Andrew Forrest’s Wyloo Metals tips $150m into rare earth play
Wyloo Metals has expanded its remit to rare earths, tipping $150m into Hastings Technology Metal’s play to take a stake in a Canadian-listed refiner.
Andrew Forrest’s Wyloo Metals will spend $150m on expanding its reach into the rare earth sector, backing the play of WA rare earth hopeful Hastings Technology Metals to take a stake in a Canadian-listed magnet maker.
Under the three way deal, Hastings will take a 22.1 per cent stake in Canada’s Neo Performance Materials, paying $C15 a share, or $C135m for the holding. It will acquire the stake from Oaktree Capital Management.
Its play will be backed by Wyloo, which will extend $150m in convertible notes to Hastings to fund the deal. If fully converted to equity in Hastings, Wyloo would emerge with about 25 per cent of the WA rare earth hopeful.
The three-year notes carry a coupon rate of 9 per cent, and can be converted into Hastings shares at a fixed rate of $5.50 a share.
Hastings is still trying to close funding for its Yangibana rare earth project in WA’s Pilbara region, but said on Friday the deal to acquire the stake in Neo Performance Materials would give the company a significant option to integrate its rare earth mine into a vertical supply chain providing high quality magnets to European car makers.
Hastings shares surged on the news, closing up 65c, or 15.5 per cent at $4.94.
Neo Performance Metals owns the only operating commercial rare earth separation plant in Europe, the company said, with the company looking to expand its Estonian operations to manufacture magnets suitable for high technology use.
Hastings said NPM booked June quarter revenue of $US168.2m, for EBITDA of $US26.5m.
Hastings said it had no intention of launching a full takeover bid for NPM.
Wyloo has spent the last few years massively expanding Dr Forrest’s presence in the battery metals space. This year it beat BHP in a takeover battle for Canadian nickel play Noront Resources, and more recently cut a deal with IGO to jointly look at nickel sulphate production in WA as part of an agreement to sell its stake in Western Areas into IGO.
The investment in Hastings will be the company’s first foray into rare earths, and Wyloo chief executive Luca Giacovazzi said the fits with the company’s other critical minerals investments.
“Rare earths and the permanent magnets they produce are essential enablers of the energy transition. There is already a shortage of these products, and the upcoming increase in magnet demand will require continued investment,” he said.
“This transaction with Hastings spans the value chain, from mining to magnet manufacturing. As the owner of the only commercial rare earth metals facility in Europe, Neo is strategically placed to help Europe meet its goal to become climate-neutral by 2050.”
Hastings executive chairman Charles Lew said the acquisition of a stake in NPM puts the company a step closer to the creation of an integrated mine-to-magnet supply chain business.
“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,” he said.