Mkango Magnetic Materials Ltd (AIM/TSX-V: MKA) has announced an agreement to acquire the remaining 10% interest in HyProMag Germany for £1.06 million, increasing its effective ownership of the rare earth magnet recycling business to 79.4% as commissioning progresses at its Pforzheim manufacturing facility.
The transaction will see HyProMag Limited acquire the minority holding from founding shareholder Professor Carlo Burkhardt, giving it full ownership of HyProMag GmbH once the agreement is completed.
HyProMag Limited is wholly owned by Maginito, the recycling and manufacturing investment vehicle in which Mkango holds a 79.4% interest and CoTec Holdings owns the remaining 20.6%.
As a result, Mkango’s effective economic interest in HyProMag Germany will increase from approximately 71.5% to 79.4%, simplifying the ownership structure of its European rare earth magnet recycling operations.
The £1.06 million acquisition consideration comprises £757,900 in newly issued Mkango shares and £302,100 in cash.
Professor Burkhardt will receive 2,569,152 new Mkango common shares at 29.5 pence each, matching the company’s closing AIM share price on 27 October 2026.
The shares will be subject to a six-month contractual lock-up, restricting their sale during that period.
The remaining £302,100 will be payable in cash upon commissioning of the Pforzheim plant, or by 31 December 2026 at the latest.
Under the funding arrangements, CoTec will contribute £218,360 in cash, reflecting its 20.6% interest in Maginito, while Mkango will provide the consideration shares and £83,740 in cash.
The acquisition follows the conversion of an existing loan to HyProMag Germany into equity, which became effective on 19 October following registration of the associated capital increase in Germany.
This conversion increased HyProMag UK’s ownership to 90%, creating the basis for acquiring Professor Burkhardt’s remaining 10% stake.
HyProMag Germany is currently commissioning its rare earth magnet recycling and manufacturing facility in Pforzheim, which has been selected as a Strategic Project under the European Union’s Critical Raw Materials Act.
The facility is designed to recover rare earth magnetic materials from end-of-life products and manufacturing waste using Hydrogen Processing of Magnet Scrap (HPMS) technology.
The process enables valuable magnetic materials to be recovered and reused in new magnet production, supporting efforts to develop domestic European supply chains for critical raw materials.
Rare earth magnets containing elements such as neodymium, praseodymium, dysprosium and terbium are essential components in electric vehicles, wind turbines, robotics and advanced industrial equipment.
Chief Executive Will Dawes said Professor Burkhardt had played a central role in establishing HyProMag Germany and developing the Pforzheim plant.
Dawes explained that bringing the German operation under full ownership would simplify the group’s corporate structure as it expands rare earth magnet recycling and manufacturing activities.
Professor Burkhardt will remain involved with the business as a consultant following completion, allowing the company to retain his technical experience and knowledge of the Pforzheim operation.
Burkhardt welcomed the agreement, highlighting the progress achieved by the German team and his continued financial interest in Mkango through the shares being issued as consideration.
The acquisition represents another step in Mkango’s wider strategy to establish rare earth recycling and manufacturing operations across Europe and North America.
Alongside its activities in Germany, the group is developing recycling capabilities in the United Kingdom and expanding into the United States through the HyProMag USA joint venture with CoTec.
Earlier this week, Mkango announced an independent pre-feasibility study outlining a potential US rare earth magnet manufacturing platform with a combined estimated post-tax net present value of US$2.6 billion to US$2.8 billion.
That proposed expansion could increase annual US magnet production capacity approximately fourfold by 2034, although the additional facilities remain at the planning and pre-feasibility stage.
Mkango also retains interests in the Songwe Hill rare earth project in Malawi and the proposed Pulawy separation facility in Poland, both of which have received Strategic Project designation under the EU Critical Raw Materials Act.
Completion of the HyProMag Germany acquisition remains conditional on final approval from the TSX Venture Exchange and execution of a notarised share transfer agreement in Germany.
The proposed transaction also constitutes a related-party transaction under AIM rules because Professor Burkhardt holds a minority interest in a subsidiary of the company.
Mkango’s independent directors, having consulted nominated adviser SP Angel Corporate Finance, consider the transaction terms fair and reasonable for shareholders.
Following admission of the consideration shares, Mkango’s issued share capital is expected to increase to 392,722,770 common shares, resulting in a modest dilution for existing shareholders.
For investors, the acquisition would consolidate Mkango’s indirect ownership of HyProMag Germany at an important stage in the Pforzheim plant’s development, while retaining the involvement of a founding shareholder with technical expertise.
The transaction also simplifies ownership arrangements as the group seeks to expand its rare earth magnet recycling operations internationally.
Attention will now turn to completion of the acquisition, commissioning of the Pforzheim facility and further progress across Mkango’s European and US recycling operations, as the company advances its strategy to establish alternative supply chains for critical rare earth magnetic materials.
