- Korean company KCF Energy agrees to invest US$15 million (A$21 million) in Australian Strategic Materials (ASM)
- KCF has subscribed to shares at $8.90 each and the parties have agreed to revise a framework agreement announced last year
- The parties will negotiate a non-exclusive basis for investments and for a five-year offtake deal for the supply of 2800 tonnes of neodymium magnet from the Korean Metals Plant
- The investments are aimed for after the delivery of work being negotiated between ASM and Hyundai Engineering and Construction, expected to be completed by mid-2023
- ASM shares are up a healthy 26.2 per cent on the back of this news to trade at $6.64 each
Korean company KCF Energy has agreed to invest US$15 million (A$21 million) in Australian Strategic Materials (ASM).
KCF Energy is owned by the Korean Consortium which is made up of Cerritos Holdings, Polo Equity Partners and ACE Equity Partners.
The Korean company has subscribed for shares at a price of $8.90 each and the parties have agreed to revise a framework agreement announced in mid-2021.
Under the revised agreement, the parties will negotiate a non-exclusive basis for investments in ASM, Australian Strategic Materials Holdings (ASMH), KSM Metals Co (KSMM) and for a five-year offtake agreement for the supply of 2800 dry metric tonnes of neodymium magnet from the Korean Metals Plant.
The investments to be negotiated under the agreement are for the Korean Consortium to facilitate a strategic investor to buy 10 per cent of ASMH shares for US$125 million, make an additional US$105 million equity investment in ASM and invest US$50 million via a convertible bond for a 30 per cent stake in KSMM.
These investments are aimed for after milestone work that ASM is currently negotiating with Hyundai Engineering and Construction. The work includes front-end engineering and design, early design of key work packages and an open book project cost estimation.
ASM is expecting this “milestone work” to be completed by mid-2023.
Managing Director David Woodall said he welcomes this investment from ASM’s Korean partners.
“The potential transactions represent a phased investment into ASM, ASMH, and KSMM and are an endorsement of ASM’s significant progress in Korea. This includes the delivery of our first metals plant in Korea, which is an alternative supplier of strategic metals,” he said.
“We are pleased to maintain our close relationship with Korea and our partners, who are highly supportive of ASM’s mine-to-metals strategy. These partners wish to secure their supplies of the metals needed to drive Korea’s manufacturing industry.”
On the market, ASM shares were up a healthy 26.2 per cent to trade at $6.64 per share at 12:00 pm AEST.