ASM Targets $3M in Share Plan Amid $1.5B Dubbo Project Backing

Capital Raising to Support Growth

Australian Strategic Materials Limited (ASM) has announced a proposed underwritten share purchase plan (SPP) aiming to raise up to A$3 million, with the option to accept oversubscriptions. This initiative is complemented by a potential top-up placement of around A$2 million, subject to shareholder approval and market conditions. The SPP is underwritten by Canaccord Genuity (Australia) Limited, providing a degree of certainty to the capital raising effort.

While the funds raised will contribute to ASM’s ongoing activities, the company cautions that these amounts will not fully fund its broader business objectives, including the development of its flagship projects. Additional capital raising will be necessary to support ASM’s ambitious growth plans.

Dubbo Project – A Cornerstone Asset

The Dubbo Project in New South Wales stands as a pivotal element in ASM’s strategy to establish a secure and sustainable supply of rare earths and critical minerals. The project is construction-ready, having secured all major state and federal approvals, land and water licenses, and is supported by a final pre-execution engineering phase conducted by Bechtel Mining and Metals.

Financially, the Dubbo Project boasts strong metrics, including a pre-tax internal rate of return (IRR) of 23.5% and an estimated annual free cash flow of A$425 million. The capital cost estimate is approximately A$1.68 billion, with conditional debt funding support exceeding A$1.5 billion from export credit agencies in Australia, the United States, and Canada. This backing underscores the project’s strategic importance in the global critical minerals supply chain.

Korean Metals Plant – Scaling Production

ASM’s Korean Metals Plant (KMP) is progressing through its production ramp-up phase, with an installed capacity of 1,300 tonnes per annum of neodymium-iron-boron (NdFeB) alloy. The company plans a Phase 2 expansion to increase capacity to 3,600 tonnes per annum, contingent on customer demand and funding availability.

The KMP has invested approximately US$60 million to date and targets annual revenues of around US$204 million with an EBITDA of approximately US$26 million at full Phase 2 capacity. The plant produces critical rare earth metals and alloys, including neodymium, praseodymium, terbium, and dysprosium, essential for high-tech applications such as electric vehicles and advanced electronics.

ASM highlights its commitment to sustainability, having achieved carbon net zero for Scope 1 and Scope 2 emissions at the KMP since operations commenced, through efficiency initiatives and carbon credit purchases.

US Metals Plant – Aspirations and Challenges

Looking ahead, ASM is exploring the establishment of an American Metals Plant (AMP) to serve the growing US market for rare earth metals and alloys. The AMP is envisioned to have an initial capacity of 2,000 tonnes per annum, expandable to 4,000 tonnes, and is expected to create up to 150 skilled jobs.

The US expansion is supported by favorable non-cost factors such as quality labor, infrastructure, and government incentives, including tax credits and grants. However, ASM acknowledges that the AMP remains aspirational, with no definitive funding or approvals secured, and no forecast made on its realization.

Strategic Positioning Amid Global Supply Chain Dynamics

ASM’s integrated mine-to-metals strategy aims to build an alternative global supply chain for rare earths and critical minerals, reducing reliance on dominant suppliers, particularly China. The company’s projects are strategically positioned to meet increasing global demand driven by sectors such as electric vehicles, renewable energy, defense, and advanced electronics.

ASM continues to pursue offtake agreements and strategic partnerships across Australia, the US, Europe, and Asia, leveraging strong government support and export credit agency backing. The company’s focus on sustainability and supply chain security aligns with broader geopolitical and market trends emphasizing critical mineral independence.

Risks and Forward Outlook

Despite the promising outlook, ASM faces several risks including supply chain constraints, commodity price volatility, regulatory approvals, funding uncertainties, and geopolitical tensions. The company’s ability to commercialize its projects depends on managing these risks effectively, securing further capital, and aligning production with market demand.

Investors should note that the SPP issue price will be determined post-offer period based on market prices, and the Placement remains conditional. ASM’s US Metals Plant and rare earth options assessment for the Dubbo Project are early-stage and subject to significant uncertainties.