ASM signs $250M agreement with South Korean consortium for 20% stake in rare earths project

July 21, 2021

The signing ceremony for the framework agreement. Attendees included (left to right): Catherine Raper, Australian Ambassador to the Republic of Korea; David Ko, CEO of ACE Equity Partners LLC; PS Ra, CEO of Cerritos Holdings Co., Ltd; Jerry Kwak, CEO of Kamur Partners LLC; Ian Gandel, chair of ASM; The Honorable Dan Tehan, Australian Minister for Trade, Tourism and Investment; and David Woodall, Managing Director of ASM (Courtesy ASM)

Australian Strategic Materials Ltd (ASM), headquartered in Perth, Australia, reports that it has entered into a conditional exclusive framework agreement with a consortium of South Korean Investors to obtain a 20% equity interest in Australian Strategic Materials (Holdings) Ltd (ASMH) for a price of US$250 million (AU$340 million).

ASMH is a wholly-owned subsidiary of ASM and is the holding company for ASM’s Dubbo Project, a proposed long-term polymetallic resource development containing rare earths, zirconium, niobium, and hafnium, all critical metals essential for advanced and clean technologies located in Dubbo in Central Western New South Wales, Australia.

The agreement includes a provision for a ten-year offtake agreement for up to 2,800 tpa of NdFeB (neodymium-iron-boron) alloy from ASM’s Korean Metals Plant (KMP), anticipatibf 100% of the neodymium oxide planned to be produced at the Dubbo Project being the primary source of feed to the KMP post the completion of construction.

The investing partnership comprises three respected South Korean private equity firms: Cerritos Holdings Co., Ltd, Kamur Partners LLC and ACE Equity Partners LLC. The investing partnership intends to establish a South Korean consortium fund for the purposes of the acquisition of the 20% equity in ASMH. Additionally, the investing partnership intends to form a separate consortium fund to establish and develop a permanent magnet manufacturing business in South Korea (MagnetCo Fund). MagnetCo Fund will be the counterparty to the proposed offtake agreement.

The investing partnership will arrange investment into the consortium fund which is expected to include strategic investment from major Korean industrial companies. Under the agreement, the subscription funds are payable to ASMH on satisfaction of the conditions. The funds are intended to be used by ASMH, in combination with other funding sources, to progress the development of the Dubbo Project.

The agreement is said to represent an important contribution of financial support for the Dubbo Project.

“I am truly delighted that the vision shown by the whole ASM team to become a leading global supplier of critical metals is bearing fruit,” stated Ian Gandel, ASM chair. “I would like to thank the Non-Executive Directors – comprising Ian Chalmers, Nic Earner and Gavin Smith – for their significant and valued contribution to ASM. In particular, I would like to acknowledge the loyalty and commitment that Ian Chalmers has shown to the Dubbo Project over the past twenty-five years. I would also like to thank our Managing Director, David Woodall, for his dedication and persistence to deliver this incredible opportunity during the Covid-19 pandemic.”

“We welcome the encouragement received from the South Korean business community and Government, which are grounded in strong relationships,” he continued. “We would also like to thank the Australian Government for its interest and support for our projects. We look forward to finalising arrangements with the Investing Partnership and funding entities as soon as possible and delivering on ASM’s ‘mine to metal’ strategy.”

David Woodall, ASM Managing Director, commented, “In opening a financing pathway for the Dubbo Project, this Agreement heralds an exciting new phase in ASM’s growth and puts us one step closer to executing our ‘mine to metal’ strategy. We are delighted our new South Korean partners have recognised the mutual value of the strategic investment opportunity represented by our integrated manufacturing capability that offers a new, cleaner source of critical metals and alloys to a rapidly expanding market. Cementing our ties with South Korea’s advanced manufacturing sector represents an incredible opportunity to create value from our Dubbo Project.”

Jerry Kwak, CEO of Kamur Partners LLC, added, “We are very proud to be associated with this strategically important project that will give rise to significant upstream and downstream benefits for both Korea and Australia, ushering in new opportunities for downstream permanent magnet product manufacturing.”

ASM states that, along with the investing partnership, it will now work towards finalising the conditions of the agreement before completing the proposed transaction and proposed offtake agreement by the end of 2021.

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