Sharecast - The AIM-traded firm said the new joint venture company, HyProMag US, would be granted sublicensing for the technology on its establishment.
Maginito Limited, the full owner of HyProMag, is 90% owned by Mkango at 90%, with CoTec holding 10%.
Intending to advance rare earth magnet recycling, HyProMag was implementing hydrogen processing of magnet scrap (HPMS) technology in several locations in the UK, Germany, and the US.
The first production was set for the UK in 2023 and Germany in 2024, while the US venture targeted revenue generation in 2025 and 2026.
The joint venture would concentrate on both a scoping and bankable feasibility study for the initial stages.
That, the board said, would gauge the viability of introducing three HPMS vessels using HyProMag's technology in conjunction with a magnet manufacturing facility in the US.
With the feasibility study slated for completion by 2024, CoTec and Mkango would then decide to progress to the US project's construction phase.
Financing for the early operations of the joint venture, including the feasibility study's costs, would be shouldered by CoTec.
Additionally, should the project construction be greenlit, CoTec would also cover the development costs, projected to range from £30m to £50m in the initial three years after the feasibility study.
The funding would be channelled as shareholder loans, while the joint venture was also planning to seek funding from the US government.
To ensure a seamless and timely development of the US project, both parties had reached a consensus on the potential pre-ordering of specific pivotal items.
A comprehensive agreement addressing the full commercial spectrum of the US project and aligned with the pre-existing cooperation agreement between CoTec and Mkango was also set to be finalised alongside the feasibility study's completion.
“We see a very significant opportunity in the US market and look forward to working with CoTec and HyProMag as we move into the next growth phase,” said Mkango chief executive officer Will Dawes.
“Less than 5% of rare earth magnets are currently recycled from end-of-life products. Increasing recycling rates via HyProMag's HPMS technology solution to unlock this new potential source of rare earths, thereby avoiding waste to landfill and significantly reducing the carbon footprint, can make a major contribution to creating more sustainable and robust rare earth supply chains across multiple jurisdictions.”
At 1307 BST, shares in Mkango Resources were up 0.86% at 10.59p.
Reporting by Josh White for Sharecast.com.