Mkango Magnetic Materials (AIM:MKA) told investors it has agreed a deal to acquire the remaining 10% stake in HyProMag, its German rare earth magnet recycling subsidiary, from founding shareholder Professor Carlo Burkhardt for £1.06 million.
HyProMag Germany is currently commissioning its rare earth magnet recycling and manufacturing plant in Pforzheim, which was recently designated a Strategic Project under the European Union's Critical Raw Materials Act. The deal follows the conversion of a convertible loan into equity, effective 19 October, which already lifted HyProMag UK's stake in the German unit to 90%.
Of the £1.06 million consideration, £757,900 will be settled on completion through the issue of 2.57 million new Mkango shares to Burkhardt at 29.5p each, the AIM closing price on 27 October, the day before the announcement. The remaining £302,100 is payable in cash on commissioning of the Pforzheim plant, and in any case by 31 December.
The acquisition is being funded by Maginito's shareholders in proportion to their holdings: CoTec Holdings will contribute £218,360 in cash for its 20.6% stake, while Mkango will provide the consideration shares plus £83,740 in cash for its 79.4% share.
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Completion will lift Mkango's effective interest in HyProMag Germany, held through Maginito, from 71.5% to 79.4%.
Burkhardt will continue working with the Mkango group as a consultant after the deal closes.
"Taking HyProMag Germany into full ownership simplifies the group structure as we scale up short loop rare earth magnet recycling and manufacturing in Germany," said Will Dawes, Mkango's chief executive, adding that Burkhardt "will continue to work with the group following the transaction."