ASM launches $106m raising for South Korean plant

Australian Strategic Materials has secured $65 million from investors while announcing plans to raise a further $41 million to build a rare earths processing facility in South Korea.

ASM, which signed a memorandum of understanding (MoU) with the Chungbuk provincial government earlier this month, is planning to develop its plant within the region, about 115 kilometres south of Seoul.

The MoU also includes a government grant, ASM said.

It will use the proceeds from a share placement and rights issue to progress the development of its proposed plant, as well as advance front-end engineering design works on the company’s Dubbo project in NSW.

Managing director David Woodall said the raising also significantly bolstered ASM’s balance sheet.

“Importantly, we continue to advance our strategy for sustainable growth, with a primary focus on developing ASM into a globally relevant, independent and integrated metals producer by 2022,” he said.

The South Korean plant will initially produce high-purity neodymium-iron-boron powder and titanium powder using a low-energy metallisation process, ASM says.

It will be the company’s first metallisation facility.

ASM will issue about 13.5 million shares under the placement, which is scheduled to settle on April 1. It expects to launch the one-for-14, non-underwritten rights issue on April 7.

Both offers are priced at $4.80 per share, which represents a 4 per cent discount to the ASM's last traded price (on March 23) of $4.99.

Petra Capital is acting as lead manager and bookrunner to the raising and Herbert Smith Freehills as legal adviser to ASM.

Shares in the company closed up 0.4 per cent to trade at $5.01.