Australian Strategic Materials hits new high on US$250 million framework agreement with South Korean consortium for 20% of Dubbo Project

Australian Strategic Materials hits new high on US$250 million framework agreement with South Korean consortium for 20% of Dubbo Project

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Australian Strategic Materials Ltd (ASX:ASM) (OTCMKTS:ASMMF) has hit a new high after entering a conditional exclusive framework agreement with a consortium of South Korean investors to subscribe for a 20% equity interest in the Dubbo Project along with offtake from the company's Korean Metals Plant. Under the agreement, a consortium fund will invest US$250 million in Dubbo Project holding company Australian Strategic Materials (Holdings) Ltd (ASMH) and it includes provision for a 10-year offtake agreement for up to 2,800 tonnes per annum of neodymium-iron-boron alloy from the Korean Metals Plant (KMP). The volumes outlined in the proposed offtake agreement anticipate 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. Investors responded positively with shares up to 19.6% higher to A$8.85, a new record high and A$1.45 higher than yesterday's close, while the market cap before the market opening was approximately A$1.032 billion. “Exciting new phase” in ASM growth ASM managing director David Woodall said: “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.” Three equity firms in investing partnership The investing partnership comprises three respected South Korean private equity firms, none of which are related to the company - Cerritos Holdings Co Ltd, Kamur Partners LLC and ACE Equity Partners LLC. This partnership intends to establish a South Korean consortium fund for the purposes of the acquisition of the 20% equity in ASMH. Additionally, it also intends to form a separate consortium fund to establish and develop a permanent magnet manufacturing business in South Korea (MagnetCo Fund) which will be the counterparty to the proposed offtake agreement. The funds are intended to be used by ASMH, in combination with other funding sources, to progress the development of the Dubbo Project. Vision to become leading supplier The agreement represents an important contribution of financial support for the 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. ASM chair Ian Gandel said he was delighted that the vision shown by the whole ASM team to become a leading global supplier of critical metals was bearing fruit. “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 25 years and 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.” “Strategically important project” Kamur Partners LLC chief executive officer Jerry Kwak said: “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 and the investing partnership will now work towards finalising the conditions before completing the proposed transaction and proposed offtake agreement by the end of 2021.

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