Australia’s rare earths developer Hastings Technology Metals has agreed to purchase a 22.1% stake in Neo Performance Materials from an affiliate of Oaktree Capital Management, for a total consideration of C$135m ($103.5m).
Under the deal, Hastings will acquire 8,974,127 common shares in Neo Performance Materials at C$15 apiece.
Neo Performance Materials is engaged in downstream processing of rare earth elements and the production of advanced materials, including permanent magnets.
Hastings expects the acquisition to provide exposure to its magnetic materials business, as well as a platform to explore potential partnership arrangements using its Yangibana feedstock in downstream rare earth operations of Neo Performance Materials.
The Australian rare earths developer said it has no plans to either make a takeover bid or acquire additional shares in Neo Performance Materials.
Hastings plans to fund the acquisition through a A$150m ($115m) cornerstone investment secured from privately-owned metals company Wyloo Metals, in the form of exchangeable notes.
With a term of three years, the notes can be exchangeable into Hastings ordinary shares at a price of $5.50 for each share, effective after 60 days.
Hastings executive chairman Charles Lew said: “The acquisition of the Neo stake represents an important strategic milestone for Hastings, providing the company and its shareholders with a unique opportunity to take further steps towards realising the Hastings 2.0 strategy.”
Wyloo Metals CEO Luca Giacovazzi said that the investment complies with the firm’s long-term plan to invest in critical minerals, which enable electrification as well as renewable energy generation.
Giacovazzi added: “Rare earths and the permanent magnets they produce are essential enablers of the energy transition. There is already a shortage of these products, and the upcoming increase in magnet demand will require continued investment.
“This transaction with Hastings spans the value chain, from mining to magnet manufacturing. As the owner of the only commercial rare earth metals facility in Europe, Neo is strategically placed to help Europe meet its goal to become climate neutral by 2050.”
The investment also allows Wyloo to appoint a nominee director to Hastings’ board and keep the nominee in place as long as its equity stake in Hastings is at least 12.5%.