ASM Boosts Rare Earth Output and Expands Capacity Ahead of Energy Fuels Deal

Production Growth at Korean Metals Plant

Australian Strategic Materials (ASX:ASM) has reported a steady increase in rare earth metal and alloy output at its Korean Metals Plant (KMP), dispatching approximately 45 tonnes of neodymium iron boron (NdFeB) alloy and neodymium-praseodymium (NdPr) metal during the June quarter. This marks the second consecutive quarter of rising production, with NdPr metal volumes notably increasing under a tolling agreement initiated earlier in 2026.

The KMP has completed a significant Phase 2 expansion, installing eight new furnaces to bring total furnace count to 12 and boosting nameplate capacity to 3,600 tonnes per annum. ASM expects operating permits for these furnaces imminently and plans to begin civil works for a second strip caster this quarter, positioning the facility to meet growing demand from US and European magnet manufacturers seeking secure, non-China rare earth sources.

Advancing Heavy Rare Earth Element Metallisation

Scaling up production of heavy rare earth elements (HRE) terbium and dysprosium remains a strategic priority for ASM. The company continues commissioning a next-generation pilot-scale HRE metallisation furnace at the KMP, targeting completion of equipment upgrades and testing by Q3 2026. These metals are critical for high-performance magnets used in automotive, aerospace, and defence sectors, and ASM’s capability outside China is a notable competitive advantage.

Dubbo Project’s Heap Leach Option and MREP Pathway

At the Dubbo Project in New South Wales, ASM is progressing a pre-feasibility study (PFS) on a Heap Leach Option that offers a simplified and potentially lower-cost production route. The study evaluates two pathways: producing separated rare earth oxides or an intermediate mixed rare earth hydroxide precipitate (MREP). Early results suggest the MREP route could cut capital costs by up to A$200 million compared to previous estimates, by eliminating complex on-site separation equipment.

This flexibility aligns well with ASM’s proposed combination with Energy Fuels Inc., whose White Mesa Mill in Utah can process mixed rare earth products into separated oxides. ASM plans to complete the PFS in the second half of 2026, covering both product pathways to ensure the most economically viable project design.

Energy Fuels Acquisition and Scheme Meeting Rescheduling

ASM’s transformational acquisition by Energy Fuels remains on track but with revised timing. Following Energy Fuels’ announcements of a conditional US$725 million financing commitment from the U.S. Office of Strategic Capital and a US$1.9 billion acquisition of rare earth magnet manufacturer Vacuumschmelze GmbH & Co. KG (VAC), ASM postponed its Scheme Meetings to 12 August 2026 to provide shareholders with a Supplementary Scheme Booklet containing updated information and a Replacement Independent Expert’s Report. The ASM Board continues to unanimously recommend the Schemes in the absence of a Superior Proposal.

The proposed merger aims to create a vertically integrated Western rare earth platform spanning mining, separation, and magnet manufacturing. ASM’s technical expertise in metallisation and alloy production will complement Energy Fuels’ upstream assets and newly acquired VAC’s downstream capabilities, potentially positioning the combined entity as a fully integrated mine-to-magnet supplier with diversified geographic reach.

Financial Position and Market Context

ASM ended the quarter with a robust cash balance of A$57.6 million after investing A$1.4 million in Dubbo Project development and A$5.5 million in Korean operations, partially offset by government grants and sales revenue. The company also refinanced its Korean Hana Bank loan facility for another 12 months, maintaining financial flexibility.

Market conditions remain dynamic. The US Magnets Value Chain Support Act of 2026, currently progressing through Congress, could provide significant purchase credits for domestically produced rare earth magnets, particularly those containing heavy rare earths. ASM’s growing HRE metallisation capability at the KMP positions it to benefit should the legislation pass. Meanwhile, prices for zirconia and hafnium have surged due to Chinese export restrictions, underscoring supply chain vulnerabilities that ASM aims to address.

ESG and Community Engagement

ASM continues to build its Environmental, Social, and Governance (ESG) foundations, with the KMP successfully completing ISO 45001 recertification for occupational health and safety without any non-conformities. The company actively engages with local communities and stakeholders through its Community Consultative Committee and participation in events such as the Annual Dubbo Show.

ASM also contributed to the Australian industry delegation at the G7 Critical Minerals Investment Forum, signing a joint statement to accelerate investment in critical minerals projects among G7 countries and partners, reflecting its growing international profile.