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- FYI Resources (FYI) enters a binding term sheet with Alcoa of Australia to jointly develop FYI’s high purity alumina (HPA) project
- This comes nearly one year after the pair first signed a memorandum of understanding regarding the commercial development of an HPA project
- The term sheet outlines three phases of the project, of which FYI would own 35 per cent and Alcoa would own 65 per cent
- Over these phases, the companies will construct a demonstration facility and full-scale HPA plant and decide whether to formally enter a joint venture
- Company shares are down 35.8 per cent to trade at 53 cents at 11:14 am AEST
FYI Resources (FYI) has entered a term sheet with Alcoa of Australia to jointly develop FYI’s high purity alumina project.
The companies have been in talks regarding a binding agreement and potential joint venture for almost one year.
Signing this term sheet follows two extensions to a 90-day exclusivity period entered into in May as the companies felt the discussions deserved more time and consideration.
Now this agreement has been signed, the companies intend to formally develop FYI’s project. It also opens up the pathway to de-risk and progress the HPA project’s development and maintain its success once it reaches production.
The companies will combine Alcoa’s technical expertise and experience in the construction and operation of refining facilities with FYI’s HPA processing flowsheet, industry knowledge and customer contracts.
FYI Managing Director Roland Hill was pleased to have come to a binding agreement with Alcoa.
“Coming to joint development terms on our HPA project is a transformational event for FYI. The strong alignment between the parties and resulting HPA business case is outstanding,” he said.
“FYI considers that a future JV forms a robust structure capable of delivering the high quality HPA strategy, as outlined in the DFS, at a time when the international HPA market is forecast to grow in line with the world’s e-mobility uptake and emerging HPA applications.”
The binding term sheet outlines three phases of the project of which FYI would own 35 per cent and Alcoa would own 65 per cent.
Phase one is expected to cost US$7 million (A$9.67 million) and involves the detailed design of a 1000 tonnes per annum demonstration facility and further production trials over this year and next.
Phase two is slated to cost around US$50 million (A$69 million) and will see the parties enter an unincorporated joint venture. The demonstration facility will be constructed and detailed engineering will be undertaken for a separate HPA plant that will produce 8000 tonnes per annum. This is subject to making a positive investment decision which is planned for next year.
Should the companies proceed to the third and final phase, they’ll establish an incorporated joint venture and construction of the full-scale plant would commence. Including engineering and construction, the plant is expected to cost about US$200 million (A$276.5 million).
“We look forward to working together to form a material HPA business to realise our vision for HPA,” Mr Hill concluded.
Company shares are down 35.8 per cent to trade at 53 cents at 11:14 am AEST.
