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Mkango Resources (MKA) Shares Jump On Deal To Acquire Songwe and Maginito

Sam Boughedda trader
Updated 13 Aug 2021

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Shares of Mkango Resources have jumped after the announcement that it will acquire Talaxis' 49% interest in Lancaster Exploration Limited, which owns the Songwe Hill Rare Earths Project in Malawi, and Talaxis' 24.5% interest in Maginito Limited, which holds a 25% interest in rare earths magnet recycler HyProMag Limited.

Mkango will pay 54.1 million Mkango shares to Talaxis, equivalent to £13 million.

The deal will increase Mkango's ownership in the Songwe Hill Rare Earths Project and Maginito to 100%, while they will also retain all offtake rights relating to Songwe Hill, Maginito, and the 100% owned Pulawy Separation Plant project in Poland.

The transaction has also seen Mkango conditionally raise £5.52m from new and existing shareholders at £0.24 per share, including a proposed £700,000 investment by Non-Executive Chairman Derek Linfield.

The company said it is now “positioned to accelerate its integrated Mine, Refine, Recycle strategy with a simplified and vertically aligned ownership structure and enhanced financial flexibility.”

Derek Linfield, Non-Executive Chairman of Mkango, stated: “This transaction brings material benefits to both Mkango and Talaxis and strengthens Mkango's position as a future integrated supplier of rare earths.

“Talaxis has strongly supported the advancement of Songwe Hill and Maginito since its initial investments in 2017, subsequent to which Mkango has grown downstream, adding investments in recycling (via HyProMag) and the Separation Plant in Poland. At the same time, market conditions for rare earths have improved markedly.

“We believe this transaction delivers a better platform to create value and a structure more aligned with the strategies of both companies. We look forward to Talaxis' continued support as we progress towards development of Songwe Hill and our other projects.

MKA
Mkango Resources Daily Chart, Source: IG

Mkango's share price has climbed over 14% to 28.6p on Thursday, making it one of the biggest movers so far during the session.

Should you invest in Mkango Resources shares?

Mkango Resources shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Mkango shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.Â