Yendon HPA, page-3

https://finfeed.com/small-caps/technology/fyis-hpa-project-now-worth-more-than-us1-billion/

Worth reading up on FYI and seeing what actually makes a HPA project work other than just the resource , many factors involved but main point is I do not see anyone on this board being able to execute this

Industry dynamics working in FYI’s favour

FYI employs a number of methods to determine pricing and demand models for the HPA market to establish a reliable estimated sales price.

This price establishing process includes the engagement of several independent commodity market research firms and direct contact with market participants.

One primary source relied upon by FYI and many of its peers is the CRU Group, a leading market intelligence and analysis firm specializing in HPA.

CRU has performed the HPA market determination function for FYI in its previous feasibility studies.

Detailed breakdowns of the HPA market have been taken into account, particularly focusing on supply, demand and pricing.

FYI mandated CRU especially for the updated DFS, with a research report released to the company in March 2021.

The most recent market survey and round of interviews conducted across producers, consumers, projects and other market participants across several geographies including Japan, South Korea, North America, Europe and China conclude there is evidence that the HPA market is entering a phase of mild tightness.

Consumers, particularly in the sapphire market for LEDs, state that supplies of reputable 4N HPA is becoming limited.

While it is evident that different trends are emerging in the HPA sector from the previous DFS report in March 2020, for the purposes of the updated DFS report the focus will be on the ‘performance-driven’ or 4N-5N market.

FYI understands that realising price premiums for high quality 4N material relies upon building strong relationships with customers, being able to adjust specifications to meet customers exacting requirements and consistently supplying material to the agreed specification.

Achieving and maintaining a reputation for delivery of reliable and consistent specification will become a very powerful marketing tool.

However, as a guide CRU noted that premium, high-quality HPA for specialists applications that is provided from a reliable source of supply is fetching around US$56 per kilogram.

This could see particularly strong pricing of circa US$50,000 per tonne realised for FYI’s 5N product.

The modelled HPA demand is forecast to grow rapidly at approximately 18.7% CAGR (compound annual growth) between 2021 and 2028.

As a result of the demand, CRU models the HPA market to tip into deficit in 2021, as reputable 4N and 5N current supply capacity fails to meet the market demand as production has not kept pace with demand growth.

Consequently, FYI sees tremendous potential opportunities to forge offtake agreements arising in the near to medium-term.

Where is the demand coming from

Lithium-ion batteries (LIBs) represent the largest potential growth sector for HPA demand over the coming decade.

These are currently used in portable electronics such as mobile phones and laptops, but their high energy density (energy contained vs weight) makes them ideal for use in the surging electric vehicle (EV) market.

CRU understands that separator manufacturers are seeking out high-quality HPA for their coatings, and this signifies a discerning customer class that will pay the higher price for quality HPA product.

Due to strong headline demand for LED units driven by broad application development, market acceptance and replacement of inferior and less efficient alternatives, LED modelled demand for 4N and 5N HPA is likely to grow from 20,000 tonnes per annum in 2020 to 85,000 tonnes in 2028, with a CAGR of 19.8%.