HyProMag – Short Loop Magnet-to-Magnet Rare Earth Recycling

HyProMag was founded in 2018 by the late Professor Emeritus Rex Harris, former Head of The Magnetic Materials Group ("MMG") within the School of Metallurgy and Materials at the University of Birmingham; Professor Allan Walton, current Head of the MMG; and two Honorary Fellows, Dr John Speight and Mr David Kennedy, leading world experts in the field of rare earth magnetic materials, alloys and hydrogen technology, with significant industry experience.

Following a transaction completed in August 2023, HyProMag is 100% owned by Maginito Limited, a 79.4% owned subsidiary of UK and Canada listed, Mkango Resources Ltd (TSXV/AIM:MKA). The core technology being commercialised by HyProMag is the highly energy efficient, patented Hydrogen Processing of Magnet Scrap ("HPMS") technology to extract and demagnetise NdFeB (neodymium iron boron) alloy powders from magnets embedded in scrap and redundant equipment. HyProMag’s technology and operations are being deployed in the UK, Germany, and the United States, with other jurisdictions under consideration.

Our aim is to develop a full recycling supply chain for rare earth magnets based upon neodymium iron boron (NdFeB). HyProMag has licensed the patented HPMS technology developed in the Magnetic Materials Group (MMG) at the University of Birmingham. This patent and related Intellectual Property is at the core of HyProMag. HPMS is a hydrogen-based process which is used to extract NdFeB magnets from electrical products such as hard disk drives, audio speaker assemblies, EV traction motors, and from a range of other sources. The extracted NdFeB powder is in the form of a demagnetised alloy which can be re-processed into different forms which can be sold back into the supply chain or utilised directly in the manufacture of new NdFeB magnets, to a range of recognised commercial grades.

HyProMag Ltd (United Kingdom)

HPMS is a key enabler for recycling of rare earth magnets in electronics, electric vehicles, robotics, wind turbines and other applications, with major competitive advantages in the rare earth magnet recycling sector, underpinned by approximately US$100m of R&D expenditure at the University of Birmingham and with associated project partners. This is coupled with the ability to manufacture rare earth alloys and magnets with significantly reduced carbon footprint. HyProMag is establishing short loop recycling facilities for NdFeB magnets at Tyseley Energy Park in Birmingham, UK and other locations using the patented HPMS process to provide a sustainable solution for the supply of NdFeB magnets and alloys for a wide range of markets including, for example, automotive and electronics. Short loop magnet recycling is expected to have a significant environmental benefit, requiring an estimated 88% less energy versus primary mining to separation to metal alloy to magnet production. The plant at Tyseley Energy Park has been developed together with the University of Birmingham, with a minimum capacity of 100tpa NdFeB. This £4.3 million project is being funded by Driving the Electric Revolution, an Industrial Strategy Challenge Fund challenge delivered by UK Research and Innovation ("UKRI"). The focus of the project is to take the HPMS technology to a greater scale and efficiency with revolutionary new design of processing equipment and extensive automation of processing methods for inert atmosphere powder handling and pressing.

HyProMag Ltd is the primary industrial user and operator of the plant. First production was achieved in June 2025, which followed successful piloting at the University of Birmingham in which has been running since 2022. An official opening of the commercial facility at Tyseley Energy Park in January 2026 was presided over by the UK’s Minister for Industry in the Department for Energy Security and Net Zero and the Department for Business and Trade.

The Facility at Tyseley Energy Park has enabled the first commercial rare earth magnet production in the UK in 25 years - making it a key enabler of UK Government's November 2025 Critical Minerals Strategy which sets targets for the UK to meet 10% of annual critical mineral demand by domestic sources, and 20% to be met through recycling by 2035.

The Facility is the only commercial scale rare earth sintered magnet manufacturing facility in the UK. HyProMag has successfully operated the Facility as the industrial partner, utilising the HPMS technology to produce a recycled NdFeB alloy powder, as well as having produced recycled NdFeB sintered magnet blocks utilising the recycled alloy powder. The Facility can recover over 400kg of rare earth alloy per batch utilising the HPMS reactor and can produce new sintered magnets from the recycled rare earth alloy at a capacity of 100 tonnes per annum on a single shift, and over 300 tonnes per annum on multiple shifts. Rare earth elements are amongst the key critical minerals featured in the UK's Critical Minerals Strategy, with their main commercial use being in rare earth permanent magnets. These magnets are required in electric vehicle traction motors and wind turbine generators, and they are also a key component in electronic devices including mobile phones, hard disk drives and loudspeakers, as well as being utilised in critical sectors.

HyProMag GmbH (Germany)

In November 2021, HyProMag established an 80%-owned subsidiary in Germany, HyProMag GmbH, to roll out commercialisation of HPMS technology into Germany and Europe. HyProMag GmbH is 20% owned (10% following conversion of the HyProMag GmbH convertible loan) by Professor Carlo Burkhardt of Pforzheim University, co-ordinator of the €14m SusMagPro and €13m REEsilience EU funded recycling projects, with approximately 40 partners across the European supply chain. HyProMag GmbH is developing a similar sized plant in Baden-Württemberg to that at Tyseley Energy Park. Initial capacity is expected to be a minimum of 100tpa NdFeB, comprising recycled rare earth sintered magnets and alloys and will be the first in Germany using the patented HPMS process, with first production targeted for Q1 2026.

Recent milestones include:

UK

• First production of recycled rare earths alloys using the commercial scale HPMS at Tyseley Energy Park (TEP) achieved in mid-2025.
• Official opening of the facility at TEP presided over by UK Minister for Industry in the Department for Energy Security and Net Zero and the Department for Business and Trade, in January 2026.
• Commissioning of magnet manufacturing equipment, including presses and sintering furnace. Commissioning of powder processing equipment underway.
• Ongoing production of NdFeB powder, block and finished magnet samples to customers, to support product marketing, offtake discussions and scale-up of existing operations in the UK.

Germany

• Development of the scaled-up rare earth magnet recycling and manufacturing plant in Germany is progressing on track for Q1 2026 production.
• Site development near Pforzheim, Germany is well underway with key equipment delivered. HPMS reactor, jet mill, and associated infrastructure have been installed.
• Equipment ordered to date includes HPMS vessel, magnet presses, jet mill, sintering furnaces and other items.

In October 2023, HyProMag's HPMS technology was identified as one of only 17 key global projects by the Minerals Security Partnership (MSP), a collaboration of 14 countries and the EU, aiming to catalyse public and private investment in responsible critical minerals supply chains globally.

In January 2024, CoTec and Maginito Limited announced the formation of a 50/50 joint venture entity which will roll out HyProMag's HPMS recycling technology into the United States. The JV company, named HyProMag USA LLC, is developing a low cost, low carbon, sustainable rare earth magnet recycling and production business underpinned by HPMS. HyProMag Ltd has sublicensed the HPMS technology to HyProMag USA.

The results of HyProMag USA’s bankable feasibility study were announced to the market in November 2024, based on a hub and spoke model using three HPMS vessels and one magnet manufacturing hub which will be based in Texas. The Feasibility Study includes the completion of detailed engineering designs, as well as permitting and potential site acquisition. Environment and permitting studies will be supported by US based Weston Solutions, Inc. First Revenue targeted in Q1 2027 with a Notice to Proceed expected in mid-2025 following completion of detailed engineering, which will commence shortly,

Following completion of the Detailed Engineering, CoTec and Mkango will make a joint decision as to whether HyProMag USA will proceed with the construction of the US Project. CoTec is responsible for funding the project development costs. Funding provided by CoTec would be in the form of shareholder loans to HyProMag USA.

HyProMag USA – Texas Facility Expansion and Valuation Update (December 2025)

Texas Facility Expansion Increases Magnet Capacity, Supports Domestic Critical-Minerals Supply Chains and Increases Post-Tax NPV to US$780 million (forecast prices) and US$409 million (current prices)

HyProMag USA, LLC ("HyProMag USA"), a U.S.-based leader in rare-earth recycling and processing, has expanded the magnet capacity of its first facility (the "Texas Hub" or the "Project") and has updated the valuation of the Project with the completion of the Class 2 AACE capital cost estimate as part of the Detailed Engineering Design and Value Engineering Phase. The Class 2 AACE capital cost estimate and detailed value-engineering work confirm a significant increase in magnet production capacity and materially improved Project economics.

In parallel, HyProMag USA has commenced a strategic review to evaluate a potential separate listing of the shares of HyProMag USA in the U.S. for late 2026 or early 2027, subject to successful execution of the Project and meeting the required regulatory approvals.

Key Highlights

• Uplift in project valuation: Detailed Engineering results for state-of-the art rare earth magnet recycling and manufacturing operation in the United States with a Texas Hub supported by two pre-processing spoke sites co-located at Intelligent Lifecycle Solutions ("ILS") sites in South Carolina and Nevada.
  • US$409 million post-tax Net Present Value ("NPV") and 27.6% real internal rate of return ("IRR") based on current market prices.
  • US$780 million post-tax NPV and 38.7% real IRR based on forecast market prices.
• Increased magnet production capacity: 941 metric tonnes per annum of recycled sintered neodymium-iron-boron ("NdFeB") magnets and 611 metric tonnes per annum of associated NdFeB co-products (total payable capacity - 1,552 metric tonnes NdFeB) over a 40-year operating life
• Competitive operating profile: Low all-in sustaining Cost ("AISC")Xii,[vii] of US$22.3 per kg of NdFeB product versus current weighted average market price of US$56.8 per kg of NdFeB products, with significant scope for price recovery from current market conditions
• Scalable design with expansion potential: The optimised layout allows for the inclusion of an additional two furnaces within three years following commissioning for an additional capital cost of approximately US$3 million
• Up-front capital cost: Total initial capital cost of US$142 million[viii] (inclusive of an 8.2% contingency margin and Class 2 AACE estimated detailed design study and engineering costs) over a 1 year construction phase.
• Attractive payback profile:
  • Payback at current market prices in 3.1 years at a profitability index (PI)[x] of 2.89
  • Payback at forecast prices in 2.2 years at a PI of 5.5
• Industrial and workforce impact: The plant is expected to support revitalisation of the U.S. magnet sector and create 90-100 skilled magnet manufacturing jobs
• Carbon profile: Independent ISO-compliant study confirmed a carbon footprint of 2.35 kg CO₂-eq per kg of NdFeB sintered block product
• Detailed Engineering: led by PegasusTSI Inc. (U.S.) and BBA USA Inc. (Canada), with support from HyProMag's international teams and the University of Birmingham

HyProMag USA – Feasibility Study Results ( November 2024)

In November 2024, HyProMag USA announced the results of the Feasibility Study. Sintered NdFeB magnets will be produced in the United States using materials sourced in the United States, contributing to security of NdFeB permanent magnet supply and enabling economical, traceable, domestic U.S. production of recycled NdFeB magnets (DFARS compliant) supporting the defence, aerospace, automotive, medical science, hyperscale data centres, robotics, and energy transition industries.

Highlights

• Positive Feasibility Study results for state-of-the art rare earth magnet recycling and manufacturing operation in the United States (the "Project"), with a central Dallas Fort Worth ("DFW"), Texas hub supported by two pre-processing spoke sites in the eastern and western regions of the United States:
  • US$262 million post-tax Net Present Value (NPV) and 23% real internal rate of return (IRR) based on current market prices
  • US$503 million post-tax NPV2 and 31% real IRR based on forecast market Prices
  • Low all-in sustaining Cost (AISC) of US$19.6 per kg of NdFeB product which compares to current weighted average market prices of US$55 per kg of NdFeB products, the latter reflects underlying prevailing low rare earth prices with significant scope for price recovery
  • Expansion potential with the inclusion of a third HPMS vessel within three years following commissioning for an additional capital cost of approximately US$7 million
• Production of 750 metric tons per annum of recycled sintered NdFeB magnets and 291 metric tons per annum of associated NdFeB co-products (total payable capacity - 1,041 metric tons NdFeB) over a 40 year operating life
• Up-front capital cost of the Project is US$125 million (inclusive of a 10% contingency margin and Class 3 AACE estimated detailed design study and engineering costs) over a 1.7 year construction phase
• Payback is achieved at current market prices in 3.9 years at a profitability index ("PI") of 2.1, at forecast market prices payback is achieved in 3.1 years at a PI of 4.0
• First Revenue targeted in H1 2027 with a Notice to Proceed ("NTP") expected following completion of Detailed Engineering Design and Value Engineering phase, which is currently underway
  • Evaluation of significant opportunities to optimize construction and operational efficiency, and to reduce capital expenditure and operating costs, as well as to expand production
  • Parallel product and operational testing in the UK at the University of Birmingham Magnetic Materials Group pilot plant and in conjunction with HyProMag commercial developments in UK and Germany
  • Completion of commercial arrangements with potential feed supply and product off taker - discussions with several potential parties underway
  • Continued discussions with federal, state and municipal governments, in relation to financing opportunities and other economic incentives including carbon price premiums which could improve economics
• Project will help secure the re-vitalization of NdFeB magnet production in the United States with the creation of approximately 90 jobs across Texas, South Carolina and Nevada
• The Feasibility Study was undertaken by a multidisciplinary team appointed by CoTec and Mkango and led by independent engineers, Canada-based BBA USA Inc. ("BBA") and U.S. based PegasusTSI Inc. ("PegasusTSI") with other independent experts and support from University of Birmingham, HyProMag Ltd and HyProMag GmbH.

Mkango Rare Earths UK – Long-loop Rare Earth Magnet to Oxide Recycling

In June 2024, Mkango Rare Earths UK ("Mkango UK") has successfully commissioned a pilot plant at Tyseley Energy Park, Birmingham, designed to produce separated magnet rare earths (neodymium/praseodymium and dysprosium/terbium carbonates or oxides) via a long-loop recycling process. Mkango UK is 100% owned by Maginito Limited ("Maginito"), which is 79.4% owned by Mkango and 20.6% owned by CoTec Holdings ("CoTec").

The long-loop pilot plant received 70% of its funding from the UKRI's Driving Electric Revolution Challenge, delivered by Innovate UK, as part of the grant-funded project "Secure Critical Rare Earth Magnets for the UK" (SCREAM). Project partners include HyProMag, Bowers & Wilkins, European Metal Recycling (EMR), GKN Automotive, Jaguar Land Rover, and the University of Birmingham.

Both long-loop and short-loop recycling technologies are underpinned by the patented HPMS technology developed at University of Birmingham, which liberates magnets from end-of-life scrap streams in a cost effective and energy efficient way to produce a recycled NdFeB alloy powder, which is manufactured into a magnet (via the short loop process) or into a rare earth carbonate or oxide (via the long-loop chemical process).

Optimisation of long-loop pilot operations is underway, targeting near-term pilot scale production of the first 50kg batch of rare earth carbonates and oxides, in parallel with completion of scoping studies and evaluation of options to advance long loop recycling via stand-alone development, joint venture or other commercial arrangements. The long-loop recycling route is used to process NdFeB HPMS powder not suitable for short-loop recycling and for the processing of magnet swarf (i.e. the powder produced from grinding and finishing magnets).