.”
For Mkango Resources, the deal will help it consolidate assets and offtake under its control, boost its financial flexibility, and support its future growth strategy.
The company said that simplifying the ownership structure of the Songwe Hill rare earths project improves optionality for its development funding. This includes the possible introduction of additional strategic investors as well as development partners.
Mkango Resources said that it is fully funded to wrap up the feasibility study for the rare earths project in Q1 2022.
Mkango Resources non-executive chairman Derek Linfield said: “This transaction brings material benefits to both Mkango and Talaxis and strengthens Mkango’s position as a future integrated supplier of rare earths.
“Talaxis has strongly supported the advancement of Songwe Hill and Maginito since its initial investments in 2017, subsequent to which Mkango has grown downstream, adding investments in recycling (via HyProMag) and the Separation Plant in Poland. At the same time, market conditions for rare earths have improved markedly.”
“We believe this transaction delivers a better platform to create value and a structure more aligned with the strategies of both companies.”
