Mkango Resources Expedites Magnet Finishing in Texas with HyProMag USA Aiming for H1 2027 Launch

Accelerated Magnet Finishing as a Strategic Step Toward Integrated Texas Hub Operations

Mkango Resources and joint venture partner CoTec Holdings Corp have expedited the timeline for HyProMag USA's magnet finishing capabilities within a phased commissioning approach for the Texas Hub. The updated plan targets commissioning of initial finished NdFeB magnet production equipment in H1 2027, several months ahead of the fully integrated facility. This early finishing operation marks a strategic shift, prioritizing downstream magnet production and customer engagement before full integration of recycling and manufacturing capacities. This approach enables HyProMag USA to establish a presence in the U.S. magnet market while continuing detailed engineering and procurement for the HPMS section.

The phased strategy acknowledges the specialized nature of magnet finishing within the supply chain. Mkango Resources CEO Will Dawes stated this positions HyProMag to supply finished magnets to customers in the UK, Germany, the USA, and other markets. Early finishing capability allows direct collaboration with U.S. customers on product specifications and qualification programs alongside Texas Hub development. This staged commissioning reduces execution risk by separating finishing operations from the more complex HPMS recycling process, enabling operational demonstration and customer commitment ahead of full facility integration.

Supply Chain Strategy Utilizing HyProMag Group’s European Magnet Block Production

HyProMag USA’s initial finishing operations will rely on magnet blocks imported from HyProMag Group’s established UK and German facilities. Up to 20 tonnes of magnet blocks will be shipped to Texas for shaping, cutting, coating, and finishing to meet customer requirements. This arrangement ensures continuity for HyProMag’s European customers, with no impact on finished magnet supply from UK and Germany operations. The strategy addresses the complexity of launching a new finishing plant while safeguarding established revenue streams.

Dependence on imported magnet blocks introduces supply chain risks that investors should consider. Continued performance of UK and German operations and availability of magnet blocks to specification are critical to meeting the H1 2027 commissioning and production targets. Disruptions from equipment issues, supply constraints, or regulatory changes could affect timelines. However, this setup provides flexibility for HyProMag USA to build customer relationships and market presence as the HPMS recycling infrastructure is developed.

Integrated HPMS Operations and Domestic Feedstock Integration Planned for Q2 2028

Following magnet finishing commissioning in H1 2027, HyProMag USA aims to commission the Texas Hub’s HPMS section and integrated magnet manufacturing in Q2 2028. At this stage, U.S.-sourced magnet-bearing feedstock will be incorporated into domestic recycling and manufacturing, shifting from reliance on imported magnet blocks to a fully integrated platform covering magnet recovery, recycling, manufacturing, and finishing. The HPMS technology, backed by over 15 years and US$100 million in R&D, offers rapid magnet-to-magnet short-loop recycling using 88% less energy and reducing carbon emissions by 85% compared to conventional methods.

This integrated expansion aligns with HyProMag USA’s core goal of recycling rare earth magnets into customer-ready products. Progress includes establishing relationships with multiple feedstock sources beyond hard disk drives, such as rotors, MRI machines, and actuators. Several large recyclers are engaged, with quality and recoverability testing imminent. CoTec Holdings CEO Julian Treger highlighted HPMS technology’s unique, energy-efficient, and cost-effective magnet recovery from assemblies with embedded magnets, providing a competitive advantage.

Production Capacity Targets and Phased Ramp-Up Plan

Post-HPMS commissioning in Q2 2028, HyProMag USA targets initial annual production of approximately 400 metric tonnes of recycled sintered NdFeB magnets and about 278 metric tonnes of NdFeB co-products, totaling roughly 678 metric tonnes of payable NdFeB material. This initial phase represents early ramp-up, with additional equipment installations planned to reach the Texas Hub’s full annual capacity target of approximately 1,526 metric tonnes of magnetic products. This staged expansion mitigates capital risk and allows operational learning and customer development.

These specific production goals provide measurable milestones for investors and stakeholders. However, forward-looking disclaimers note that actual capacity, quality, and ramp-up rates may vary due to factors including equipment delivery, feedstock availability and quality, customer qualification success, and regulatory or trade changes. Procurement of long-lead equipment has started alongside ongoing engineering, feedstock aggregation, customer offtake, and financing discussions.

Advancement of Detailed Design Study and Capital Cost Estimation

The Texas Hub’s Class 2 AACE Capital Cost Estimate and Detailed Design Study is being led by independent engineering firms PegasusTSI and BBA, currently about 38% complete. The study includes operational optimization and updated capital cost profiling. A 3D plant model based on the Q4 2025 Class 2 estimate has been completed, with a video model publicly available. This design progress is critical for confirming project economics and capital costs, which underpin financing and ownership decisions, including the potential U.S. listing.

Independent engineering involvement adds technical rigor and third-party validation. Nonetheless, risks remain that the study may not conclude as expected or support projected economics. Investors should expect phased updates on capital costs and performance as the study advances. Completion timing and updated cost estimates have not been disclosed.

Customer Engagement and Sample Magnet Distribution Indicate Market Interest

HyProMag USA has begun active customer engagement, supplying initial sample magnets to potential U.S. customers. Collaboration with UK and German operations is increasing sample availability to meet demand. Engagement spans smaller customers and OEMs across North America, serving to validate the business model, refine product specifications, and build customer relationships ahead of commercial production.

This market-driven approach allows customer requirements to shape product development and manufacturing. The initial finishing line will convert magnet blocks into customer-ready magnets tailored to specific dimensions, tolerances, coatings, and performance standards. This addresses a critical U.S. supply chain gap, as magnet finishing is a specialized, technically demanding process with limited domestic capacity. However, details on customer numbers, sample volumes, identities, or anticipated orders remain undisclosed.

Mkango Resources’ Strategic Role in Rare Earth Recycling

Mkango Resources holds a 79.4% stake in Maginito Limited, which owns 100% of HyProMag Limited and a 90% direct and indirect interest in HyProMag GmbH (assuming conversion of Maginito’s convertible loan). Through these holdings, Mkango controls HyProMag’s magnet recycling operations in the UK, Germany, and the U.S. via the 50:50 joint venture HyProMag USA. Mkango aims to lead in recycled rare earth magnets, alloys, and oxides production while developing sustainable sources of neodymium, praseodymium, dysprosium, and terbium to meet growing demand from EVs, wind turbines, and clean energy technologies.

Mkango’s portfolio extends beyond recycling to long-loop rare earth separation and primary production. Maginito owns 100% of Mkango Rare Earths UK Ltd, focused on chemical-route magnet recycling in the UK. Mkango also owns the advanced Songwe Hill rare earths project in Malawi and the proposed Puławy rare earths separation plant in Poland, both designated Strategic Projects under the EU Critical Raw Materials Act and supported by U.S. International Development Finance Corporation funding. Mkango has signed a Business Combination Agreement with Crown PropTech Acquisitions to list Songwe Hill and Puławy projects on NASDAQ via a SPAC merger as Mkango Rare Earths Limited. This diversified portfolio spans both supply-side magnet recovery and demand-side primary rare earth production.

Potential U.S. Listing of HyProMag USA and Ownership Implications

In December 2025, CoTec Holdings Corp and Mkango Resources Ltd announced exploration of a potential U.S. listing for HyProMag USA. The current update confirms engagement with advisors and investment banks to evaluate this possibility. A separate U.S. listing would significantly restructure Mkango’s portfolio, impacting capital structure, ownership, and market valuation. However, no commitment has been made to proceed.

HyProMag USA is currently owned equally by CoTec Holdings Corp (TSXV: CTH; OTCQX: CTHCF) and HyProMag Limited, which is wholly owned by Maginito Limited. Maginito is 79.4% owned by Mkango Resources Ltd and 20.6% by CoTec Holdings Corp. A U.S. listing would require complex negotiations on ownership dilution, governance, and capital allocation. No timeline, valuation, or transaction details have been disclosed. Investors should closely monitor developments as the listing evaluation progresses due to its potential impact on Mkango’s portfolio and capital availability.

Project Financing and Detailed Engineering Progress

HyProMag USA continues advancing detailed engineering and project financing in parallel with equipment procurement and customer engagement. Long-lead equipment procurement has begun, including HPMS vessels and magnet finishing equipment tailored to U.S. market needs based on customer feedback. A staged procurement strategy aims to mitigate supply risks and enable measured production ramp-up. The announcement does not disclose total capital costs, committed capital, financing structure, or capital required for full commissioning in Q2 2028.

Project financing availability on acceptable terms is a key assumption underlying the timeline. Risks exist that financing may not be secured as needed, potentially delaying or preventing commissioning. Financing needs will evolve with the Class 2 AACE capital cost estimate and detailed design study. Future announcements are expected to provide updates on capital costs, financing arrangements, and capital contributions from Mkango or CoTec Holdings.

Regulatory, Trade, and Supply Chain Risks Impacting Execution

Forward-looking disclaimers highlight risks including equipment delivery delays, supply constraints, export controls, trade restrictions, tariffs, and availability or quality of magnet-bearing feedstock. The evolving U.S. regulatory environment emphasizes supply chain security and domestic production but may impose export controls affecting equipment or technical support availability, impacting commissioning timelines.

Additional risks involve development and performance of proprietary HPMS technology, which is central to recycling operations and supported by over US$100 million in R&D. Technical challenges scaling to commercial production could delay HPMS commissioning and affect capacity targets. Competition, demand fluctuations, and pricing changes for NdFeB magnets and rare earths may influence market opportunities and financial outcomes. Permitting, environmental compliance, contractor performance, and economic disruptions also present uncertainties.