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

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:

 

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

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).

 

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Scoping study demonstrates feasibility of ASM Korean metals plant

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.

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ASM Produces Rare Earth Permanent Magnets at Korean Institute of Rare Metals Facility

Highlights

  • Two kilograms of pre-sintered permanent magnets successfully produced from ASM’s high-purity neodymium-iron-boron (NdFeB) powder
  • Magnetic properties and quality confirmed by the Korean Institute of Rare Metals (KIRAM)

ASM reports that the Korean Institute of Rare Metals (KIRAM) has successfully produced and tested two kilograms of pre-sintered permanent magnets from ASM’s high-purity neodymium-iron-boron (NdFeB) powder from its pilot plant in Korea.

KIRAM’s testing provides a strong indication that ASM’s NdFeB alloy is suitable to produce rare earth permanent magnets that are commercially in demand. This certification is further validation of ASM’s strategy to become an independent, fully integrated “mine to manufacturer” producer of critical metals.

ASM managing director, David Woodall said, “The excellent support and collaborative work between the Ziron Tech and KIRAM teams delivered a truly significant result. It provides ASM with confidence that our integrated business model – from the Dubbo Project to metals production – can play an important part in the Korean Government’s ‘New Green Deal’.

“We now have confirmation of the quality and high purity of the permanent magnet alloy and titanium powders ASM can deliver to the Korean industry and eventually the global markets. ASM is now planning to advance in the next few months with the detailed engineering, incorporating both the recently produced titanium and now the permanent magnet powders as part of an initial 5,200 tonnes per year plant in Korea, projected to be fully operational by mid-2022. This is a very significant transition for the company as we continue to progress the development of the Dubbo Project in the central western, NSW.”

Methodology

KIRAM scientists made a strip-cast sample using five kilograms of the NdFeB powder produced by ASM’s Ziron Tech team. The strip was then examined using scanning electron microscopy (SEM) and Energy Dispersive X-Ray Spectroscopy (EDS) to confirm the microstructure (Figure 1) and magnetic orientation.

NdFeB strip alloy produced from Ziron Tech power (SEM/EDS result)

Some of the Ziron Tech NdFeB alloy was pressed into a two-kilogram block to measure the magnetic characteristics using VSM (Vibrating Sample Magnetometry) and compared with a similar sample made from a commercially available alloy. These tests (Figure 2) indicated that ASM’s pre-sintered magnet exhibited superior magnetic properties than the commercial sample.

Results of Vibrating Sample Magnetometer (VSM) tests comparing the Ziron Tech pre-sintered alloy with a commercially available powder.

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ASM Titanium Powder Approved for 3D Printing by Korean Advanced Manufacturing Company

Highlights

  • Independent 3D-printed metal part producer HANA AMT has confirmed the high purity of ASM’s titanium powder
  • A 75kg/day run of titanium (Ti) metal powder was successfully produced by Ziron Tech at a pilot scale (metal purity 99.918%)
  • Significant environmental benefits of ASM’s novel metal process were confirmed by HANA AMT

ASM has received confirmation of its high-purity titanium powder from HANA AMT, a Korean 3D printing group. HANA AMT performed a detailed analysis of 20kg of the titanium powder, confirming a purity of 99.918%.

The titanium metal powder assayed came from a run of 75kg produced at ASM’s metallisation pilot plant during January 2021. ASM and HANA AMT have signed a non-disclosure agreement as they progress negotiations towards an initial 1,500 tonne per year offtake agreement for titanium metal powder.

20kg titanium metal ingot produced by ASM (left), Creation of Ti metal powder (centre), HANA AMT 3D-printed metal products (right)

Contributing to the progress of this agreement, the independent assay analysis of ASM’s titanium powders demonstrated the following comparison with industry standards (table 1):

Titanium Metal Powder

Elements Industry Standard – %* ASM Ti Powder – %
Ti Balance 99.918
Fe < 0.010 0.002
Al < 0.005 0.003
Cr < 0.005 0.003
Mo < 0.005 0.001
Mn < 0.005 0.001
Ni < 0.005 0.002
Zr < 0.005 0.001
Cu < 0.005 0.003
Co < 0.005 0.002
B < 0.005 0.001
C < 0.005 0.001
Ni < 0.010 0.009
H < 0.005 0.003
O < 0.080 0.050

Table 1 – Assay Comparison completed by HANA AMT
* ASTM B299 – Standard Specification for Titanium

ASM managing director, David Woodall said, “This independent review of ASM’s titanium metal powder is a great validation of our patented metal process, confirming the high purity and the environmental benefits of the metal ASM can produce for the manufacturing sector in Korea. We look forward to progressing negotiations and continuing discussions with other potential offtake and strategic partners during our time in Korea.”

SEM Image of ASM’s Ti powder (left), ASM’s Ti powder sparks bright orange, indicating high quality due to low oxygen (right)

“Our team continues to work closely with the Korean Institute of Rare Metals (KIRAM) to produce sample permanent magnets for the Korean market to review over the coming weeks. This is a promising start of the year, with 2021 a foundation year for ASM, as we progress our vision to become a fully integrated critical metals producer – supplying metals from the mine direct to manufacturers, through the delivery of the Dubbo Project and the establishment of our metals business.”

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Quarterly Activities Report to 31 December 2020

Highlights

ASM Metals Business

  • Completed acquisition of 95% interest in joint venture partner Ziron Technology Corporation (Ziron Tech)
  • Produced 8.6kg of high-purity zirconium metal powder at 98% Zr and 1.5% Hf
  • Korean Atomic Energy Research Institute (KAERI) confirmed de-hafniated zirconium metal meets Korean market requirements
  • Agreement with Dongkuk Refractories & Steel to design, develop, assemble, install and verify a 250kg/day commercial plant
  • Produced 120kg of titanium copper alloy (99.5% purity)
  • Confirmed commercial scalability of the innovative metallisation process
  • Confirmed significant environmental benefits of innovative metal process
  • Produced 200kg of ferro-neodymium (FeNd – Nd 80%, Fe 20%), a key constituent of strip cast permanent magnet alloys
  • Produced 6kg of a neodymium iron boron (NdFeB) magnet alloy at the Korean Institute of Rare Metals (KIRAM) facility
ASM’s Chairman Ian Gandel and Managing Director David Woodall with the successful Ziron Tech team that delivered commercial metal production.

Dubbo Project Optimisation

  • Optimisation Feasibility Study (OFS) on track for completion at the end of Q1 2021
  • Confirmed the simplification of the Zr circuit, with negligible impact on de-hafniated zirconium circuit
  • Independent review of rare earth processing circuit confirmed the validity of the Dubbo Project flow sheet and also identified opportunities for optimisation
  • Optimisation of the flow sheet informed finalisation of the OFS scope, with Hatch proceeding on this basis
  • Mining consultants engaged for OFS mining costs update
  • Utilities, reagents, and consumables quantities have been confirmed, with potential providers invited to quote on supply, capital costs, and delivery
  • Requests for quotations for the supply of the processing plant have been sent to key suppliers, with updated pricing information expected by the end of February 2021
  • Logistics analysis is well advanced with no major issues identified in delivery and export

Corporate

  • Cash position totalled A$ 12.4 M
  • Executed and progressed non-disclosure agreements with large Korean EPC companies during the quarter
  • Executed agreement with Dongkuk Refractories & Steel to complete the design, development, and construction of a commercial metal plant. Detailed engineering is expected in Q2 2021
  • Progressed discussions with potential strategic partners
  • Continued discussions about metal offtake agreements with potential Korean manufactures
  • Continued discussions with key Korean Government departments Korean Institute of Technology, Korean Institute of Rare Metals, Ministry of Trade and Industry.

 

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ASM produces 6kg of neodymium iron boron (NdFeB) alloy

Highlights

  • ASM produced 6kg of a neodymium iron boron (NdFeB) alloy at the Korean Institute of Rare Metals (KIRAM) facility.
  • KIRAM has certified the metallic structure and ratio of key metals (Nd: Fe: B = 32%: 67%: 1%) of the key NdFeB permanent magnet alloy.
  • ASM continues to work on the potential for establishing a full scale metal processing facility that would include production of the NdFeB alloy.

ASM has produced 6kg of a neodymium iron boron (NdFeB) alloy at the Korean Institute of Rare Metals (KIRAM) facility in Korea. The NdFeB alloy was manufactured from the FeNd alloy produced by ASM’s metallisation pilot plant.

NdFeB is a key rare earth permanent magnet alloy. KIRAM has certified the metallic structure and ratio of key metals (Nd: Fe: B = 32%: 67%: 1%) of the alloy, confirming its suitability for rare earth permanent magnet production. KIRAM is a division of KITECH, the Korea Institute of Industrial Technology, which is a South Korean government research institute.

With the successful production of 6kg of the NdFeB alloy, ASM and KIRAM will continue the production of an additional approximately 7kg of NdFeB alloy for conversion into an initial permanent magnet samples for evaluation by Korean industry.

ASM continues to assess the potential of developing a higher-volume continuous metal production facility in 2021. The successful production of the NdFeB alloy gives ASM further confidence in its capability to produce this permanent magnet alloy at the metal facility, which would be situated in Korea (ASX 2 November 2020).

ASM Managing Director, David Woodall said: “The successful production of this NdFeB alloy is an important milestone for ASM, and paves the way for integrating production of key rare earth permanent magnet alloys into our developing metals business. Our team is working closely with KIRAM, a key research group in Korea, to gain certification of the alloy. In the coming months, we’ll produce further sample permanent magnets for the Korean market
review.

“ASM is now focused on assessing the potential for development of a metals processing plant in Korea. In addition to laying the foundation for a potential metals business, which would include metals from our Dubbo Project, we continue to progress offtake and strategic partner agreements.”

 

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Titanium Copper Alloy Production Confirms Commercial Scalability & Doubles Process Efficiency

Highlights

  • ASM produced 120kg of titanium copper alloy (99.5% purity), confirming the commercial scalability of its innovative metallisation process.
  • Improvements to ASM’s metallisation process has doubled the metallic yield.
  • ASM continues to work collaboratively with Dongkuk R&S, on the potential to develop a full-scale metal processing facility.

ASM has successfully confirmed the commercial scalability of its innovative metallisation process with the production of 120kg of titanium copper alloy (99.5% purity) at its facility in Korea. ASM’s Ziron Tech team produced two 60kg runs of the titanium copper alloy at a rate equivalent to approximately 1,000kg per day.

This result is significantly above the targeted 250kg per day production rate, outlined in the agreement between ASM and Dongkuk Refractories and Steel Co Ltd (DK R&S), announced on 2 November 2020.

The key to the successful demonstration of the commercial scalability was due to proprietary improvements to ASM’s unique metallisation process, which has seen the efficiency of metal recovery more than double than the initial test work in the pilot plant. This test work confirms the ability of ASM to produce any type of titanium alloy traded in the global metal market.

This increase in efficiency was delivered while maintaining the environmental advantages of ASM’s low-energy metallisation process, compared to the standard industry process. ASM will now focus on accelerating the development of a larger metals plant in Korea through its agreement with DK R&S. Members of DK R&S’s management and technical team were present to witness the successful metallisation run using the improved process.

ASM Managing Director, David Woodall said, “The successful commercial production run of titanium metal alloy is a significant result for the ASM team in Korea. What is even more pleasing is that this result was achieved using a proprietary improvement to our metallisation process, which has more than doubled the metal yield. We continue to discuss with DK R&S how we can accelerate the development of a metal processing plant in Korea.

“In addition to producing metal products from our Dubbo Project in central west NSW, ASM now has the potential to develop a significant business unit around titanium and other metals. This provides a tremendous foundation for ASM and its shareholders.”

 

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ASM produces permanent magnet metal alloy

Highlights

  • ASM has produced 200kg of ferro-neodymium (FeNd – Nd 80.3%, Fe 19.9%), a key constituent of strip cast permanent magnet alloys.
  • ASM is working with the Korea Institute for Rare Metals (KIRAM) to produce a strip cast permanent magnet alloy which will be formed and sintered into permanent magnets.
  • Samples of permanent magnets will be distributed to Korean industry for evaluation.

ASM’s Ziron Tech team in Korea has successfully produced 200kg of FeNd, a key rare earth alloy used to produce sintered permanent magnets (via powder metallurgy). Sintered rare earth permanent magnets have high magnetic strength and heat resistance and are essential for advanced and clean technologies including electric vehicles. The FeNd alloy was produced using ASM’s low energy metallisation process and has significant environmental advantages over the industry standard process.

The 200kg of FeNd alloy will be used in the production of rare earth permanent magnets in partnership with the Korea Institute for Rare Metals (KIRAM), a division of KITECH (the Korea Institute of Industrial Technology).

The FeNd alloy will go into a strip casting process at KIRAM to be converted into NdFeB (iron-neodymium-boron) magnet alloy powder. This powder will then be subjected to assay and magnetic strength testing to determine product acceptability.

ASM Managing Director, David Woodall said, “The successful production of the key FeNd alloy, which is essential in the production of permanent magnets, is another significant milestone in ASM’s “mine to manufacturing” strategy. We are looking forward to seeing the progress of KITECH’s permanent magnet production run, as Korea continues to secure its supply chain to provide stability, security, and sustainability for its vital new technology manufacting sector. This is strongly aligned with ASM’s strategy.

“With partners, Dongkuk R&S, we are progressing the design and construction of our 250kg per day continuous metal plant in Korea (as announced on 2 November 2020). We expect to see the first phase of commercial operation within four months. This will represent the start of ASM’s metal business, which should prove very exciting for our shareholders.”

 

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