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Australian Strategic Materials (ASX:ASM) to build Korean plant with DKRS

Materials
ASX:ASM      MCAP $181.5M
02 November 2020 10:00 (AEST)
Australian Strategic Materials (ASX:ASM) - Former Managing Director, David Woodall

Source: The Market Herald

Australian Strategic Materials (ASM) has signed a deal to build a low-emission, high-purity metal refining plant in Korea.

The deal

ASM and Dongkuk Refractory and Steel (DKRS) have signed a joint development agreement to design, construct and commission a 250-kilogram per day metal plant.

The plant will use ASM’s proprietary refining technology and the comnpany will retain all intellectual property rights.

The novel refining process will belong to ASM upon the completion of the deal to acquire a 95 per cent stake in Ziron Technology.

DKRS is a reputable Korean firm with a five-decade history in the industrial space, and is known for innovation and development of new technologies.

Under the deal, the 250-kilogram reduction furnace design, assembly and verification will be undertaken at DKRS facilities under the supervision of a temporary “Joint Task Force”, with the completed furnace jointly owned by ASM and DKRS.

The plant is expected to cost US$1 million (around A$1.43 million) and the costs will be split 60-40 between DKRS sand ASM.

The design is expected to be completed within four months; the deal can be terminated if testing is not successful within 12 months of signing the deal.

ASM Managing Director David Woodall says the deal is a great opportunity for both companies.

“The agreement with DKRS brings together the strengths of ASM with its innovative metal technology and DKRS, a leading innovative manufacturer of metals and refractory products within the Korean and global markets,” David said.

“This production facility will prove Zirontech’s patented low emission, high-purity metal refining technology at scale, paving the way for a 3,000 to 5,000-tonne per year metal plant in Korea,” he added.

“Our team in Korea is now progressing the confirmation of the continuous commercial metal production process with significant benefits for Korea, Australia, and the global customers that are faced with changing dynamics in the critical metals supply chain,” he concluded.

Next steps

ASM is working through strategic partner, offtake, and financing discussions in Korea to get the plant off the ground.

Discussions are in the earliest stages, so there’s currently no timeline for when ASM will have news on any proposed offtake or financing arrangements.

The proposed plant will use the rare earths and other metals from ASM’s Dubbo Project as feedstock to produce specialty metals and oxides for advanced technologies.

Australian Strategic Materials is trading 9.21 per cent higher for $3.44 at 10:24 am AEDT.

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