2021 - General Discussion, page-5781

RB - "The most important consideration looking long term, is we have 35% of everything Alcoa does with HPA."

This issue has been bothering me ever since the binding JV term sheet was signed with Alcoa. On the face of it, some FYI investors seem to think that 65% of the NPV (US$1015m) has been given away to Alcoa in exchange for what would have been FYI's 35% of the funding needed to build the pilot plant. Probably the last FYI corporate presentation (8 Oct) showing the revised NPV now at A$398m, along with the ~60% fall in the share price that we have witnessed, has cemented this view with some. But in reality, it appears to me that the JV agreement will not just stop at the pilot plant. It will apply to additional HPA plants wherever they are located. The effective NPV of the project could end up being many multiples of A$398m. I think many investors are missing this crucial point. If three HPA plants got built around the world, FYI would end up with a higher NPV than we started with in the DFS. Since I am not a contract lawyer, I emailed Roly yesterday and asked him about this issue, specifically that according to the current agreement with Alcoa, was it the intention that if the project moves beyond phase 3 (say via additional plants), FYI would get a 35% share of the revenues and EBITDA from these activities (subject to FYI funding 35% of the Capex/Opex etc.). His response was that this was correct, that for all future HPA projects, FYI would maintain a 35% holding providing it met the 35% capital commitment. If three HPA do get built eventually, it looks to me that this would become essentially a staged development for FYI, which is actually a much improved situation financially since earnings from plant 1 can be used to fund the capex for additional plants. Better for FYI than trying to raise by itself ~US$200m for an HPA plant, with likely shareholder dilution. With HPA 3 plants in production and no further dilution, FYI would be a cash machine for current shareholders.

All IMHO, DYOR