Member Info for esduk

Apologies, I’m not saying you’re misrepresenting what JT said, as I remember him saying something along those lines. What I was trying to say is that is not in fact how shareholder loans work and JT’s initial remark in answer to a question was off the cuff, poorly worded and misrepresentative of the actual situation.

As you also set out in your original post, JT went on to say that the Cotec funding of Hypromag USA had been delivered through shareholder loans and that they would get first priority over distributable cash flow (available after debt service), and so would be paid out before general shareholder dividends. Mkango will not be paying anything back to Cotec, instead Cotec will have first priority over cashflow after debt service until its shareholder loans are paid off. My calcs suggest this should be done within the first year of nameplate operations.

The UK and German plants have the capacity to do 330 tpa with current infrastructure and machinery. The variable is how many shifts they run at the factory. If it’s one shift it’s 100-110 tpa, two shifts 200-220 tpa and three shifts up to 330 tpa. Machinery / fixed cost is the same in all cases, staffing and feedstock the biggest variable costs. If they needed to expand to 1k tpa and 700 tpa respectively there would obviously be a substantial capital outlay, although to date the UK plant has been funded through grants and the German plant has been 50% grant funded, so I’d expect we may be able to access further grants and probably some reasonable debt financing (possibly subsidised) too if we need it.

I watched that particular investor call with JT but I think this is slightly misrepresented in the first part of your post. Mkango will not actually be paying back its share of the costs of the project, although he said something along those lines off the cuff. Cotec has provided a shareholder loan (subordinated debt) to Hypromag USA and this will be treated as junior to any senior debt i.e. from EXIM, but senior to distributions to equity holders i.e. Maginito and Cotec. So Mkango won't be paying anything back to Cotec, but its receipt of dividends through Maginito is likely to be delayed when compared to a scenario where there was no shareholder loan from Cotec.

I used to work in structured finance, so have seen a lot of these kinds of arrangements. Based on the calcs the company have done for the US plant we are talking about a delay in dividends to Maginito/Mkango which may only be around a year or less (from start of commercial operations) given how high the operating margins will be for Hypromag USA. At 1k tpa profit after tax would be well over $30m at current pricing, so paying back $10-15m in shareholder loans would be very quick.

I think the afternoon sell off we have been seeing pretty regularly is potentially being driven by US / North American investors, but I don't think it has anything to do with TSX arbitrage personally, given volumes there are so low.

JK, here are my thoughts on the numbers below.

i) MKAR - pro-forma value of MKAR is $470m, with Mkango's share being $400m and CPTK's share being $70m. I think $400m is a reasonably safe assumption here given current market sentiment and peer comparisons in the US. Upside scenario $600-800m for Mkango's share, worst case scenario $200m for Mkango's share (I don't think they would go ahead with the listing below this level).

ii) Hypromag USA - think your $200m NPV per hub to Mkango is quite conservative, and I assume it was based on current rather than forecast prices. Spot prices of Neodymium have gone up about 8% since the RNS and an additional 25% tariff on Chinese magnets has since come in. The NPV is calculated using a 7% discount rate, but we should get the bulk of our financing at a discounted rate from EXIM and we have a good chance of receiving grant funding too. There are also a large number of tax breaks we can potentially access. So in reality equity returns should be much higher than stated in the latest valuation. If we take the forecast prices and don't apply any uplift from the above factors, we get 39.6% x $780m = $309m, without any of the likely value enhancers. They are designing three plants, which could be close to $1bn NPV for MKAR and JT has talked about 7 plants overall in the US.

iii) - iv) Nameplate capacity of UK and German plants is 330tpa (based on running three shifts), and the company has confirmed that they have great demand for their product and are planning to expand to 1k tpa and 700 tpa respectively. So I think using 24tpa (they mention 25tpa in the RNS) is very much on the low side and is just for the ramp up stage. I think a reasonable base assumption for this year would be 125tpa for UK and 75tpa for Germany given they will both be ramping up from 25tpa to between 100-330tpa (depending on how many shifts they run), with the UK having a head start. I think longer term, 330tpa is a pretty conservative assumption, given expansion plans for both plants. Running at nameplate capacity in the UK and Germany I get an after tax NPV for Mkango's share of $164m and $140m respectively, using the same assumptions as the US, which probably understate operating costs a bit but overstate tax substantially.

v) Yes who knows about further international expansion but I reckon you could assume plants of at least the same size and spec as the US, with similar economics. Though we should also get a better equity share deal in the JV's now as we have proven the tech, are in a better RE market and are no longer a minnow and have government interest, in which case the economics would be considerably better.

Right on queue Jimzi...

I see you already got your answer, good summary flundra. Wasn't aware that the interest rate was 5%, but that's very reasonable for a shareholder loan, what was your source for that? I haven't seen them described as convertible shareholder loan notes, and personally I would prefer that they weren't convertible as I want Mkango to keep as high an equity stake as possible.

Interesting question JK, this complexity could be one of the reasons it has taken them a bit longer to consider listing Hypromag USA? I'm not sure exactly how the joint venture agreement (JVA) is set up. It may be that we don't have a senior class of shares, but instead within the JVA there is an obligation for Cotec to secure the funding the business for a certain period of time (see below RNS extract). So the shares have the same value, but they have a separate obligation to fund the business and secure financing.

"CoTec will fund the initial operations of the Joint Venture, including the costs of the Feasibility Study. If the Joint Venture proceeds with the construction of the US Project, CoTec will also be responsible for funding all the development costs of the US Project, with a total expected funding of £30 million to £50 million during the first three years post completion of the Feasibility Study, subject to results of the Feasibility Study. All funding provided by CoTec would be in the form of shareholder loans. CoTec and Mkango also expect that the Joint Venture will seek US government funding for the US Project."

Cotec's funding commitment may have been met by the time of any Hypromag USA listing, so it's possible that Cotec may have fulfilled their obligation under the JVA at that stage. Remember also that they hold an effective c.10% stake in Hypromag USA through their c.20% holding in Maginito and Maginito's shares in Hypromag USA will most likely be of the same class, regardless of their ultimate owner. This leads me to believe that there may not be two separate classes of shares and that they may have dealt with Cotec's funding obligations in another way.

I, like you, would like to understand the potential ownership structure of the eventual SPAC in greater detail, but I assume we may need to wait for a MoU with a shell company or the BCA itself, before getting this. I assume Cotec will be on the hook for the administrative burden and funding of transaction costs in relation to the SPAC listing, given that their obligation to fund the business and secure financing.

If Cotec no longer has the responsibility to fund Hypromag USA post listing then I wonder if they will still keep the 50/50 JV split with Maginito, without them adding value in some other way. At this point we would still be bringing the IP to the table, but it is not clear what they would be bringing, though they would have clearly spent a lot of money, time and effort to get Hypromag USA to that point, which is in itself a pretty valuable contribution. Anyway, I trust that Will and Alex are on top of this, they have shown themselves to be astute deal makers over the years imo.

Last thing on the subject. While the opex assumptions in my calcs are probably a bit bullish, the tax assumptions are probably too conservative as I imagine that both the UK and German plants will benefit from various tax reliefs, though I'm no longer close to how these work these days so have used simplified assumptions, which probably overstate the tax costs.

Apologies again, the 350 tpa in my post below should say 330 tpa. At least that is the figure I used in the calcs. Interesting that the company presentation on the website is currently unavailable with the caption "coming soon" when I went to check the exact max production capacity figures. Seems like they are probably updating it, lets hope it's with something major...

Interesting contribution from AI SG, thanks. I think it is better at the BAU scenario (from analysing past quarterlies) but not so good at understanding the nuances of our German subsidiary and our revenue ramp up.

The optimistic revenue case of £50k per month is off the mark from my perspective. If our cheaper product sells at $55-60k and we are currently running at 25 tpa, then that would produce a base of at least £85k revenue per month for the UK alone. When you consider that we are supposed to be ramping up to 100-330 tpa, with a planned expansion 1,000 tpa in the work, and that we will start selling magnets at closer to $100 per kg then I'd say our optimistic scenario would have us much much higher.

My past calcs show annual profit after tax from 100 tpa of $4.6m and from 350 tpa of $15.4m. This uses per kg cost assumptions from the Hypromag USA Feasibility Study and more up to date pricing assumptions $94 per kg), though still below current market prices. You can definitely argue that a the UK plant wouldn't benefit from the same economies of scale as the 1,000 tpa plant in the US feasibility study, but transport and processing costs are likely to be higher there given the use of a hub and spoke model in the FS and labour costs here are lower. So you could add some cost on, but the margins are still massive. Cotec also have the right to c. 20% of the profits, so our share would be $3.7m and $12.3m respectively at 100 tpa and 350 tpa.

German numbers are similar, though their tax rate is 29% and our share is 72% of the profit rather than 80% due to the stake of the local German partner.

In summary, if we can even scale up the UK and German plants to just 100 tpa, less than a third of their nameplate capacity, then we may not need to raise again, ever. The company still have to prove that they can do this, but if and when they do, we won't be looking back.

Apologies, I meant to say 3 tonnes per annum and 25 tonnes per annum, not 3k and 25k tonnes. That would make us instantly rich...

Hello Colin, I have previously posted analysis on cash position and cash burn rate following the release of the quarterlies at the start of December. You can go back to 2/3rd December in my posting history to find it if you want. Also have a look at the quarterly results, to form your own independent opinion. My synopsis was that our cash position as at end of November was a lot better than I had been expecting.

Here is an extract from the Q3 results:

· Cash position of US$2 million as at 30 September 2025 with a £3 million (US$4 million) successful equity raise in October 2025 post quarter end.

So post raise in early October we had about $6m in the bank, our healthiest cash balance in some time. Burn rate had previously been about $1m a quarter but is now harder to calculate given:

- £60k in warrant conversions post Q3 quarter end

- there are likely to be some shareholder loans being drawn by Hypromag GmbH to complete construction and commissioning of the plant. It's not clear how much of our co-funding was left to handover, though I'm assuming it's no more than about $1m given the total capex spend is about $9-10m and we are responsible for less than 40% of it, with a lot of the equipment having been purchased and infrastructure works having been completed before end of Q3

- we had $500k from CrownProptech to cover SPAC expenses and I don't know if the delay has resulted in additional expense that we have to cover ourselves

- we are earning revenues from Tyseley, with the results mentioning 3k tonnes of NdFeB alloy powder having been produced in the 3rd quarter and sales having been completed which will be booked in Q4. I imagine we produced somewhere between 3-6k tonnes in Q4 as they said they were currently running 25k tpa. Price is around $55-60k per tonne currently. We also produced our first sintered magnets at Tyselely, though not sure if these have been sold or are being used for marketing purposes. The company confirmed that there was very strong demand for their products.

My best guess is that having had cash of around $6m in early October, we are currently around sitting between $3.25-5.0m. From the results it was clear that Will and Alex had given themselves a long run way with the last raise and wanted to make sure the SPAC listing was complete and material revenues were coming in from UK and Germany before the money ran out. That is my theory anyway. The market seemed to think the same as the results were well received for once and we had a positive SP reaction. Obviously we have drifted since then. I think that the cash we have will probably last us to at least mid year, even without the SPAC listing (my guesstimate is end of April / start of May for that) or significant revenues from Germany. But if we do ramp up Tyselely as planned, first of all to 100tpa (and start selling the more valuable magnets) and get Germany revenue earning in the next month then there is potential we don't need to raise again this ye

Yeh velcro, despite the current sentiment here and disappointing SP action, the pricing / geopolitical / macro backdrop and potential news flow couldn't be much better for us.

Talking about Mkango's prospects in a positive and measured way is not ramping Strangler, those prospects are the reason we are all here after all. I don't believe for one second that you bought in the 50's / were influenced by anyone on this board to buy. But you keep peddling your nonsense, fear and anxiety. Good luck to you but I don't think many, if any, are fooled by you.

Ha, snap SG!

Yep we've had a seller(s) that has kept a lid on any potential rises over the last few weeks. Whether it's just normal selling or with the intent to keep the price in range who knows. See that Neodymium prices are up again today +1.33% and 6% for the month.

We already knew what? That you are a wrong un? Yes, agreed.

The Evolution news was new, and I think people appreciated it being shared, so bog off mate and stop talking like you represent the views of this BB.

I strongly cautioned against the G7 ramping / expectations at the time. Timetables slipped (SPAC, Hypromag USA and German plant) and RE sentiment retreated from the euphoric levels of October/November, so we've had a pull back, despite some other positive developments in the meantime. For the record, the SP reached an intraday high of 66p on the G7 expectations, we are now at 46p, so it's a 30% retrace, but I wouldn't expect you actually do the work to figure that out. Again, sums you up...

I continue to be very confident here, for reasons already stated many times, and have topped up around these levels. I have been invested here for approaching 10 years, so I can wait a few months more for the next re-rate if necessary.

Strangler, you are a real wrong un aren't you, who loves to twist words / misrepresent what others have said. Evolution Metals and Technologies is a Critical Minerals and Rare Earths SPAC being listed by Cohen and Co on the Nasdaq, so seeing it do very well on its first day is encouraging for us and shows there is still strong demand for rare earth / critical mineral listings in the US market. Evolution also has Daniel Mamadou heavily involved and he is a close friend of Mkango. I'm not saying we will get a 200% rise on listing, just making the point that there is strong appetite in the market generally.

I see Daniel Mamadou’s SPAC Evolution Metals and Technologies re-listed yesterday on the Nasdaq and was up nearly 200% in its first day of trading. A very good sign for us imo, and proof that there is still a lot of interest in Critical Minerals and Rare Earths out there.

Looking to sell a share with the sole purpose of buying back lower is a risky business. It's not an easy thing to do, particularly on GGP with the backdrop of a secular Gold bull market. I assume that the majority of posters on here, particularly the ones that follow Bamps' advice closely, are long term investors rather than swing traders.

If after seeing Bamps' posts people sold a few because they wanted to slice some profit or needed to fund something else then that's never a bad idea, and they shouldn't regret it imo. If they saw Bamps' posts, got greedy and tried to trade out and back in lower to increase their holding then hard luck, that's the game.

Regardless of anyone's' views on the veracity or sagacity of Bamps' original posts, people should take responsibility for their own actions in relation to them. If you can't form your own opinion / understand your own investment thesis then you shouldn't be trying to swing trade.