FYI Resources Ltd


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Our Big Bet for FYI

We want to see FYI significantly re-rate by moving into High Purity Alumina (HPA) production and scaling its technology to other HPA projects

Investment Memo: FYI Resources Ltd (ASX:FYI) - LIVE

Opened: 01-Jul-2022

Shares Held at Open: 1,097,000

What does FYI do?

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.

What is the macro theme?

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.

Why did we invest in FYI?

Funded through to commercialisation

FYI has a binding joint venture agreement with Alcoa that essentially provides a complete pathway to commercialisation of its HPA technology. FYI retains a 35% interest and Alcoa funds US$243M in development costs. Subject to the technology continuing to tick Alcoa’s ‘boxes’, first production is poised for 2024, which would make it the first-to-market of any of the new kaolin-based processes. We can’t overstate the importance of Alcoa, considering its substantial R&D resources, operating experience, long-established marketing and industry relationships, and global reputation – alongside its large balance sheet. Indeed, we think project financing will be a considerable (even insurmountable) hurdle for many of FYI’s peers, whereas FYI is effectively free-carried through to production.

Favourable market dynamics

The HPA market is expected to move into deficit in 2024, coinciding with full scale production of FYI’s first plant facility. With the cost of FYI’s HPA output expected to be under half of the current conventional method (that delivers most of the current HPA supply), the opportunity to substantially disrupt this industry remains on the cards.

Positive ESG headwinds

We back FYI’s ESG-centric focus, with its process set to replace the current and prevalent more expensive, energy intensive and polluting method. We think this will appeal to battery manufacturers and automotive companies as key customers, as well as larger institutional investors.

What do we expect FYI to deliver?

Objective #1: Commission demonstration plant

  • Ultimately the plan is to have full-scale production by 2025. Alcoa effectively handles the ~US$250M funding required, provided FYI’s technology successfully proves itself over several phases. This has already been demonstrated at the pilot plant scale. 
  • Subject to engineering, we expect Alcoa and FYI to greenlight the construction of a demonstration plant through funding US$50M – producing market demonstration and assessment volumes up to 1ktpa HPA.  
  • Allowing 6-12 months for construction, we would be looking at first HPA production sometime in 2H 2023.


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

  • In parallel with the demo plant progressing, FYI and Alcoa will advance front-end engineering and design (FEED) for the full-scale, 8-10 ktpa plant.  
  • Subject to satisfactory demo plant performance, this will be the precursor for the Second Investment Decision to proceed to commercialisation. We expect that the FEED will commence before year end.


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

As projects become further de-risked, potential customers become increasingly interested in securing output. We think that sufficient progress can be made in 1H22 such that multiple customer offtake MOUs and marketing relationships can be delivered in 2H22.


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.

General updates from FYI

Managing Director purchases shares off market [18-Aug-2022]

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.

Investment Milestones for FYI

✅ Initial Investment: @20c
✅ Top Slice
✅ Free Carry
✅ Initial Investment: @50c
🔲 Free Carry
✅ Initial Investment: @44c
🔲 Free Carry
🔲 Take Profit
✅ Price increases 300% from initial entry
🔲 Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
✅ 12 Month Capital Gain Discount
🔲 Hold remaining Position for next 2+ years

Our Past Commentary on FYI Resources Ltd

Date Title
25-Jan-2023 $ Big funding decision looming: The catalyst FYI is looking for?
03-Dec-2022 $ 0.150 What we are looking for before Christmas...
25-May-2022 $ FYI to be first to market with a superior battery metals product?
05-Mar-2022 $ 0.250 Mainstream Media Catching on to the Commodities Supercycle
21-Feb-2022 $ 0.290 Why we invest in Oil & Gas and Precious Metals
12-Feb-2022 $ 0.305 Energy Transition Metals, Raw Materials, McKinsey, Supply and Demand Economics
05-Feb-2022 $ 0.280 The "Lesser Kown" Energy Transition Metals: Copper, Aluminium, Graphite, Helium, Rare Earths
22-Jan-2022 $ 0.340 Our Investment Approach, Energy Cold War, Ukraine, Supply Chain Crisis
14-Jan-2022 $ 0.415 How do Fund Managers Invest in Small Cap Stocks?
16-Oct-2021 $ 0.455 Mainstream media casts a big spotlight on Green Hydrogen
13-Oct-2021 $ Doubling down on the dip in our favourite long term High Purity Alumina play
02-Oct-2021 $ 0.530 Evergrand, Gold and Traditional Energy
01-Oct-2021 $ FYI signs JV with Alcoa - Now free carried into production
04-Sep-2021 $ 0.780 Annual Reports, Uranium and a Welcome to New Subscribers
03-Sep-2021 $ So close… again. FYI and Alcoa binding deal terms delayed to October 5th.
21-Aug-2021 $ 0.820 Market fluctuations and portfolio news and quick takes
20-Aug-2021 $ FYI strengthens Environmental, Social and Governance (ESG) as Alcoa Joint Venture approaches...
07-Aug-2021 $ 0.650 Market swings back up as small caps scramble towards the end of the year
04-Aug-2021 $ FYI very close to Alcoa JV - expected in just 30 days.
03-Jul-2021 $ 0.540 End of Financial Year, and what happened to 88E's share price?
29-Jun-2021 $ FYI’s Project of National Significance, says Australian Federal Government
18-May-2021 $ This is why we invested in ASX:FYI
18-May-2021 $ FYI in Exclusive Talks with Alcoa to Bring $1BN HPA Project to Life
13-May-2021 $ 0.480 We are now Holding FYI for the Long Term
12-May-2021 $ New investment FYI added to Wise-Owl Portfolio
01-Apr-2021 $ 0.555 FYI’s Net Present Value Almost Doubles - Now Over US$1 Billion
19-Jan-2021 $ 0.360 ASX Battery Metals Developer Days Away from Pilot Plant Results

More positive results for HPA-doped anode coatings


Oct 04, 2022


Investment Memo: FYI IM-2022

Our Wise-Owl critical metals Investment, FYI Resources (ASX:FYI) is progressing an innovative high purity alumina (HPA) project that could transform the industry, making it much cleaner and cheaper to produce.

The company continues to progress its joint venture with leading global aluminium player Alcoa for mass production of HPA, with the partners now working on engineering details for a demonstration plant to be based in WA.

On the application and marketing side, FYI and graphite company Ecograf (ASX:EGR) are working together on an anode coatings development program - essentially determining if their activities combined can further enhance performance of lithium ion batteries through ‘doping’ Ecograf’s spherical graphite with FYI’s 4N (ie 99.99% pure) HPA. Earlier today, the companies reported further positive results from the program, with the electrochemical performance in lithium-ion coin cells in excess of 110 continuous cycles achieving near theoretical irreversible capacity and outperformed standard industry materials. In addition, more encouraging results from the application FYI HPA being applied to the polyolefin separators showed a further improvement of 7.94 mAh/g reversible capacity.

This is interesting as polyolefin separators composed of polyethylene and polypropylene are the separators of choice in commercial lithium-ion batteries - being able to provide superior separators could open further markets and deliver higher margins for both FYI and Ecograf.

Up next for FYI, we’re keen to see an update on how the Alcoa joint venture is progressing, with Stage 2 funding decision looming in December.

Critical minerals quickly becoming a priority in the EU

Sep 20, 2022

Macro: Commodities

Readers who follow our Investment Portfolios will know that we have been making strategic Investments in commodities that have made critical minerals lists for the EU, USA, Japan, India and Australia.

These minerals are considered critical to the digitisation and decarbonisation macro thematic and include lithium, graphite, cobalt, nickel and PGE’s, to name a few.

Over the weekend, the following speech from the president of the European Commission, Ursula von der Leyen, gave a speech announcing that the EU would look to pass a “European Critical Minerals Act”.

The aim is to avoid the position Europe finds itself in with oil and gas, where it relies on a single trading partner like Russia.

The act would see the EU put in place:

  1. Agreements with partners like Chile, New Zealand, Mexico, India and Australia for the supply of critical minerals.
  2. Identification of strategic projects across all along the supply chain from mine sites to processing/refining projects.
  3. The act would also see the setting up of strategic reserves of these critical minerals.

All of this bodes well for our Investments across commodities identified as “critical minerals” giving these projects strategic importance on the world stage.

To see a list of all the critical minerals in the Australian Critical Minerals strategy document, check out the following link.

Here is a snippet from that speech:

Engineering Services Provider appointed for HPA Project


Aug 23, 2022


Investment Memo: FYI IM-2022
Objective 1 : Commission demonstration plant

Our Wise-Owl critical metals Investment, FYI Resources (ASX:FYI) is progressing an innovative high purity alumina (HPA) project that could revolutionise the industry.

FYI has partnered with the Australian subsidiary of the leading global aluminium producer, the +$10B capped Alcoa, to develop the HPA project via a joint venture (65% Alcoa : 35% FYI).

The project aims to produce HPA that is purer and substantially cheaper than the current predominant process, and leaves a much smaller environmental footprint.

The JV is currently developing a demonstration plant in WA which will produce up to 240 tpa HPA.

Earlier today, FYI announced that Hatch Engineering was awarded the engineering services contract to support work for the demonstration plant.

With over 70 offices around the world, Hatch is a leading, global multidisciplinary management, engineering and development consultancy with extensive experience in critical minerals.

The Hatch appointment fits in with the main objective we’d like to see FYI deliver in 2022 — commissioning the demonstration plant. The key catalyst for this will come in December with the $50M funding decision by Alcoa.

While we are not privy to Alcoa’s internal discussions regarding its funding decision, there are positive indications of its continued commitment to the project. We note that Alcoa did mention the HPA project in its latest quarterly presentation and commentary.

We also take confidence in seeing FYI management increase their own holdings — managing director Roland Hill recently acquired $190k of shares at a premium through an off-market transaction.

For more on our analysis on FYI Resources, here is a link to our FYI Investment memo.

Managing Director purchases shares off market


Aug 18, 2022


Investment Memo: FYI IM-2022

Yesterday we saw some direct buying off market from FYI’s Managing Director Roland Hill.

The purchase was for $190k at an average price of 19c per share, a premium to the current market price for FYI.

FYI’s share price is down ~50% from where it was earlier in the year at ~40c per share.

With the share price down so much, we always like it when the company directors step up and start to buy shares on or off market. Director buying signals to us that the people closest to the company clearly see some value in topping up their shareholdings.

To see all of the key objectives we want to see FYI achieve in 2022, the reasons why we continue to hold FYI in our portfolio and the key risks to our Investment thesis, check out our 2022 FYI Investment Memo here.

Noosa Mining Investor Conference round-up

Jul 22, 2022

Macro: Commodities

Spanning three days on the pristine Sunshine Coast of Queensland, the Noosa Mining Investor Conference kicked off its 12th year on Wednesday. Attracting a diverse and large spread of corporates, brokers, retail and institutional investors, this year’s event featured over 60 companies presenting and over 1,000 people in attendance, all hosted within the coastal town's Peppers Resort.

At the event, we caught up with a number of executives from our Investment companies (including AKN, AOU, BPM and PFE) as well as companies of interest, either as potential additions to one of our Portfolios, or to gain expert insight to macro and regional headwinds impacting the markets.

The conference is held in the ideal location to mix work with pleasure, and meet a host of CEOs of ASX juniors. Each day ends with a short ‘business at the bar’ session that quickly morphs into talking tactics about where to eat and drink. On Thursday and Friday nights, many head to the Noosa Surf Club for its networking sessions, enjoying its glassed indoor area and open deck to the beach.

We look forward to providing updates on companies we met with down the road.

China considering US$1.1 trillion infrastructure stimulus

Jul 15, 2022

Macro: Commodities

China plans to make up to US$1.1 trillion in financing available for infrastructure spending, which we think will increase commodity demand. Read the following Bloomberg article for details.

Read the full article here.

Below are our key takeaways:

  • China is making 7.2 trillion yuan ($1.1 trillion) in funds available for infrastructure spending.
  • According to Citigroup, infrastructure investment in 2022 is likely to rise by 7.7% versus 2021.
  • President Xi Jinping has called for an “all out” effort to increase infrastructure spending this year to fuel economic growth and meet a GDP growth target of around 5.5%.

The Bloomberg article touches on the impacts of China’s COVID induced lockdowns on the domestic economy.

With economic growth tipped to slow, the Chinese government is getting ready to lean on fiscal stimulus through infrastructure investment to spur economic growth.

We think this type of fiscal stimulus is likely to become a common theme in China and the West, with macro themes like decarbonisation requiring massive CAPEX.

This infrastructure spending forms part of our “commodities supercycle” investment thesis, where we see increased fiscal stimulus and CAPEX investment spurring higher demand for commodities already facing supply shortages.

China considering US$220Bn in infrastructure stimulus

Jul 08, 2022

Macro: Commodities

The following Bloomberg article highlights China’s plan to spend up to US$220 billion to spur economic growth through infrastructure spending.

All of this new infrastructure will require more commodities.

Read the full article here.

Below are our key takeaways:

  • China’s Ministry of Finance is considering US$220 billion of infrastructure funding aimed at shoring up the country’s beleaguered economy.

  • The funding is to be brought forward from next year’s quota, marking the first time the issuance has been brought forward due to concerns around the dire state of the world’s second largest economy.

  • The funding would primarily be used on infrastructure spending to boost an economy hit by Covid lockdowns and a housing downturn.

  • Commodities rallied in European trading hours following the news, with copper moving 3.6% higher on the London Metal Exchange.

For over two years, we have been writing about an upcoming commodities supercycle brought about by infrastructure spending, following decades of underinvestment in the “real economy”.

All this investment in the “real economy” requires raw materials, which is why we think the macro backdrop for commodities over the next decade is strong.

The Bloomberg article highlights the readiness of the Chinese government to lean on fiscal stimulus to spur economic growth at a time when the Chinese economy is slowing down.

Generally, governments would try to respond to slowdowns in economic growth by cutting interest rates. With this tool exhausted after the COVID pandemic, we think infrastructure spending will become the new policy of choice for governments worldwide.

Again, this infrastructure spending will increase demand for commodities which we expect will take commodity prices higher.

VW CEO breaks down batteries and supply chain issues

Jul 08, 2022

Macro: Commodities

The following Bloomberg article showcases the moves major carmaker Volkswagen is making in the batteries industry.

Read the full article here.

Below are our key takeaways:

  • VW is pressing forward with investments along its battery supply chain, commencing construction at a new cell factory in Salzgitter, Germany, one of five facilities in Europe under the carmaker’s PowerCo subsidiary.
  • Salzgitter is home to VW’s main motor factory, and it is where the company last year opened an $80 million facility to research, develop and test EV batteries.
  • Roughly $2 billion will be invested in the new cell factory, where production is scheduled to begin in 2025.
  • VW expects its battery business to generate €20 billion in revenue by the end of this decade.
  • VW CEO Herbert Diess said, “We are invested in some startups and we are looking forward to a joint venture together with Bosch for the machine tools and equipment for those plants, so we’re really gearing up to become one of the bigger battery cell producers”.

The news is just another sign that downstream investment in battery supply chains is showing no signs of slowing down.

VW is one of the world's largest carmakers and is heavily investing in downstream production capacity. It expects this part of its business to generate over €20 billion in revenues by the end of the decade.

This is a situation where investment in midstream/downstream (manufacturing/battery industry) is far ahead of upstream investment (mining), this leads to the supply/demand imbalances for the raw materials required to produce batteries only becoming worse.

The imbalance comes from the timing of these mega projects. Building a downstream / midstream facility could take 1-4 years whereas it takes around 7 years on average to bring a new resource discovery into the production stage.

As a result, we think that raw materials prices will remain high for at least the next decade whilst the mining industry catches up to demand.

Commences next phase of HPA project development with Alcoa


Jun 02, 2022


Investment Memo: FYI 2022

Objective #1: Commission demonstration plant

Our Wise-Owl specialist batteries metal tech investment, FYI Resources (ASX:FYI) has announced the completion of the first of three development phases for its high purity alumina (HPA) project.

The HPA project is a joint venture with the Australian subsidiary of the +$10B capped Alcoa — a leading global aluminium producer (65% Alcoa : 35% FYI). The project aims to produce HPA that is purer and substantially cheaper than the current predominant process, and leaves a much smaller environmental footprint.

The JV now progresses to Phase 2, the development of a demonstration plant in WA which will produce up to 240 tpa HPA. Whilst this is less than the initial 1,000tpa production goal, the quantity isn’t the important aspect.

What matters is seeing FYI’s technology scale up from the pilot plant level. If that can be achieve, the JV will likely progress to the third and final phase — the development of a 9,000 tpa production facility.

HPA is drawing heightened attention as a key component for separators in electric vehicles batteries and demand for HPA is soaring as consumers switch from gas guzzlers to EVs, with the market expected to tip into a supply deficit from around 2024.

Today’s news fits in with the main objective we want to see FYI deliver in 2022 — to commission the demonstration plant. The key catalyst for this will be Alcoa signing off on the demonstration plant funding, which is expected in December 2022.

High purity alumina added to government's critical mineral list


Mar 17, 2022

Yesterday the Australian federal government updated its “critical minerals strategy” documents and added two new minerals to the list - silica and high purity alumina.

The list of now 26 critical minerals are made up of those that are needed to manufacture high tech devices, military applications and, importantly, those needed to aid the transition towards a low carbon economy.

High purity alumina has several different industrial applications from glass to LED lights, more recently however it is starting to be considered a “critical” mineral due to its use in high energy density batteries such as those used in electric vehicles.

Our battery metals investment FYI is aiming to be the first to market to deliver high purity alumina using a new kaolin clay based process that is cleaner, purer, and much less expensive than traditional methods of alumina production. It is doing this via a partnership with US$14 billion global alumina giant, Alcoa.

With ESG considerations becoming more and more important and high purity alumina now recognised as a “critical mineral” we expect the market to become more interested in FYI’s tech.

Latest appointment further bolsters team


Mar 03, 2022

On Thursday, our high purity alumina (HPA) investment FYI added an impressive industry veteran to their team.

Mr. Phil Thick has been appointed as a strategic advisor to FYI’s Board, having previously held senior positions at Tianqi Lithium, Shell Australia, Coogee Chemicals and Alcoa Australia. His impressive track record includes instrumental roles in several developments within battery and energy related industries, which certainly fit FYI’s downstream and value-add battery mineral business.

We like this addition to the team, and suspect that Phil’s previous role at Alcoa Australia can only benefit the FYI- Alcoa joint venture.

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