2021 - General Discussion, page-3149

FYI appears set to dominate HPA industry.
Background story.
The list of HPA wannabes (FYI, A4N, ATC, KRR, ADN etc) is extensive.
Production costs of $6,000-10,000 and 4N sales of $24,000 plus per ton makes everyone’s feasibility studies look great on paper. The potential market for 4N is set to increase by 40,000-60,000 tons per annum over the next few years to supply the EV market.
So what’s stopping companies going into production?
Sometimes it’s been the technical issues of trying to produce 4N.
4N is $24,000 a ton for a reason- it’s hard to produce.
Then you have to factor in difficulties in getting finance for Capex and fulfilling the various requirements of buyers.
The example of ATC whose share price has fallen some 75% over the last few years serves as a warning that not everything works out how you would hope. (Despite having 4N offtake interest they are now looking at patenting application of HPA to EV anodes)
When I bought into FYI in September 2020 there was only one competitor which had comparable costs and Capex - A4N. What attracted me to FYI was that they had a MOU with Alcoa (that a 20 billion dollar multinational was interested in a JV with FYI was a big tick).
Since then FYI has produced some great results.
1. A joint run of pilot plant with Alcoa accidentally produced 5N. Which can be produced at about the same cost/time effort as 4N. This has been added to updated NPV.
2. ESG accreditation (which may be vital for selling into EV market)
3. Awarded Major Project Status by the Australian government.
4. Note that the Alcoa MOU JV has entered into a 90 day exclusivity period (with about 4 weeks to go).

I hadn’t looked over at what A4N had been doing - but when I did I was rather surprised.
They recently did a capital raise of 50 million dollars (with the resultant dilution of exisiting holders) to produce a precursor production facility. Hoping to earn some 8-11 million dollars per annum from 2022 onwards.
What happened to annual production of 10,000 tons of 4N and pretax cashflow of 280 million AUD?
(To me this appears to be a serious sidestep- but I haven’t looked too closely at the reasons why- good luck to their shareholders as I hope everyone gets a return on their investment).

For myself I’m more than happy with where FYI is headed.

FYI is about to finalise JV with Alcoa (and doing so will possibly make them in short time the biggest 4N/5N HPA player in the world). As I don’t believe that Alcoa intends to only produce a share of 10,000 tons of HPA per year.

If FYI have to go it alone - they already have finance of about 40% of cost of Capex - and with Major Project Status should be able to obtain the rest. Going it alone means that shareholders reap the entire forecast earnings of 80 cents per share (which eventually will be returned as dividends).

Either way the future looks bright for FYI.

GLTAH
IMO DYOR