FYI Resources Ltd (ASX:FYI) and Alcoa (NYSE:AA) of Australia Ltd are making strong progress regarding a possible joint venture (JV) for FYI’s High Purity Alumina Project (HPA) in Western Australia.
Both companies have agreed to an extension of the current Exclusivity Agreement to finalise the negotiations of a binding term sheet.
FYI says the parties have formed an “excellent” working relationship while negotiating the proposed HPA JV terms and conditions and a collaborative understanding of the potential development options and future opportunities.
Alcoa and FYI are seeking to collaborate on the JV that will utilise the respective strengths of each organisation to build a HPA business that will take advantage of the global rise in demand for HPA in the high-tech energy materials sector.
“Made tremendous headway”
FYI managing director Roland Hill said: "Alcoa and FYI have made tremendous headway in negotiating the significant HPA JV opportunity.
“In our view, both companies share a similar vision for the JV and growth opportunities of the HPA strategy.
“Both companies have invested a considerable amount of time and resources to progress the JV discussions to this point, it is a mutual decision to extend the negotiations to consider the value-add opportunities.”
One-month extension
After completing due diligence, the parties have mutually agreed to extend the exclusivity agreement for one month to October 5, 2021, to allow the additional opportunities to be fully considered and potentially incorporated into the binding term sheet as well as providing additional time to refine the term sheet.
“We see the extension as positive as it allows both parties further time to assess and implement their intentions in order to achieve a positive outcome,” Hill said.
“We are simply giving the potential JV discussions all the time and consideration that the strategy deserves.”
Developing value-add initiative
In parallel to the discussions with Alcoa, FYI has been developing a number of broader HPA value-add initiatives that could enhance and strengthen the position of the JV in the market.
In establishing the framework for the potential JV, the parties intend to create a material HPA business that provides a delivery platform for high-quality material globally.
Alcoa president Michael Gollschewski said: “Alcoa remains encouraged by the progress made towards the possible joint development of a HPA project with FYI Resources.
“We continue to carefully consider this opportunity that has the potential to be a natural complement to Alcoa’s existing alumina refining operations.”
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 LEDs and other sapphire glass products.