Cotec JV HyProMag USA commissions concept study

Executive Summary

• Cotec Holdings Corp. notes that its US-based joint venture, HyProMag USA LLC, has commissioned a concept study to evaluate expanding operations into Nevada and South Carolina.
• The study, conducted by PegasusTSI Inc. and BBA USA Inc., aims to define design and capital requirements for additional hydrogen processing capacity and up to four new magnet production lines.
• CEO Julian Treger highlighted the potential for a threefold increase in company value through linear economics of hub expansion, citing strong rare earth prices and US government support for domestic supply chains.

Key Details

• Expansion Study: HyProMag USA is collaborating with Intelligent Lifecycle Solutions LLC to evaluate expansion into Nevada and South Carolina.
• Study Scope: The concept study will define design and capital requirements for:
  • Additional hydrogen processing of magnet scrap capacity.
  • Up to four new magnet production lines.
• Strategic Context: Expansions are planned to complement the phased buildout of the first Texas hub, optimizing HyProMag USA's hub-and-spoke configuration in the United States.
• Valuation Metrics: CEO Julian Treger stated the Net Present Value (NPV) for the Texas hub is approximately $600 million based on recent expansion plans.
• Growth Potential: Treger noted that the economics of expanding hubs are linear, providing a potential three times increase in company value with additional hubs.
• Market Drivers: The valuation is strengthening due to a recent strong increase in the price of rare earths and associated magnets.
• Regulatory Environment: HyProMag USA is positioned to support US demand growth following significant steps by the US government to support domestic supply and reshoring of rare earth magnet production.
• Timeline: Commercial operations are targeted for the first half of 2027 (H1 2027).
• Current Activities: Detailed engineering, supply of feedstock, and offtake discussions are continuing at pace.

Notable Quotes

• "We are very excited to begin formally expanding and optimizing the footprint of HyProMag USA to Nevada and South Carolina collaborating with our partner ILS. HyProMag USA's NPV for the Texas hub is circa $600-million based on recent expansion plans, and the economics of expanding the hubs are linear, which provides a potential three times increase in company value with additional hubs." — Julian Treger, CEO, Cotec Holdings Corp.
• "Furthermore, given the recent strong increase in the price of rare earths and their associated magnets, the valuation of the company continues to strengthen as detailed engineering, supply of feedstock and offtake discussions continue at pace. With the recent significant steps by the U.S. government to support domestic supply and reshoring of rare earth magnet production, HyProMag USA is well positioned to support U.S. demand growth with commercial operations targeted in H1 2027." — Julian Treger, CEO, Cotec Holdings Corp.