Australian Strategic Materials (ASX:ASM)
has entered into a conditional exclusive framework agreement with a consortium of South Korean investors to subscribe for a 20 per cent equity interest in Australian Strategic Materials Holdings (ASMH) for a subscription price of US$250 million. ASMH is the holding company for ASM’s Dubbo Project.
The agreement includes provision for a ten-year offtake agreement for up to 2,800tpa of NdFeB (neodymium-iron-boron) alloy from ASM’s Korean metals plant, which is currently under construction in Ochang, South Korea. The volumes outlined in the proposed off-take agreement anticipate 100 per cent of the neodymium oxide planned to be produced at the Dubbo Project.
The investing partnership comprises three South Korean private equity firms. 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 off-take agreement.
The investing partnership will arrange investment into the Consortium Fund, which is expected to include strategic investment from major Korean industrial companies.
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.
Shares in Australian Strategic Materials (ASX:ASM)
are trading 11.4 per cent higher $8.24.