Today’s RNS from Mkango tells us
Commercial production at Tyseley is targeted for mid-2024, with initial throughput targeted at 20 tonnes per annum ("tpa") rare earth magnets and alloys, scaling up to a minimum of 100tpa in subsequent months. Larger scale up scenarios of up to 1,000tpa are currently being evaluated.
So Project SCREAM within Maginito (a subsidiary of Mkango) is on track. With NdPr currently at £100k/tonne, that’s £2m revenue by mid ‘24 becomes £10m revenue later in 2024. Evaluation for £100m revenue is underway.
Scrap magnets are a problem - what do you with end of life magnets? Currently they are shipped to China where the process for recycling is messy and highly polluting.
The patented process from Mkango is 88% more energy efficient using a stream of hydrogen rather than toxic chemicals to achieve separation. It also achieves another kind of separation - the kind that deglobalisation and security of supply chains is forcing. China produces 92% of the world rare earth magnets.
The UK demo plant is just part of three recycling plants MKA are progressing. There is a German and US plant also. Today’s announcement and progress is positive. As I set out in my prior article on Mkango the value of the recycling business alone justifies the current share price - let alone that MKA own Songwe.
Currently there is no substitute for rare earths with the same performance/cost, although Tesla are trying to eliminate or minimise rare earths, using ferrite compounds for example. Demand is only set to increase and supply is constrained. Recycling will be a key technology and MKA seem well positioned to take advantage.
Another driver is the EU’s Critical Minerals legislation which mandates for 25% of all strategic minerals to be recycled - of course this includes NdPr.
The NAV of Maginito was previously put at 7p so over half of MKA’s 12p ask price today. The overall NAV is an unrisked 221p.
But that NAV was before the US Maginito was formed where MKA negotiated 45% ownership at no cost. Rare earths are a strategic resource and this article argues may fall under the US Defense Production Act in the future. Maginito US would benefit from that Umbrella too.
And just because the Songwe is an eye popping 214p a share unrisked perhaps we should pause to think about well, what’s the next step there? So I should add that MKA have been “assured” the mining development agreement with happen in the next few weeks. It’s taken all year - where “in a few weeks” was said in January. According to the World Bank such a project can’t come soon enough. There’s a further hurdle to finance and build afterwards - the FID too.
This is not advice.
Oak