Ann: SCOPING STUDY DEMONSTRATES FEASIBILITY OF METALS PLANT, page-30

Important points of note for me...

The Scoping Study demonstrates the potential for the KMP to deliver a profitablestandalone downstream business for ASM while the company progresses the DubboProject. ASM’s KMP will supply high-purity products direct to the Korean market, providingmanufacturers with a stable and secure domestic supply of metals. ASM will continuediscussions and negotiations for offtake contracts to grow its customer base and marketpresence.

ASM proposes to initially construct a 5,200tpa plant to produce high-purity critical metals.Once fully commissioned, the 5,200tpa plant will have the flexibility to add production tomeet increasing Korean demand and customer offtake specifications for the variousproducts. This would see the initial plant incrementally expanded to a capacity of over16,000tpa by 2024.

The raw material inputs will be sourced from established globally traded markets with thequantities required for the plant anticipated to be readily available to the Company. Thesupply of the raw materials is anticipated to be from existing producers and holders ofinventory with whom the Company has already established a supply relationship withduring the operation of the pilot plant over the previous 7 months. The Scoping Study hasbeen prepared on the basis of a standalone downstream business, and does not assumeavailability of raw material inputs from the Company’s Dubbo Project. In the event that theDubbo Project is developed and begins to produce raw materials suitable for the KMP, theCompany will review supply arrangements to ensure the best outcome for shareholders.

Construction of the Korean Metals Plant is contingent on securing funding that maximisesthe return to all shareholders. It is most likely that financing would be undertaken via acombination of debt and equity, and may include Korean and local government financingand incentives.

The ASM Board has approved proceeding with detailed engineering to define the scope ofworks for construction of the KMP (using independent engineering firms to global industrystandards) and to confirm the capital estimate in the KMP Scoping Study. The costsassociated with this external engineering study are expected to be approximately US$1.5million. ASM expects the completion of this engineering work, together with offtake andfinancing discussions over the next several months, will lead to a development decision atthe end of Q2 2021.

While this engineering work progresses, ASM will commence commercial production ofapproximately 200 tonnes of titanium powder and 8 tonnes of NdFeB strip metal alloy usingthe two reduction furnaces at its existing commercial pilot plant as it progresses the5,200tpa Metal Plant to full-scale metal production in 2022. The company will continuediscussions with oxide suppliers and Korean metal and alloy consumers, ensuring key supplyand offtake contracts are delivered before the development decision for the KMP. ASMexpects to secure offtake contracts for the majority of revenue categories before a decisionto proceed with construction.

The announcement in my opinion, doesn't include a lot we didn't already know, hence the little change in SP. Never the less, the highlighted points do provide answers to some of the questions I had re offtake agreements, future of Dubbo and source of raw materials.