Note: The views, opinions, estimates, and interpretations expressed are solely my own and are provided in my personal capacity only. They do not represent the views, opinions, or official positions of CoTec Holdings Corp. or any of its affiliates.
CoTec Holdings (TSX-v: CTH) / (OTCQX: CTHCF) was founded four years ago to commercialize disruptive mineral-recovery technologies and apply them to undervalued or stranded assets—especially undervalued mining waste & recycling opportunities.
The goal is 25–30 operating assets within the next 5-6 years. The team has high conviction in CoTec’s business plan & prospects. Management & the board own ~60% of the Company.
Focuses in the waste/recycling areas are rapid, low-cost, efficient, clean recoveries of 1) super-fine materials, 2) hard-to-grind rock, and 3) low-grade materials.
Before jumping into CoTec’s primary focus, it’s worth touching upon the Company’s 17% stake in the MagIron project (enhanced flotation recovery for hematite & goethite ore, allowing iron ore to be recovered from waste, for low-carbon green steel).
A Jan. 15th PR detailing a new BFS on MagIron implies a C$378M valuation for its 17% interest in the US$1.6B post-tax NPV(4.9% real discount factor). Pre-production assets are not valued at 100% of NPV, but even a third of that would be C$126M vs. CoTec’s enterprise value of ~C$172M.
This week the Company announced big news regarding its HyProMag USA segment (60.3% CoTec Holdings). It’s tripling its recycled NdFeB magnet capacity to 4,656 tonnes/yrby 2029 by expanding to three hubs. First production from the initial Texas hub is expected within 18 months.
Key Strategic & Economic Highlights
Expansion: Triples production through a “Case 3” integrated model: recycling magnet scrap into high-value sintered NdPr blocks & finished permanent REE magnets.
Strong Financials: The three-hub configuration projects a post-tax NPV of $1.14B to $2.18B and a real IRR of up to 38.7%.
Feedstock Security: New hubs will co-locate with Intelligent Lifecycle Solution (ILS) facilities to harvest magnets from end-of-life tech devices.
Sustainability: Utilizing patented HPMS technology, the process maintains a low carbon, low energy footprint.
HyProMag USA is advancing to Pre-Feasibility Studies for its two new sites, but has completed an internal scoping study. Robust growth plans support a planned U.S. public listing of HyProMag USA, which could be a valuable investment catalyst for CoTec shareholders.
On Jan. 15th, the official opening of HyProMag’s UK rare earth magnet recycling & manufacturing facility was announced. It can produce up to 300 tonnes/yr of magnets & REE powder. Climbing the learning curve in the UK will be extremely helpful for efforts in the U.S.
Combined cap-ex for three hubs will be under US$450M vs. a post-tax NPV of $2.2B. In my view (no guarantees), I imagine the DoD and/or DoE will provide funding opportunities. The question is how much, and on what terms.
And, I would not rule out the notion of the U.S. government taking an equity stake in CoTec like it did in MP Materials. Big initiatives like government funding, and commercial off-take require a lot of time, but discussions are underway. It could be 2Q/26 before something big drops.
CoTec’s operating model utilizes disciplined capital allocation to create value. Management acquires & incubates early-stage assets at low cost, applies disruptive technologies, scales projects efficiently & rapidly, with plans to monetize them while minimizing equity dilution.
Things are progressing well at HyProMag USA. The Texas plant and those that follow will use patented Hydrogen Processing of Magnet Scrap (“HPMS“) technology to recover & recycle NdFeB magnets & demagnetized powders from end-of-life products.
HyProMag USA is critical to U.S. national defense, homeland security, and major industrial sectors—aerospace, wind power, robotics, MRI machines, EVs, and data centers.
CoTec is using conservative prices in its economic analysis. The U.S. DoD set a US$110/kg floor for MP Materials’ NdPr, and Aclara Resources’ recent PFS uses a long-term price assumption of $118.7/kg based on an Argus Media study.
Australia’s Meteoric Resources uses $110/kg as a base case in its PFS, and $138.57/kg as a “forecast” level, the mid-point of recent Adamas Intelligence & Project Blue reports. HyProMag USA’s forecast price is conservative. Its REE magnets & powders are more valuable than precursor NdPr oxide.
First revenue for HyProMag USA is slated for mid-2027. The math suggests the potential for robust margins… But wait, it gets better! CoTec’s share of the economics could/should grow quite substantially as there are plans for up to a total of 7-10 hubs.
How risky is the progression from zero HyProMag revenue today to possibly a significant run-rate relative to today’s valuation early next decade? While there are execution, timing, permitting & funding risks, they are not nearly as great as the risks facing mining projects at earlier stages, in riskier countries.
Funding risk for the initial unit is not onerous, cap-ex is US$142M, of which 65-80% could probably be covered by debt facilities, off-take agreements & government grants/financial support.
To be clear, gov’t grants/financial support is far from a sure thing, but REE magnet production in the U.S. is a highly desirable outcome for the U.S. DoD, DoE and other agencies/departments (see below). Even US$20-$50M, a tiny drop in the bucket for the U.S. gov’t, would be quite impactful.
Last year HyProMag USA obtained an indicative LOI from the U.S. Export-Import Bank for up to US$92M with a 10-yr term at a favorable interest rate.
Project delays are always possible, but as long as funding the low-cost project remains intact, (carrying cost for a months-long delay would not be high), timing is not a major risk factor (in my opinion).
Regarding permitting, the beauty of CoTec’s business model is that permitting hurdles are much lower. Why? Everyone wants recycled materials, no one wants tailings/waste sites. Large mining complexes have layers of complexity & tailings management challenges. Locals don’t want mines, mills, or tailings facilities nearby.
Unlike many REE projects, HyProMag USA expects to start generating cash flow in 2H/27, with a lifespan of 40+ years vs. a mine with a lifespan of 15-20 years.
Management plans to eventually spin out three or more segments, including; CoTec Metallics, CoTec Copper & CoTec Iron. These initiatives, and the HyProMag USA listing in the U.S., should be attractive investment catalysts.
Switching Gears to CoTec’s other attractive opportunities…
The 100%-owned Lac Jeannine project is a tailings reclamation play to produce high-purity (66.8% Fe iron ore concentrate). A PEA was done in mid-2024, and a BFS is expected in 1H/26. There’s considerable upside from the PEA economics exists through further drilling & advanced processing technologies.
CoTec has equity interests in Binding Solutions & Ceibo. Binding Solutions converts fines into ISO-compliant pellets for furnace use to produce green steel with 95% less energy & 98% less CO2. This tech is also amenable to other metals & minerals.
Ceibo is a low-carbon heap leach technology targeting refractory Cu minerals. It increases recoveries of low-grade sulfide ores.
There could be multiple company-makers on top of HyProMag USA, each potentially spun out to shareholders. Yet, in my view, CoTec’s valuation is notably cheap on just its 60.3% interest on HyProMag USA.
MagIron is fairly advanced and probably worth north of C$100M, Lac Jeannine’s BFS could show a robust NPV of C$100M+. How much might the Company’s 60.3% stake in HyProMag USA be worth? I think post U.S. listing it could be valued at a lot more than today’s enterprise value of ~C$190M.
While not without timing, execution, funding risks, a sum of the parts points to very substantial potential upside in CoTec Holdings’s share price, especially if peer critical material stocks move higher. 2026 could truly be a tremendous year.
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