FinReview BillionaireAndrew Forrest will invest more of his...

FinReview

BillionaireAndrew Forrest will invest more of his fortune in the metals needed fordecarbonisation with a proposal to make a strategic investment in WestAustralian rare earths developer Hastings Technology Metals.

Mr Forrest’s private company Wyloo will lend $150 million to Hastings inthe form of “secured, redeemable, exchangeable notes”, assuming Hastingsshareholders vote to approval the deal.

Andrew Forrest’sWyloo Metals has taken the plunge into rare earths. Bloomberg

The $150 million face value of the notes represents about 34 per cent ofthe $435 million market capitalisation that Hastings had at the close oftrading on Thursday.

Hastings would use the money to fund the purchase of a 22 per cent stakein Canadian magnet maker Neo Performance Materials, a transaction that wouldput it on track to eventually become a more vertically integrated company,rather than just a miner of the upstream resource.

Neo, listed on the Toronto Stock Exchange, is a producer of permanentmagnets and rare earth materials and owner of the only operating commercialrare earth separation facility in Europe.

Hastings,with Wyloo’s backing, has entered into a binding share purchase agreement withan affiliate of Oaktree Capital Management to acquire 8,974,127 shares in Neo at$C15 ($16.64) a share.

Spanning the value chain

Wyloo chief executive Luca Giacovazzi said rare earths and permanentmagnets were essential in electrification of the economy and the move away fromfossil fuels.

“There is already a shortage of these products, and the upcomingincrease in magnet demand will require continued investment,” he said,

“This transaction spans the value chain, from mining to magnetmanufacturing, and fits well with our strategy of investing in the stable andsecure supply of critical minerals.”

Mr Forrest’s involvement comes after he outbid BHP last year forcontrol of Canadian nickel explorer Noront Resources.

Mr Forrest has also struck an arrangement with IGO whereby his privatecompanies will have the chance to participate should IGO push ahead with plansto build a nickel sulphate refinery in Australia.

The deal with IGO was struck during IGO’s pursuit of nickel minerWestern Areas; as a big shareholder in Western Areas, the refinery partnershipwas pivotal in getting Mr Forrest to support the deal.

Hastings said the development and financing of the $658 millionYangibana rare earths project in WA remained a key priority. The federalgovernment’s Northern Australia Infrastructure Facility is providing a $140million low-interest loan and Hastings is in talks with other financiers.

Hastings has set its sights on first production of up to 15,000 tonnesof neodymium/ praseodymium (NdPr) a year by 2024, at a time when Lynas Rare Earths, the world’s biggest non-China supplier, and Iluka Resources are looking to ramp up operations in WA.

Hastings executive chairman Charles Lew said the aquisition of the Neostake was an important strategic milestone for the company.

“We are also thrilled to welcome the support of and strategic investmentby Wyloo Metals. We see Wyloo’s commitment to Hastings as an importantvalidation of our strategy and objectives,” he said.

“Importantly for Hastings shareholders, in addition to these importantstrategic initiatives, we continue to remain focused on the development andfunding of Yangibana.”