CoTec Holdings Corp. Notes HyProMag USA Advancement of Texas Hub and U.S. Magnet Platform

Executive Summary

• HyProMag USA, a joint venture between CoTec and Mkango, has commenced procurement of long-lead equipment for its Texas Hub magnet recycling facility, targeting a construction start in Q4 2026 and commissioning in H2 2027.
• Updated detailed engineering and economics project an annual capacity of ~1,526 metric tons of NdFeB magnets, with a post-tax NPV of US$797 million (37.1% IRR) based on forecast prices and US$416 million (26.3% IRR) based on current prices.
• The company is advancing feedstock aggregation, offtake customer engagement, power supply negotiations, and project financing discussions, while simultaneously exploring a potential U.S. public listing for late 2026/2027.

Key Details

• Project Timeline & Procurement: Commenced procurement of three Hydrogen Processing of Magnet Scrap (HPMS) vessels and magnet processing/finishing equipment; targeted commissioning for H2 2027; construction start planned for Q4 2026.
• Production Capacity: Annual capacity of ~1,048 metric tons of recycled sintered NdFeB magnets and 478 metric tons of NdFeB co-products (total payable capacity of 1,526 metric tons) over a 40-year operating life.
• Project Economics: Post-tax NPV of ~US$797 million and real IRR of 37.1% (based on forecast market prices); Post-tax NPV of ~US$416 million and real IRR of 26.3% (based on current market prices); Total initial capital cost of ~US$152 million (includes 8.2% contingency and detailed design/engineering costs over a one-year construction phase).
• Engineering & Design: Class 2 AACE capital cost estimate completed in Q4 2025; detailed design study is ~35% complete, led by independent firms PegasusTSI and BBA; 3D plant model completed based on the Class 2 estimate.
• Facility & Infrastructure: Preparatory work underway at the Ironhead building in Northlake, Texas (Dallas-Fort Worth metro area); formal power supply discussions initiated with Oncor Electric Delivery Company LLC, with the facility expected to be supplied predominantly from renewable resources.
• Pre-processing/Spoke Sites: Three Inserma "3rd generation" HDD magnet separation systems installed at Intelligent Lifecycle Solutions (ILS) facilities in Williston, South Carolina and Las Vegas, Nevada; upgrades include AI-embedded HDD recognition and data traceability functions.
• Feedstock Strategy: Partnership with ILS and a multi-source purchasing strategy targeting bulk NdFeB feedstock including electric motor rotors, wind turbine magnets, speaker assemblies, and end-of-life MRI machines.
• Commercial & Financing: Discussions underway with multiple potential offtake customers (magnet samples provided for product verification and qualification); in discussions with three financial institutions to advance project finance following long-lead equipment procurement.
• Leadership & Corporate Structure: Engaged a leading global executive search firm to identify a U.S.-based CEO and CFO to support a potential future public listing; owners (CoTec and Mkango) are exploring a potential U.S. listing for HyProMag USA, expected late 2026 or 2027, subject to project milestones, market conditions, and regulatory approvals.
• Expansion Plans: Targeting completion of a Class 3 AACE estimate and optimal configuration study in Q3 2026 for additional plants mirroring the Texas Hub, with the objective of expanding U.S.-based production to ~4,656 metric tons of NdFeB saleable products.

Notable Quotes

• Julian Treger, CoTec CEO: "We are making strong progress on our first plant in Texas. Ordering long-lead items now keeps the Texas Hub on track and signals our confidence in the project and our ability to deliver it on schedule."
• Julian Treger, CoTec CEO: "Our near-term focus is on securing feedstock and offtake commitments to support our project financing and enable a construction start in Q4 2026. Importantly, we are not starting from scratch - the underlying technology is already commissioned and operating in the UK and Germany, and our goal is to scale that proven model in the United States."