FYI Resources makes significant moves at HPA project, reveals June quarter report

Summary

• During the quarter, FYI released an update on the revised definitive feasibility study (DFS) of the HPA Project.
• The HPA project offers a post-tax internal rate of return (IRR) of 55% and a payback period of only 3.2 years.
• Morgan Stanley Capital International (MSCI) has added FYI Resources Limited to the MSCI Global Index
• FYI announced a quarter ending cash balance of ~$9.0m.

Australia-listed mineral resource company, FYI Resources Limited (ASX:FYI), continues to mark significant progress at its flagship High Purity Alumina (HPA) project. Recently, the company released its activity report for the quarter ending 30 June 2021.

Notably, FYI is inching towards becoming a low-carbon high-purity alumina (HPA) producer to capitalise on the skyrocketing demand in the burgeoning electric vehicle and LED manufacturing sectors.

The resource company envisions to develop an innovative and integrated HPA business and achieved several milestones during the quarter period.

Outstanding NPV of HPA Project

In April 2021, FYI released an update on the revised definitive feasibility study (DFS) of the HPA Project, which demonstrated the potential project value (NPV-post tax) of US$1.14 billion (AU$1.3 billion). The increase in potential project value reflects several changes to underlying assumptions based on project de-risking, technical improvements, and other key commercial developments accomplished by FYI since the preliminary DFS in March 2020.

The summary of the updated DFS is as follows:

Read Here: FYI Resources Grab Headlines, as HPA Project NPV Surpasses USD 1 Billion

As per the updated DFS, the HPA project offers a post-tax internal rate of return (IRR) of 55% and a payback period of only 3.2 years.

Trading on US-based OTC Market

During the June quarter, FYI commenced the OTC quotation of the Company's securities under the code OTC: FYIRF. Although the Company's application for joining the US-based OTCQX market was accepted in April 2021, the final approval came in May 2021. The Company's initiative to commence trading on the OTC market was underpinned by a high level of inquiries from North American investors.

The strong interest from North American investors was a result of:

Must Read: FYI Resources (ASX:FYI) Gets Listed on US-based OTC Market

HPA MoU with Alcoa Australia

FYI has inked an exclusivity agreement with Alcoa Australia Limited to facilitate the detailed negotiation for the potential JV for the development of the HPA project. The agreement was in line with the MoU formed between Alcoa and FYI in September 2020.

The EA grants a 90-day exclusivity period to conduct additional due diligence activities and establish a joint venture for the development and commercialisation of the HPA project.

Don’t Miss: FYI Resources (ASX:FYI) inks exclusivity agreement with Alcoa, Shares up

Admission to MSCI Global Index

On 27 May 2021, Morgan Stanley Capital International (MSCI) added FYI Resources Limited to the MSCI Global Index. The inclusion of FYI into the MSCI Australia Microcap Index has boosted the Company's exposure to the global investment market and provided increased liquidity to FYI. The resource player also got an opportunity to increase its access to capital sources.

For Details: FYI Resources (ASX:FYI) earns a place on the MSCI Australia Micro Cap Index                     

ESG Reporting and Rating

During the first week of June, the Company stated that it had adopted global standards for Environmental, Social, and Governance (ESG) reporting. Under the ESG rating framework, FYI has established a baseline standard and made commitments to improve on these ESG standards.

The resource player has completed the initial ESG certification during the quarter through Sustainalytics, an independent assessment group. FYI achieved an excellent overall ESG rating of 28.0 and a ranking of 9 out of 153 peers.

The detailed performance of FYI across various ESG categories is stated as follows:

Good Read: FYI Resources (ASX:FYI) achieves outstanding scores in initial ESG rating

In conjunction with the EGS ratings, the Company has established a world-renowned ESG reporting platform in June end.

Major Project Status

The Australian Federal Government has approved FYI’s innovative high-purity alumina project as Major Project Status (MPS) on 29 June 2021.

Recognising FYI’s role in the burgeoning energy storage and battery minerals industry, Hon. Christian Porter, MP, Federal Minister for Industry, Innovation and Science said –

“Not only will it improve global supplies of high-grade alumina, with forecast export revenue

of $6.8 billion, but the project will also provide a raft of economic and job benefits for

regional communities in Western Australia.”

The award of MPS to the Company's HPA project is intended to support the overall development of the project, which is underpinned by the outstanding economic metrics.

Don’t Skip: FYI Resources’ (ASX:FYI) High-Purity Alumina project conferred with National Major Project Status by Federal Australian Government

Planned September Quarter

The planned activities for the current quarter include:

FYI ended the June quarter with a cash balance of ~$9.0m.

The shares of FYI traded at AU$0.585 a share on 2 July 2021 at 1:42 PM AEST, gaining ~4.46% against the previous close.