ASM to bolster balance sheet through $65m placement and up to a further $41m through entitlement offer

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Month: March 2021

ASM to bolster balance sheet through $65m placement and up to a further $41m through entitlement offer

Posted on by Tim Highley

ASM is pleased to announce that the Company has received firm commitments from sophisticated, professional and institutional investors for the placement of approximately 13.5m fully paid ordinary shares (New Shares) at $4.80 per New Share, raising $65m in gross proceeds (Placement).

Managing Director, David Woodall, commented: “We are delighted to have completed the placement component of this raising from existing and new international and Australian institutional investors. I am very pleased to welcome new shareholders to the Company, who join our register at a truly exciting time as we finalise plans to develop our first metallisation facility in Korea.

The funds raised significantly bolster our balance sheet, placing the Company in a strong position as we progress key workstreams which include the development of the proposed Korean Metals Plant and advancing key FEED workstreams on the Dubbo Project in New South Wales.

Importantly, we continue to advance our strategy for sustainable growth, with a primary focus on developing ASM into a globally relevant, independent and integrated metals producer by 2022.”

Highlights

  • Firm commitments received to raise approximately $65m through Placement at $4.80 per share
  • Strong international and domestic demand, with several high-quality institutions participating in the Placement
  • Funds raised from the Placement significantly strengthens ASM’s existing cash position, with further funds expected to be raised from the Entitlement Offer
  • Proceeds provide funding for ASM to focus on advancing key workstreams including engineering and development of Korean Metals Plant and the FEED Study for the Dubbo Project, while also providing additional working capital and funding of corporate costs
  • 1 for 14 Entitlement Offer will now proceed, at the same pricing as the Placement, to raise up to a further $41m, with some of ASM’s largest shareholders committing to take up approximately 29.4% of entitlements under the Entitlement Offer

The Placement

A total of 13,541,667 New Shares will be issued under the Placement at a price of $4.80 per New Share (Offer Price) under ASM’s ASX Listing Rule 7.1 placement capacity.

New Shares issued under the Placement will rank equally with existing ASM ordinary shares. The Offer Price represents a discount of:

  • 4% to the Company’s last closing price on 23 March 2021 of $4.99; and
    10% to the 5-day volume-weighted average price of $5.35.

Settlement of the Placement is scheduled to occur on Thursday, 1 April 2021.

Entitlement Offer

ASM is also undertaking a 1 for 14 pro-rata non-underwritten, non-renounceable entitlement offer to eligible shareholders to raise up to approximately a further $41m (before costs) (Entitlement Offer).

Eligible shareholders as at the Record Date of Wednesday, 31 March 2021, with a registered address in Australia or New Zealand, will be invited to participate in the Entitlement Offer at the Offer Price (being the same price as the Placement). The Entitlement Offer is expected to open on Wednesday, 7 April 2021, and close at 5pm (Perth time) on Friday, 16 April 2021, unless extended. As the Entitlement Offer is non-renounceable, entitlements will not be tradable or otherwise transferable.

Certain large shareholders (including ASM’s largest shareholder Abbotsleigh Proprietary Limited) who hold a combined voting power of 29.4% have committed to take up their full pro-rata entitlements under the Entitlement Offer, totalling approximately $12m.

The terms and conditions and further details of how to participate in the Entitlement Offer will be set out in the Offer Booklet which is expected to be sent to eligible shareholders on Wednesday, 7 April 2021. The Offer Booklet will include a personalised entitlement and acceptance form. Copies of the Offer Booklet will also be available on the ASX and the Company’s website.

Proceeds from the Placement and Entitlement Offer will be primarily used as follows:

  • To fund the final stage of engineering and construction of ASM’s proposed Korean
    Metals Plant (KMP);
  • Further engineering (FEED) work in relation to the Dubbo Project in NSW;
  • Corporate costs; and
  • Working capital and offer costs.

Timetable

The indicative timetable for the Placement and Entitlement Offer is set out below:

 

Download the ASX Announcement

Download the Equity Raising Presentation

ASM signs MOU with South Korean provincial government for metals plant location

Posted on by Tim Highley

ASM has signed a memorandum of understanding (MoU) with the Chungcheongbuk-do (Chungbuk) Provincial Government and Cheongju-si (Cheongju), City Government to locate its first metals plant (Korean Metals Plant or KMP) within the Ochang Foreign Investment Zone in Korea.

The Chungbuk Provincial Government MoU covers supply of utilities, administrative licenses and permit procedures, including the Korean Standard Industrial Classification code for rare metals and rare earth metals. The MoU also includes a government grant, in accordance with the Foreign Investment Promotion Act.

Chungbuk is located 115km south of the Korean capital, Seoul, and 20km north of Daejeon, the site of the metalisation pilot plant. The region has substantial existing infrastructure and a competent technical workforce.

Provincial Governor Si-Jong Lee said, “To sustain the growth of the Chungcheongbuk-do economy, we strongly support this investment. ASM is establishing its Korean headquarters, R&D centre and metals plant in the Ochang Foreign Investment Zone. This will provide key rare earth metals to the Korean economy and local employment to revitalise our local economy.”

ASM Managing Director, David Woodall, said “This MoU, along with the strong support from the Korean Ministry of Trade, Industry and Energy (MOTIE) and the Chungbuk Provincial Government, provides ASM with confidence to build the metals plant in the Ochang Foreign Investment Zone. With key Korean manufacturing companies like LG Chemical, Samsung SDI, SK Hynix, and Hyundai Mobis within close proximity, we are confident that building our first metal plant in this well established industrial area will provide significant benefits.”

ASM’s Korean Metals Plant will initially produce high-purity neodymium-iron-boron powder and titanium powder using the innovative, low-energy metallisation process developed by ASM’s Ziron Tech team.

Last week, ASM announced it had completed an internal scoping study for the initial 5,200tpa metals plant, with the results demonstrating the feasibility of the Korean Metals Plant (ASX announcement, 2 March 2021).

 

Download the ASX Announcement

Scoping study demonstrates feasibility of ASM Korean metals plant

Posted on by Tim Highley

Highlights

  • Initial 5,200tpa Korean Metals Plant study delivers strong economics
    • Estimated capital – approximately US$35-45million
    • Estimated annual revenue – approximately US$180m-190m
    • Estimated annual EBITDA – approximately US$45m-$50m
  • Expenditure of US$ 1.5m on detailed engineering approved by ASM Board & underway
  • A final investment decision (FID) on the 5,200tpa Korean Metal Plant expected in mid-2021
  • Plans to expand the 5,200tpa Metal Plant to over 16,000tpa by 2024
  • Commercial production of Titanium and NdFeB metal powder from ASM’s existing Korean commercial pilot plant proposed to commence in Q2 2021

ASM has completed an internal Scoping Study for an initial 5,200tpa metals plant (Korean Metals Plant or KMP) in Korea. The results of the study demonstrate the feasibility of the Korean Metals Plant.

As a result of the positive outcome of the Scoping Study, the ASM Board has approved an expenditure of approximately US$1.5million for detailed design engineering. This will provide a fully engineered scope of works and further refine capital estimates, before making a final investment decision by June 2021. The Korean Metals Plant will initially produce high-purity neodymium iron boron powder and titanium powder using the innovative, low-energy metallisation process developed and patented by ASM’s Ziron Tech team.

With the completion of the detailed engineering and the confirmation of the capital costs of the KMP, an investment decision is anticipated by June 2021. Construction of the Korean Metals Plant is expected to be completed by mid-2022, with metal production to progressively increase, expecting to reach full capacity of 5,200tpa by mid-2022.

ASM will continue to pursue its collaborative strategy with Korean manufacturers to independently produce key critical metals, focusing on rare earths, titanium and zirconium metals, alloys, and powders. ASM expects to expand the capacity of the KMP to over 16,000tpa by the end of 2024, to meet the potential Korean demand.

ASM Managing Director, David Woodall, said: “Our ability to commercially produce high-purity critical metals for advanced technology manufacturers in Korea gives ASM an excellent foundation to be an independent fully integrated critical metals producer globally. With the US$4.5million grant in 2020 from the Korean Government and the excellent work and milestones delivered by our Ziron Tech team, we are confident about our strategy to integrate into Korea’s critical metals sector.”

“Korea is phase one. Once complete, this will provide the template for future ASM metals plants in other regions. We’ll now continue to progress our ‘mine to manufacturer’ strategy using our pilot plant furnaces in the second half of 2021, with the production of titanium and rare earth permanent magnet alloy powders. This will enable ASM to commence providing critical metals directly into the Korean manufacturing sector.”

The Scoping Study demonstrates the potential for the KMP to deliver a profitable standalone downstream business for ASM while the company progresses the Dubbo Project. ASM’s KMP will supply high-purity products direct to the Korean market, providing manufacturers with a stable and secure domestic supply of metals. ASM will continue discussions and negotiations for offtake contracts to grow its customer base and market presence.

Download the ASX Announcement

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