Shares in FYI Resources have fallen sharply for the second day running after the Perth company announced details of a $US250 million joint venture with Alcoa of Australia.
Its shares were down 20 per cent to 42 cents today after a 36 per cent tumble on Friday.
The sell-off has erased much of the big share price gains FYI achieved since announcing in September last year the signing of an MOU with Alcoa to develop a high-purity alumina plant.
The final agreement, announced on Friday, will see Alcoa acquire a 65 per cent stake in the HPA project, which will cost $US257 million ($A350 million) over three phases.
Alcoa will be manager of the planned development, including the proposed joint venture.
The joint venture remains subject to final investment decisions by both parties and will only eventuate if all goes to plan over an extended four-year development pathway.
FYI said a joint development with Alcoa was the surest pathway to de-risk and progress the development of the project and to ensure its success once in production.
“The involvement of Alcoa will help to transform the HPA project from the current R&D and design stage to reality,” the company said.
Phase one of the project would involve the detailed design of a 1,000 tonnes pa demonstration facility and further production trials over 2021 and 2022, at a cost of $US7 million.
Phase two would see construction of the demonstration facility along with detailed engineering for a full-scale HPA plant to produce 8,000tpa.
This phase would cost $US50 million, with Alcoa contributing the first $US5 million of FYI's funding requirement by sole funding the first $US14 million of construction costs
Phase three, earmarked to commence in 2023, would involve construction of the full-scale plant at a cost of about $US200 million.
Alcoa would contribute the first $US68 million of FYI's funding requirement by sole funding the first US194 million of costs associated with the construction of the full-scale facility.
FYI managing director Roland Hill said that coming to joint development terms on the HPA project was a transformational event for the company.
“The strong alignment between the parties and resulting HPA business case is outstanding,” he said.