FYI Resources Ltd (ASX:FYI) has made substantial progress with Alcoa (NYSE:AA) of Australia Ltd regarding a possible joint venture on the High Purity Alumina Project in Western Australia, with both parties agreeing to extend the exclusive agreement for an extra month.
With due diligence completed, both parties are assessing as part of the content and scope of the project:
- The broader development and future growth options for the project; and
- Various de-risking options for the project in line with Alcoa (NYSE:AA)’s operating experience.
An exclusive agreement period was set up with Alcoa to negotiate a binding terms sheet as the basis for a full form joint venture agreement. Both FYI and Alcoa believe the short extension is essential to complete the work required, facilitate the completion of negotiations and draft a binding term sheet.
Both parties aim to accelerate the project’s development as outlined in the original MOU remains unchanged notwithstanding this extension.
"Significant opportunity for a unique joint venture"
FYI managing director Roland Hill said: "Alcoa and FYI are negotiating a significant opportunity for a unique joint venture to leverage our combined strengths to capture opportunities in the high-growth HPA market.
“While the requirement for the extension is not ideal, our commitment to successfully negotiating a binding agreement is unwavering and we will continue to work constructively towards its completion”.
Alcoa president Michael Gollschewski said: “While not yet conclusive, Alcoa is encouraged by the progress made towards the establishment of a possible joint venture with FYI Resources for the production of HPA”.
Background
FYI's Cadoux Kaolin Project has a 3.2 million tonne reserve and a more than 25-year mine life of aluminous kaolin clay, grading 24.8% aluminium oxide and around 10,000 tonnes per annum of feedstock would be produced via the company’s proposed HPA production facility in Kwinana.
The longer-term driver for HPA, with a forecast compound annual growth rate of more than 17%, is the outlook for the burgeoning electric vehicle and static energy storage markets, where the primary function is in the use as a separator material between the anode and cathode in batteries to increase power, functionality and safety of the battery cells and FYI is positioning itself to be a significant producer of 4N and 5N HPA in this rapidly developing high-tech product market.
HPA is increasingly becoming the primary sought-after input material for certain high-tech products, principally for its unique properties, characteristics and chemical properties that address those applications high specification requirements such as LED’s and other sapphire glass products.