Suvo Strategic Minerals Ltd (ASX:SUV) has signed a binding subscription and option agreement to acquire a 26% interest in Dingo HPA Pty Ltd, an Australian proprietary company aiming to produce high purity alumina (HPA) from recycled feedstock.
A private placement will see SUV acquire 220,000 fully paid ordinary shares in Dingo, at an issue price of $1.00 per share.
In addition to the placement, Dingo is granting Suvo a clear pathway to acquire up to 76% of the issued capital of the company.
This transaction provides the company with an opportunity to develop a novel, green HPA process, offering significant environmental benefits through a closed-loop recycling process.
Notably, the global HPA market was valued at $1.3 billion in 2019 and is projected to reach US$4.8 billion by 2026, growing at a CAGR of 20.7%.
“Resilient and sustainable commodity”
Suvo executive chairman Henk Ludik said: “The decision to acquire an initial 26% interest in Dingo is in line with Suvo’s commitment to building a resilient and sustainable commodity offering from its industrial minerals assets and novel industrial processes.
“The staged structure for Suvo to increase its interest in Dingo presents a low-risk approach for shareholders as we prove up Dingo’s proprietary technology to produce this critical mineral.
“Recent market reports show that demand for HPA in powder form is expected to grow to 187,000 tonnes per annum by 2028, with this growth likely to be constrained by supply limitations, leading to a potential spike in prices as supply struggles to keep pace with demand.
“HPA is a commodity derived from kaolin production.
“Suvo has extensive operations in the development, production and sale of kaolin products and believes the acquisition will generate synergies with Suvo’s existing technical and commercial expertise.
“Dingo’s bespoke IP offers a potential pathway for Suvo to produce a sustainable source of HPA with a low carbon footprint, compared to traditional HPA production, and take advantage of rising demand and prices.
“We look forward to providing shareholders with further updates on this unique market opportunity as the project progresses.”
Use of funds
The initial placement funding is to be used by Dingo towards scoping study advancement and general working capital.
At the end of the stage 3 earn-in, Suvo will have an exclusive period to negotiate a share purchase acquisition of the remaining shares on issue in Dingo, subject to the listing rules and any further regulatory approvals.
Dingo’s IP is at the concept study level and Dingo intends to use funds from the placement to support the advancement of a scoping study, as well as for general working capital.
The scoping study has been designed to assess the techno-economic viability of Dingo’s proposed flowsheet to produce HPA and validate the feasibility of a potential near-term project.
“Positive environmental outcomes”
Dingo director Dan Fraser said: “We are pleased to enter this partnership with Suvo. Dingo and Suvo share the same strong commitment to producing critical minerals with positive environmental outcomes.
“HPA is a dirty business, and we intend to clean it up. Our intention is to change the market dynamic and to give consumers of HPA a green alternative.
“Dingo aims to be an ESG-leader and a globally significant producer of green HPA for the rapidly growing Lithium-ion battery and LED lighting markets.”
HPA market
HPA is a high-value (US$28,000–US$40,000 per tonne), high margin and high-demand critical mineral used in the production of lithium-ion batteries, portable electronics, electric vehicles and LED lights.
It is also a critical material in the production of synthetic sapphire, which is used to manufacture substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used in optical windows and electronics, such as smartphones.
Several factors are contributing to the expected global HPA demand growth, including the global adoption of LED lighting, smart technology and the growing electric vehicle market.
Australia’s Federal Government recently added HPA to the critical minerals list as part of the 2022 Critical Minerals Strategy, citing broad-ranging economic and strategic importance.