Mkango Magnetic Materials Ltd. (LSE:MKA) announced on Tuesday, 27 October 2026, that an independent pre-feasibility study (PFS) for the proposed expansion of HyProMag USA’s rare earth magnet manufacturing operations estimates an incremental post-tax net present value (NPV) of between US$1.85 billion and US$2.06 billion.
The study, completed by PegasusTSI Inc. and BBA USA Inc., evaluates the development of three additional U.S. production facilities and a centralised manufacturing and finishing hub, alongside the existing planned facility in Northlake, Texas.
The proposed expansion could increase HyProMag USA’s annual saleable material production capacity to approximately 6,000 metric tons by 2034, including 4,192 metric tons of finished magnets. The initial Northlake facility remains in detailed engineering, with Phase 1 commissioning expected in mid-2028.
Pre-Feasibility Study Estimates 31% to 36% Internal Rate of Return
The independent study examined two potential development scenarios for the three additional manufacturing facilities, excluding the Northlake project.
Case 1 considers a production system using recycled rare earth magnet feedstock, while Case 2 incorporates both recycled materials and primary neodymium iron boron (NdFeB) alloy feedstock.
Under Case 1, the PFS estimates a post-tax NPV of US$2.06 billion, an internal rate of return (IRR) of 36% and capital expenditure of approximately US$623 million. The estimated payback period is 2.3 years.
Case 2 produces an estimated post-tax NPV of US$1.85 billion, an IRR of 31% and capital expenditure of approximately US$656 million, with a projected payback period of three years.
The profitability index, calculated as post-tax NPV divided by capital cost, ranges from approximately 2.8 times to 3.3 times across the two scenarios.
These estimates are based on forecast product prices and Class 3 AACE capital cost estimates. They relate exclusively to the proposed expansion facilities and do not include the value of the Northlake Texas project.
The findings represent preliminary economic assessments of potential future developments rather than financial results from operating facilities.
Combined U.S. Platform Valuation Estimated at Up to $2.8 Billion
Including the proposed Northlake facility, the estimated combined post-tax NPV of HyProMag USA’s planned manufacturing platform ranges from US$2.6 billion to US$2.8 billion.
The Northlake project has an updated estimated post-tax NPV of approximately US$723 million, compared with US$797 million announced on 22 June 2026.
Mkango attributed the reduction to a revised construction timetable, higher capital expenditure and updated operating cost assumptions.
Estimated capital expenditure for Northlake has increased to approximately US$167 million, reflecting its phased construction approach and the finalisation of equipment orders.
The project is currently undergoing detailed engineering, with initial commissioning scheduled for mid-2028.
Proposed Expansion Targets 6,000 Metric Tons of Annual Production
The PFS outlines a phased expansion involving three additional production plants in South Carolina, Nevada and a second location in Texas.
Together with the Northlake facility, the proposed manufacturing platform targets approximately 6,000 metric tons of saleable material annually by 2034.
Projected annual output comprises approximately 4,192 metric tons of NdFeB magnets, 1,305 metric tons of magnetic alloy powder and 503 metric tons of other saleable materials.
The projected magnet production capacity represents a fourfold increase from the approximately 1,048 metric tons per year planned at Northlake.
The three additional plants would contribute an estimated 4,474 metric tons of annual saleable material production beyond the Northlake facility.
The expansion remains subject to further development work, including progression to a feasibility study.
Manufacturing Costs and Product Pricing Assumptions
The PFS estimates all-in sustaining costs for the first expansion plant in 2030 of approximately US$37.40 per kilogram under Case 1 and US$41.60 per kilogram under Case 2.
These estimates include downstream processing and finishing costs, including plating and epoxy coating.
Based on forecast market prices and the proposed product mix, the study assumes a weighted average realised selling price of approximately US$100.50 per kilogram in 2030.
The study also considers increasing the proportion of higher-grade magnet products from approximately 10% to 20% of total magnet output.
This would involve the use of grain boundary diffusion technology, which enables the manufacture of magnet grades designed for applications including medical equipment, industrial automation, robotics, energy infrastructure and advanced manufacturing.
The projected costs, selling prices and product mix remain assumptions used in the PFS economic modelling.
Central Texas Hub to Support Manufacturing and Finishing
The proposed expansion includes a Central Texas Hub within the second Texas production facility.
The hub would provide shared manufacturing and finishing services for the three additional plants, including alloy processing, machining, plating, coating, quality assurance and product qualification.
Planned processing capabilities include vacuum induction melting, strip casting and grain boundary diffusion.
Under the proposed operating structure, the regional facilities would process feedstock and manufacture unfinished sintered NdFeB magnet blocks.
These products would subsequently be transferred to the Central Texas Hub for additional processing and finishing.
The hub could also provide manufacturing and finishing services to third parties, creating potential additional revenue opportunities beyond HyProMag USA’s own magnet production.
Recycling Technology and Feedstock Supply
The proposed facilities would use Hydrogen Processing of Magnet Scrap (HPMS) technology to recover rare earth magnetic materials from end-of-life products and manufacturing waste.
The process is designed to recover magnet-grade materials without chemical processing.
According to HyProMag USA, its recycling technology uses 88% less energy and produces 85% fewer carbon emissions than conventional processing methods.
The company also referenced a previously completed carbon footprint assessment for the Northlake facility indicating approximately 2.35 kilograms of carbon dioxide equivalent per kilogram of sintered NdFeB block product.
The PFS considers combining recycled feedstock with primary alloy materials to provide additional sourcing options.
HyProMag USA may also gain future access to primary feedstock from Mkango under certain existing supply rights.
The proposed manufacturing configuration includes the recovery and reprocessing of machining residues and other production by-products.
Commercial Qualification and Employment Plans
HyProMag USA is undertaking product testing and customer validation activities with potential U.S. offtake customers.
The company expects to draw on technical and commercial qualification work already underway within the wider HyProMag Group in the United Kingdom and Germany.
The proposed U.S. expansion is expected to create approximately 300 jobs across Texas, South Carolina and Nevada, in addition to around 100 positions associated with the Northlake facility.
The company has identified potential applications for its magnet products in electric vehicles, robotics, advanced electronics, energy infrastructure and defence systems.
The expansion strategy remains under review, with a feasibility study expected to follow at an appropriate stage.
Management Comments on Expansion Plans
Will Dawes, chief executive officer of Mkango, commented on the study’s findings and the potential relationship between the company’s existing rare earth operations and HyProMag USA:
“The Study indicates the scalability of the HyProMag business model and provides a framework for disciplined growth in the United States using HyProMag USA’s first plant in Northlake. Together with ongoing development activities in the United Kingdom and Germany, it strengthens the foundation for establishing a significant domestic rare earth magnet manufacturing capability for HyProMag. It also highlights the significant potential synergies between HyProMag USA and Mkango, including increased security of feedstock supply and enhanced supply chains into USA markets, respectively.”
Julian Treger, chief executive officer of CoTec, also commented:
“This Pre-Feasibility Study confirms the opportunity to establish a significant domestic rare earth magnet manufacturing platform in the United States. The Study demonstrates robust economics and a pathway to producing higher-value NdFeB magnet products for strategically important sectors including advanced manufacturing, energy, defense and AI-driven technologies. Importantly, the platform is designed with the flexibility to utilize primary alloy feedstock alongside recycled materials, providing greater supply chain resilience and supporting long-term operational competitiveness. The results highlight the platform’s potential to create substantial long-term value while strengthening the U.S. rare earth magnet supply chain.”
The companies indicated that further technical, commercial and development work will be required before the proposed expansion advances.
HyProMag USA Ownership Structure
HyProMag USA is a joint venture owned equally by CoTec Holdings Corp. (TSXV: CTH; OTCQX: CTHCF) and HyProMag Limited.
HyProMag Limited is wholly owned by Maginito Limited, in which Mkango holds a 79.4% interest and CoTec owns the remaining 20.6%.
Through this structure, Mkango participates in the development of HyProMag USA’s rare earth magnet recycling and manufacturing operations.
The joint venture is pursuing a phased manufacturing strategy, beginning with the Northlake facility and potentially extending to three additional U.S. plants.
More About Mkango Magnetic Materials
Mkango Magnetic Materials Ltd. (LSE:MKA) is a rare earth materials company with interests in recycling, magnet manufacturing and rare earth resource development.
Through Maginito, the company participates in HyProMag’s magnet recycling and manufacturing operations in the United Kingdom, Germany and the United States.
Mkango also owns the Songwe Hill rare earth project in Malawi and the proposed Pulawy rare earth separation plant in Poland.
The company has entered into a proposed business combination involving Mkango Rare Earths Limited and Crown PropTech Acquisitions, intended to list the Songwe Hill and Pulawy projects on Nasdaq.
The HyProMag USA pre-feasibility study provides preliminary economic estimates for a potential expansion of U.S. rare earth magnet manufacturing capacity, with further development and feasibility work required before implementation.
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