Quarterly Activities Report to 31 March 2022

The Australian Strategic Materials (ASM) Quarterly Activities Report to 31 March 2022 has been released.

Key points for the Quarter include:

  • Buildings and facilities at the Korean Metals Plant (KMP) were completed, with the Plant Registration certificate received on 7 April 2022. The installation and commissioning of the first phase of the KMP will continue in the second quarter, and is planned to have an installed capacity of 2,200 tpa.
  • Due diligence on the Dubbo Project was completed by the Korean Consortium Fund (KCF), comprising Cerritos Holdings Co., Ltd, Kamur Partners LLC and ACE Equity Partners LLC.
  • A Heads of Agreement (HOA) was signed with Hyundai Engineering Corporation Co., Ltd., (HEC) to exclusively negotiate the Front-End Engineering and Design (FEED) and the Engineering Procurement and Construction (EPC) for the Dubbo Project. While work is continuing with HEC, the delivery of a contract for the initial FEED has been delayed while both ASM and HEC finalise the scope, which includes more detailed engineering in key work packages.
  • ASM continued to work on progressing the financing of the Dubbo Project. During the quarter, an Expression of Interest from the Korea Trade Insurance Corporation (K-Sure) was received to potentially provide export credit insurance support to ASM for financing the development of the Dubbo Project.
  • A Modification Report to the Dubbo Project State Significant Development consent was submitted to the NSW government. The report incorporated ASM’s proposed plan and design improvements, resulting from the Optimisation Study completed in December 2021. Once submitted, public consultation commenced, with the exhibition and public submission period opening on 30 March 2022 and closing on 19 April 2022.
  • The composition of the ASM Board changed during the quarter. Mr Ian Chalmers, Non-Executive Director, retired. Mr Chalmers delivered vital leadership to establish the foundation of ASM, particularly in developing the Dubbo Project. ASM welcomed to the Board, Ms Kerry Gleeson LLB (Hons), FAICD, as a Non-Executive Director.

ASM signs Exclusive Heads of Agreement with Hyundai Engineering Corporation

Australian Strategic Materials (ASM) has announced that following ongoing discussions with HEC in relation to the development of the Dubbo Project, it has signed a Heads of Agreement with Hyundai Engineering Corporation Co., Ltd., to exclusively negotiate with HEC the delivery of the FEED, which could progress to the EPC.

The agreement for the exclusive negotiation follows the request for proposal process run by ASM for FEED for the Dubbo Project, where HEC have been identified by ASM as the preferred candidate based on HEC’s experience and capability.

Under the HoA, ASM and HEC have entered into an exclusivity period for the award of FEED by 31 March 2022 and subject to the successful delivery of FEED for the award of EPC until 25 February 2023. The Company’s current target is for the FEED contract to be awarded in Q1 2022, and for the delivery of the FEED in Q4 2022. The terms of the FEED and any EPC (including the price, scope, and schedule) are yet to be agreed by the parties.

ASM Managing Director David Woodall said exclusively engaging with HEC was another key milestone in moving the Dubbo Project towards a Final Investment Decision and demonstrates the support the Dubbo Project has from key stakeholders in Korea.

The team at HEC are impressive being at the forefront of providing innovative and sustainable engineering solutions that will enable the successful delivery of our Dubbo Project, a key to our “mine to metal” strategy.

Meeting HEC CEO Mr Kim Chang-Hag and his team shows the quality project partner HEC brings.  The desire of both HEC and ASM to work in partnership to deliver the Dubbo Project with significant benefits to both Korea and Australia puts us in a great position as we continue discussions with Korean financial institutions to fund the development of Dubbo.

Mr David Woodall

HEC Chief Executive Officer Kim Chang-Hag said:

HEC has delivered large projects successfully globally, and we are delighted to be working with ASM on FEED progressing to EPC to develop the Dubbo Project. We believe we can deliver an innovative and optimised solution to support the development of the Dubbo Project and ASM’s critical metals business in a partnership that helps Korea secure the critical metals it needs for its manufacturing industries.

Download the ASX Announcement

Quarterly Activities Report to 30 December 2021

The Australian Strategic Materials (ASM) Quarterly Activities Report to 30 December 2021 has been released.

Highlights for the Quarter included:

  • Released the Dubbo Project Optimisation Study
    – A capital cost estimate of AUD 1,678 million with pre-tax NPV of AUD 2,361 million, pre-tax IRR of 23.5%, and annual free cash flow (full ramp-up) of AUD 425 million
  • Commenced hot commissioning of ASM’s Korean Metals Plant
  • Deputy Prime Minister of South Korea, Mr Hong Nam-ki, visited ASM’s Korean Metals Plant
  • Signed a Joint Statement of Cooperation with the Korean Mine Rehabilitation and Resource Corporation (KOMIR) to enable the supply of critical minerals and metals into Korea
  • Appointed Australian and New Zealand Banking Group Limited ( ANZ) as financial advisor for the debt financing of the Dubbo Project
  • Hosted the NSW Deputy Premier, The Hon Paul Toole MP, at ASM’s Toongi deposit for the launch of the NSW Critical Minerals and High-tech Metals Strategy
  • Attended a roundtable meeting on the Critical Minerals Supply Chain with the President of the Republic of Korea, His Excellency Mr Moon Jae in

Korean Consortium successfully completes due diligence on the Dubbo Project

Australian Strategic Materials Limited (ASM) is pleased to advise that the consortium of South Korean Investors, comprising Cerritos Holdings Co., Ltd, Kamur Partners LLC and ACE Equity Partners LLC, (the Investing Partnership) has successfully completed due diligence on the Company’s flagship Dubbo Project. This represents a key milestone in progressing the consortium fund’s proposed conditional investment under the Framework Agreement. (see ASX Announcement: 21 July 2021)

After a delay due to COVID-19 travel restrictions, ASM recently hosted an extensive Australian due diligence visit by the Investing Partnership. This included visiting the Company’s Dubbo Project and discussing ASM’s research partnerships and business activities in Australia.

ASM’s Managing Director, David Woodall, said the completion of due diligence to the satisfaction of the Investing Partnership had taken place in parallel with continued progress on the remaining formal binding terms of the consortium’s investment.

“We are very pleased to have successfully concluded the due diligence process. Together we are now focused on securing a significant South Korean strategic investor to partner with ASM on its Dubbo Project, and to completing the terms for a formal binding agreement.”

“Our relationship with our Korean partners continues to go from strength to strength,” Mr Woodall said.

Spokesperson for the Investing Partnership, CEO and Founder of Cerritos Holdings Co., Ltd, Pumsoo Ra said the Investing Partnership was committed to working with ASM to finalise an investment in relation to the Company.

“It is clear that ASM has the resources and technical capacity to partner with us to support the supply chain of critical metals needed for the production of clean energy technologies such as electric vehicles and renewable energy generation capacity, as well as advanced electronics,” Mr Ra said.

“We need that supply chain to be secure and reliable, and we look forward to continuing our discussions with ASM and our partners in Korea.”

ASM will continue to update the market as further milestones are reached.

Download the ASX Announcement

 

Kerry Gleeson appointed non-executive Board director

Ms Kerry Gleeson

Australian Strategic Materials Limited (ASM) is pleased to advise the appointment of Kerry Gleeson as Non-Executive Director to the Board effective 1 February 2022.

Ms Gleeson is an experienced independent Non-Executive Director, chair and committee member with over two decades of experience as a director, senior executive and board advisor of various ASX listed companies. She has worked nationally and internationally across broad and complex industry sectors, including mining and resources, industrial and agri-chemicals, manufacturing, transport and distribution and international education.

Ms Gleeson is a qualified lawyer in both the UK and Australia, and spent 15 years in private practice, including as a partner of an English law firm, before emigrating to Melbourne and joining Blake Dawson Waldron (now Ashurst). Ms Gleeson’s other current roles include Non-Executive Director of St Barbara Limited, New Century Resources Ltd and Chrysos Corporation Ltd. She is also the Chair of Trinity College at the University of Melbourne.

Commenting on her appointment Ms Gleeson said:

ASM is entering an exciting stage of the Company’s development and I am thrilled to be joining as ASM enters its next phase. I am looking forward to working with the Board and management to build on the impressive momentum ASM has already created.

ASM Chair Mr Ian Gandel said:

“I am delighted to welcome Kerry to the ASM Board. Kerry’s strong leadership skills, technical capability and commercial expertise will help drive us forward through the next phase of our development.

This exciting phase includes the production of critical metals in South Korea, progressing the development of the Dubbo Project and looking for opportunities to grow our global ’mine to metals’ business.”

Download the ASX Announcement

ASM signs Joint Statement of Cooperation on Critical Metals with KOMIR (KORES)

Australian Strategic Materials Limited (ASX: ASM) is pleased to announce that it has signed a Joint Statement of Cooperation with the Korean Mine Rehabilitation and Resource Corporation (KOMIR), the renamed Korean Resources Corporation (KORES), to enable the supply of critical minerals and metals into Korea.

Under the Joint Statement of Cooperation, ASM and KOMIR have agreed to work together to expand the use of rare earths and critical metals in Korea and develop import opportunities that will secure the supply of these metals for Korean industry.

ASM Managing Director, Mr David Woodall, said:

“This builds on the cooperative and collaborative relationship between Korea and ASM, creating further opportunities to engage on the strategic issue of critical minerals and metal supply.”

“This Joint Statement of Cooperation is another firm sign of Korea’s commitment to securing its supply of critical metals and to working with ASM to deliver an outcome that is beneficial to the Korean supply chain.”

“ASM welcomes this opportunity to work with KOMIR to provide an alternative, secure and sustainable supply of critical metals. ASM will commence production of critical metals at ASM’s Korean Metals Plant in 2022.” 

CEO of KOMIR, Kyu-yearn Hwang, said:

“To improve the supply and demand of rare earths in South Korea, the South Korean government supports the operation of South Korean critical metals plants. Partnering with ASM will enable us to deliver on our strategy to ensure a stable, secure supply of critical minerals and metals for the South Korean industry.”

The key areas contemplated for cooperation under the Joint Statement of Cooperation include:

  • Importation of rare-earth products into Korea, including for strategic stockpiling.
  • Supplying ASM with rare-earth products to enable Korean domestic production of rare-earth magnet feed metal at ASM’s Korean Metals Plant.

The term of the Joint Statement of Cooperation is for five years, and the term will automatically extend for an additional one-year period unless the parties agree otherwise.

Under the Joint Statement of Cooperation, both ASM and KOMIR have a right to terminate the agreement on three months written notice to the other party.

KOMIR is the Korean Government Agency responsible for national resource security, including developing overseas mining and processing capacity to supply the Korean market. One of KOMIR’s strategic objectives is to upgrade the country’s access to critical minerals.

 

Download the ASX Announcement

Dubbo Project Optimisation Delivers Strong Financials

Key points

  • Optimisation Work for Dubbo Project confirms a strong expected rate of return with pre-tax NPV of AUD 2,361 million, pre-tax IRR of 23.5%, and annual free cash flow (full ramp-up) of AUD 425 million
  • Capital cost estimate of AUD 1,678 million consisting of direct capital of AUD 1,307 million, indirect capital of AUD 208 million, and a contingency of AUD 163 million
  • Forecast annual operating cost of AUD 287 million
  • Forecast based on 20-year life of mine at 1Mtpa plant feed rate based on existing ore reserves. Measured and Inferred mineral resources, which have the potential to extend the mine life, have been excluded for this study
  • Oxides of zirconium, hafnium, niobium, didymium (i.e. neodymium and praseodymium), dysprosium and terbium to be produced
  • Inclusion of major infrastructure to optimise environmental, social and governance (ESG) performance and deliver operating cost savings

Australian Strategic Materials Ltd (ASX: ASM or the Company) is pleased to confirm strong financial results as an outcome of the Optimisation Study and Enhanced Project Addendum (Optimisation Work) for the Dubbo Project (Dubbo Project). The Optimisation Study was based on Alkane Resources Ltd’s optimisation study released to the market in 2018 (ALK: ASX Release 4 June 18 Dubbo Project Engineering and Financials Update) (2018 ASX Release). A summary of the outcomes of the Optimisation Work is included at the end of the ASX announcement entitled Dubbo Project: Project Summary (Project Summary).

The revised financials are based only on the initial ore reserve of 18.9 Mt. Substantial additional measured and inferred mineral resources beneath the ore reserve are excluded from this study.

The Optimisation Work simplifies the Dubbo Project process flow sheet and incorporates new operating strategies that will reduce operating costs and improve the ESG performance of the Dubbo Project. These strategies now include increasing the brine concentrator capacity (halving water consumption), refurbishment of the railway line (which simplifies project logistics and will provide new categories of local entry-level jobs) and development of a chlor-alkali plant (which reduces the cost of reagents and their handling and transportation). These strategies facilitate ESG benefits by reducing water consumption, reducing the handling and quantum of process chemicals, and reducing the number of trucks on local roads, required for the Dubbo Project.

The updated Dubbo Project base case for the 20-year life of mine is expected to achieve a pre-tax NPV of AUD 2,361 million and a pre-tax project internal rate of return of 23.5%. This is a pre-tax IRR improvement of 6.0% compared to the 2018 ASX Release.

ASM Managing Director David Woodall said, “I am delighted with the outcomes of the Optimisation Work which demonstrates the financial strength of the Dubbo Project and ASM’s focus on a sustainable future delivering improved performance and ESG outcomes.”

Deputy Prime Minister of South Korea visits ASM Korean Metals Plant as hot commissioning begins

Australian Strategic Materials Limited (ASX:ASM) is pleased to announce that commissioning has begun at its Korean Metals Plant in Ochang Province, South Korea, marked by a visit to the plant by Deputy Prime Minister of South Korea, Mr Hong Nam-ki.

Australian Strategic Materials has commenced hot commissioning on its neodymium furnace. This included firing up the plant’s furnaces, processing feed material and casting the plant’s first ingots of neodymium metal.

This represents the first phase of commissioning activities, with additional modules of the Korean Metals Plant undergoing construction and installation. These first phase commissioning activities are planned to continue through the first half of 2022, with the full scale, 5200 tpa plant due for completion in the second half of calendar year 2022.

South Korean Deputy Prime Minister, Mr Hong Nam-ki meeting with representatives from the ASM Korean Metals Plant, South Korea.

Updated production guidance will be provided once the first phase of commissioning is complete.

Australian Strategic Materials Managing Director, David Woodall said the hot commissioning milestone was an important one for the company as it moves towards the completion of the Korean Metals Plant.

“The team in South Korea has worked tirelessly to put us in a position to start commissioning activities at the Korean Metals Plant, despite the logistical and supply constraints as a result of covid. Although, we have more work to do to complete the installation of the facility and commission the full plant, this is a great early sign that our plant is working as expected for this stage.”

“Australian Strategic Materials is moving closer to producing commercial quantities of titanium and permanent magnet alloy, as part of our strategy to provide an alternative, secure supply chain for critical metals.”

“We were also extremely honoured to have Deputy Prime Minister Mr Hong Nam-ki visit us at this significant stage for the business.”

Presentation of ASM metal samples to South Korean Deputy Prime Minister, Mr Hong Nam-ki.

Quarterly Activities Report to 30 September 2021

Highlights
  • Signing a $US250m framework agreement with South Korean consortium for 20% interest in Dubbo Project and offtake from Korean Metals Plant (ASX Release 21 July 2021: Framework Agreement for 20% stake in Dubbo Project and Offtake)
  • Construction of the Korean Metals Plant continuing, commissioning planned to commence before calendar year end
  • The Dubbo Project optimisation study is being finalised, with results to be released on completion of final reporting
  • Inclusion in the S&P ASX/300 Index effective 30 September 2021 (S&P DJI Index Announcement 3 September 2021: S&P DJI Announces September 2021 Quarterly Rebalance)
  • Appointing ANZ as financial advisor for the debt financing of the Dubbo Project (ASX Release 6 October 2021: Dubbo Project Finance Update)

ASM’s Managing Director, David Woodall, said:

“As the global energy transition continues, so does the global need for an alternative, reliable supply of critical metals and during the quarter we took a significant step towards meeting that demand by signing a Framework Agreement with a consortium of Korean businesses that creates a pathway towards financing the Dubbo Project.

Progress has been made to support the completion of the due diligence on the Dubbo Project under the Framework Agreement, and for preparations to commence commissioning the Korean Metals Plant before the end of the year. While the impact of the delta variant of COVID-19 has slowed completion of our planned activities, I am proud of our Korean and Dubbo Project teams on what they have achieved in trying times. 

We are close to finalising the outcomes of the Dubbo Project optimisation study and look forward to updating the market with these outcomes. We continue to progress opportunities with Australian and Korean engineering and construction companies, including to provide key infrastructure and equipment planned for the Dubbo Project.

I have just spent 4 months in Korea to continue the progression of our development of delivering our “mine to metal” business. Looking ahead, ASM will continue to work with our Korean partners to progress the equity investment into the Dubbo Project; commission the Korea Metals Plant; and continue our discussions with financiers and potential offtake partners for our high purity, low emissions metals products.”

ASM