FYI impresses Alcoa, a likely near term offtake partner

By Trevor Hoey. Published at Feb 11, 2021, in Technology

FYI Resources Ltd (ASX:FYI) has released highly promising and commercially crucial analytical results from the recently completed HPA pilot plant trial conducted in collaboration with Alcoa Australia Limited (Alcoa).

Analytical results indicated more than 99.998% Al2O3 purity was consistently achieved with an average of 99.9986% Al2O3 purity surpassing expectations - just a whisker of the premium 5N product that has a grade of 99.999%.

The fact that some samples achieved results of 99.999% HPA is an outstanding outcome that surpassed both parties’ operational expectations, providing further validation of FYI’s innovative HPA flowsheet design.

In industry terms, this confirms that FYI has drawn significantly closer to being able to offer its customers a 5N product that fetches approximately double the price (circa US$50,000 per tonne) of the 4N product that had previously been applied as a base case in the definitive feasibility study (DFS).

The sale of a 5N product would not only generate substantially higher income, but it would also open up a much wider range of markets where that quality of HPA is essential.

As a backdrop, FYI and Alcoa entered into a Memorandum of Understanding (MOU) on 8 September 2020 for the potential joint development of FYI’s innovative, fully integrated, high quality HPA product.

These results go a long way to meeting a key condition precedent to the Alcoa MOU, being the successful review of FYI’s innovative process flowsheet design and performance and potential operational parameters in terms of FYI’s future production scenario.

Significant upside to DFS financial metrics

The MOU activities continue to progress toward completion of the two other key conditions precedent being the engineering review and the economic/commercial terms. The parties will now work closely to finalise the MOU review.

The following excerpt from the group’s DFS provides a snapshot of the base case assumptions that were used to project revenues, sales and the underlying project valuation from the production of 4N.

As you can see, management used pricing assumptions of US$24,000 per tonne which was conservative in terms of 4N pricing, and for the most part everything below that line including revenues, margins, underlying earnings and project payback will reflect more favourable numbers based purely on 4N production.

The project’s net present value and internal rate of return would be a substantially higher even if 99.999% 5N product sales accounted for 25% of production.

For example, just looking at the top line, a split of 25% 5N and 75% 4N would lift the revenue line from US$192 million to US$244 million.

This could have a proportionate impact on margins, EBITDA, project payback time (already a conservative 3.6 years), and in turn result in an increased net present value which would arguably see the company rerated on an enterprise value/NPV basis and/or by applying revised enterprise value/EBITDA metrics.

FYI continues to lead the way with its technical expertise

The 99.999% purity level was not specifically targeted for this trial, and managing director Roland Hill was buoyed by the results saying, “We are delighted with the exceptional results from the joint pilot plant trial.

‘’The achievement continues to demonstrate the outstanding qualities of our flowsheet in delivering consistent and reliably high quality HPA product – a key requirement from a customer perspective.

‘’FYI is encouraged by the outcomes of the pilot plant and will continue to progress with the development of our HPA strategy and advancing the MOU conditions with Alcoa.”

Some HPA from the joint FYI and Alcoa pilot plant trial was retained for detailed internal analysis and product phase work.

In maintaining the company’s on-going high standard of quality control and product assurance, the additional pilot plant trial HPA samples will be forwarded to EAG Laboratories in New York for further independent, elevated Glow Discharge Mass Spectrometry (GDMS) analysis to provide supplementary data that is intrinsic to the level of purity that has been achieved by the collaborative trial production.

Following the final product finishing work of the trial HPA, samples will be sent to several potential offtake parties for further product qualification – particularly directed towards the LED lighting and lithium-ion battery (LiB) markets.

Alcoa agreement could trigger a wave of commercial activity

The production of 5N would allow FYI to target a broad range of markets, providing scale, client diversification and leverage to multiple price points, including a proportion of top-tier product segments that fetch in the order of US$50,000 per tonne.

Given the numerous share price catalysts on the horizon, FYI appears to have what it takes to attract significant investor attention in 2021.

The most likely near-term material development is the finalisation of the memorandum of understanding that has been struck with Alcoa.

It is worth noting that much could be read into a positive decision by Alcoa given its global industry recognition by other potential offtake partners.

The trial product will be particularly directed towards the LED lighting and lithium-ion battery (LiB) markets in particular, industries that are continually under the microscope with upward assessments in what is already considered an exponential growth profile.

It is worth noting that FYI is already engaged in product qualifications with a number of targeted potential customers whom are focused on diversified applications and in specific jurisdictions – including South-East Asia, Europe and the US.

With management in discussions with other potential offtake clients, intermittent news on this front could commence in the coming months.

Combine these factors with the release of a revised project economics study in March and it is easy to see the company being substantially revalued.

The delivery of a successful final engineering report in the June quarter would position the company to confirm its decision to proceed to construction - another potential share price catalyst.

View Our Investment Portfolios

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why is Australia’s leading small cap publication

Founded seven years ago, is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise. provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more. is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!