Hastings Technology Metals (ASX:HAS) has entered into a binding share purchase agreement with an affiliate of Oaktree Capital Management to acquire almost 9 million common shares in Neo Performance Materials Inc. (TSX:NEO).
The deal to acquire a total 8,974,127 million shares represents a significant 22.1% shareholding in Neo.
The acquisition has been agreed at a price of C$15.00 per Neo share, representing a total consideration of C$135 million, equating to a 4.7% premium to Neo’s closing share price of C$14.33 per share on 24 August 2022.
The deal is also a 2.8% premium to Neo’s 10-day VWAP of C$14.60 per share up to and including 24 August.
Hastings, which is touted as Australia’s next rare earths producer, also announces that Wyloo Metals has come on board as a new strategic investor in the company.
Wyloo is a privately owned metals company with a focus on investing in the critical mineral supply chain. It has committed to subscribe for $150 million of secured, redeemable, exchangeable notes to be issued by Hastings, with the proceeds used to fund the proposed acquisition.
Neo is a global leader in the downstream processing of rare earth elements and the production of advanced materials, including permanent magnets.
Neo is a global leader in the downstream processing of rare earth elements and the production of advanced materials, including permanent magnets
Hastings has been advised on the acquisition by Barrenjoey as financial advisor and sole arranger of the Wyloo strategic investment, and King & Wood Mallesons and Cassels Brock & Blackwell LLP as legal advisors.
Commenting on the transaction, Hastings Executive Chairman Charles Lew said: “The acquisition of the Neo stake represents an important strategic milestone for Hastings, providing the company and its shareholders with a unique opportunity to take further steps towards realising the Hastings 2.0 strategy.
We are also thrilled to welcome the support of and strategic investment by Wyloo Metals. We see Wyloo’s commitment to Hastings as an important validation of our strategy and objectives.
Importantly for Hastings shareholders, in addition to these important strategic initiatives, we continue to remain focused on the development and funding of Yangibana, and the company continues to advance its plans in this regard.”
The transaction rationale is based on the notion that globally, the challenge of supply chain resilience in the face of ongoing geo-political, COVID-19 and other pressures has brought critical mineral policies to the forefront of governments around the world.
Hastings reports that Western governments are increasingly focused on securing supply of NdPr and NdFeB permanent magnets from sustainable and strategically aligned supply chains.
Neo is a market leading producer of NdFeB magnets and rare earth materials globally, uniquely positioned as the owner of the only operating commercial rare earth separation and rare metals facility in Europe.
Also, Neo is currently accelerating plans to expand its rare earths separation operations in Estonia and construct a new factory in Estonia to manufacture sintered NdFeB permanent magnets.
The proposed acquisition will provide Hastings with a strategic stake in Neo and exposure to its magnetic materials business, as well as a platform to explore potential partnership arrangements utilising Hastings’ Yangibana feedstock in Neo’s downstream rare earth operations.
Upon completion of the acquisition, Oaktree’s representatives on the Neo board have agreed to step down, and Hastings intends to seek representation which is commensurate with its shareholding.
Hastings confirms it has no current intention to make a takeover offer for Neo nor to acquire any more shares in Neo.
Hastings views the Acquisition as the first step in its Hastings 2.0 strategy, to create a fully integrated mine-to-magnet supply chain business. Wyloo is supportive of this vision and Hastings is pleased to have the support of Wyloo as a strategic partner.
The Hastings board and management team unanimously endorse this important strategic initiative
The Hastings board and management team unanimously endorse this important strategic initiative.
Neo is headquartered in Toronto with corporate offices in the US, Singapore, and China. Neo operates globally with sales, research and development, and production across 10 countries, being Japan, China, Thailand, Estonia, Singapore, Germany, United Kingdom, Canada, United States, and South Korea.
The company has some 1,860 employees. Neo recently reported a record result for 2Q 2022 with revenue of US$168.2m, higher by 24.5% YoY.
Hastings Technology is a rare earths company primed to become the world’s next producer of neodymium and praseodymium concentrate (NdPr). NdPr are vital components used to manufacture permanent magnets used every day in advanced technology products ranging from electric vehicles to wind turbines, robotics, medical applications, digital devices, etc.
Hastings’ flagship Yangibana REE project, in the Gascoyne region of Western Australia, contains one of the most highly valued NdPr deposits in the world, with a NdPr:TREO ratio of up to 52%.
Images: Hastings Technology Metals Ltd
