Initial Entry Price
Returns from Initial Entry
|ASX:FYI investment added to Wise-Owl Portfolio||12-May-21||$0.460||-63%|
|FYI in Exclusive Talks with Alcoa to Bring $1BN HPA Project to Life||18-May-21||$0.560||-70%|
|This is why we invested in ASX:FYI||18-May-21||$0.560||-70%|
|FYI and BDA in the news||18-Jun-21||$0.600||-72%|
|“FYI’s Project of National Significance” Says Australian Federal Government||29-Jun-21||$0.525||-68%|
|FYI very close to Alcoa JV – expected in just 30 days.||04-Aug-21||$0.600||-72%|
|FYI strengthens Environmental, Social and Governance (ESG) as Alcoa Joint Venture approaches…||20-Aug-21||$0.81||-79%|
|So close… again. FYI and Alcoa binding deal terms delayed to October 5th.||03-Sep-21||$0.77||-78%|
|FYI signs JV with Alcoa – now free carried into production, leveraging Alcoa expertise and global networks||01-Oct-21||$0.520||-67%|
|Doubling down on the dip in our favourite long term High Purity Alumina play||13-Oct-21||$0.440||-61%|
|What have our portfolio companies been doing? (Part 1)||10-Nov-21||$0.370||-54%|
|FYI to be first to market with a superior battery metals product?||25-May-22||$0.195||-13%|
|Initial Entry Price||
|Returns from Initial Entry||
|ASX:FYI investment added to Wise-Owl Portfolio|
|FYI in Exclusive Talks with Alcoa to Bring $1BN HPA Project to Life|
|This is why we invested in ASX:FYI|
|FYI and BDA in the news|
|“FYI’s Project of National Significance” Says Australian Federal Government|
|FYI very close to Alcoa JV – expected in just 30 days.|
|FYI strengthens Environmental, Social and Governance (ESG) as Alcoa Joint Venture approaches…|
|So close… again. FYI and Alcoa binding deal terms delayed to October 5th.|
|FYI signs JV with Alcoa – now free carried into production, leveraging Alcoa expertise and global networks|
|Doubling down on the dip in our favourite long term High Purity Alumina play|
|What have our portfolio companies been doing? (Part 1)|
|FYI to be first to market with a superior battery metals product?|
Published May 2022
FYI Resources Ltd (ASX: FYI) is a specialist metals technology company, focusing on the key battery metal input High Purity Alumina (HPA). FYI utilises a new production process that is cleaner, purer, and much less expensive than conventional methods. FYI is partnered by leading global alumina company Alcoa, with a binding agreement through to commercialisation.
The market demand for HPA is tipped to more than treble from 2021 levels by 2028, largely driven by greater demand for lithium-ion batteries as automakers secure critical inputs for electric vehicles (EVs) mass production.
What we expect the company to deliver in 12 months
Objective #1: Commission demonstration plant
✅ Complete pilot plant trials
🔄 Front end engineering design – progress update
🔲 Front end engineering design – final report
🔲 Greenlight Phase 2, Alcoa funds US$50m – December 2022
🔲 Appoint lead project engineer
🔲 Commence construction
🔲 Complete construction
🔲 Maiden production in 2023
Objective #2: Progress FEED for the full-scale plant
🔲 Front end engineering design – progress update
🔲 Front end engineering design – final report
🔲 Appointment of lead project engineer
🔲 Greenlight Phase 3, Alcoa funds US$200M
Objective #3: Secure first offtake agreement
🔲 Enter into first MOU offtake agreement
What could go wrong?
Financing risk – the commercialisation of FYI’s technology currently hinges on Alcoa funding, which in turn hinges on both parties progressing through three phases of development, as outlined in their Binding Agreement entered in September 2021. There is no guarantee that both parties will proceed across all stages, which would result in FYI requiring to raise substantial funds for project financing, which would almost certainly lead to a market sell off.
Technical risk – FYI’s process flowsheet and technology has been proven in the lab and on a pilot plant level, but has yet to be tested at scale. The demonstration plant, followed by the full plant facility, will test this. There is no guarantee that FYI’s technology meets Alcoa’s requirements to progress through these stages.
Market dynamics – FYI’s technology is new and seeks to replace the current conventional method (hydrolysis of aluminium alkoxide, a process that has not been substantially changed since the 1880’s). However, there could be yet another new technology that emerges that proves superior or more popular, which would be detrimental to FYI’s business. Furthermore, there could be unforeseen changes to the HPA market that could alter demand, impacting the viability of FYI’s project.
Project timeline – the timeline for first production from the full scale plant is 2025. However, the scope for timeline slippage is real, given logistical constraints and supply challenges not accounted for. It is also not uncommon for joint venture partners to ‘move at different paces’, which would impact the timetable.
What is our investment plan?
We first invested in FYI at 20c and then increased our position at 50c and 44.4c.
In line with our standard investment strategy for small cap investments we de-risked around 17% of our FYI Total Holdings in the lead up to the Alcoa JV catalyst.
We still maintain around 83% of our Total Holdings in FYI and intend to hold the majority of this position until the Alcoa US$50M funding decision – expected in December this year.
If the share-price runs up in the lead up to this decision we will sell up to an additional 20% of our Total Holdings.
We’ll re-evaluate our investment plan after the Alcoa funding decision.
Disclosure: The authors of this memo and owners of Wise-Owl, S3 Consortium Pty Ltd, and associated entities, own 1,097,000 FYI shares at the time of publishing. S3 Consortium Pty Ltd has been engaged by FYI to share our commentary on the progress of our investment in FYI over time.