PERTH (miningweekly.com) – Rare earths developer Hastings Technology Metals has announced plans to acquire a 22.1% shareholding in TSX-listed Neo Performance Materials Inc, which would be funded through a A$150-million cornerstone investment from Andrew Forrest’s Wyloo Metals.

Hastings on Friday announced that it had entered into a binding share purchase agreement with an affiliate of Oaktree Capital Management to acquire more than 8.9-million shares in Neo Performance, which is a global rare earth processing and permanent magnet producer.

The acquisition was agreed at a price of C$15 per Neo share, representing a total investment cost of C$135-million. The offer price represented a 4.7% premium to Neo’s closing price on August 24, and a 2.8% premium to its ten-day volume weighted average share price.

Hastings told shareholders that the proposed acquisition would provide the company with a strategic stake in Neo and exposure to its magnetic materials business, as well as a platform to explore potential partnership arrangements utilising Hastings’ Yangibana feedstock in Neo’s downstream rare earth operations.

Upon completion of the acquisition, Oaktree's representatives on the Neo board have agreed to step down, and Hastings intends to seek representation which is commensurate with its shareholding. Hastings confirms it has no current intention to make a takeover offer for Neo nor to acquire any more shares in Neo.

“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,” said executive chairperson Charles Lew.

“We are also thrilled to welcome the support of, and strategic investment by, Wyloo Metals. We see Wyloo’s commitment to Hastings as an important validation of our strategy and objectives. Importantly for Hastings shareholders, in addition to these important strategic initiatives, we continue to remain focused on the development and funding of Yangibana, and the company continues to advance its plans in this regard.”

Wyloo’s investment is in the form of A$150-million in secured, exchangeable notes, which will have a term of three years and will be exchangeable, at any time after 60 days, into Hastings ordinary shares at an exchange price of A$5.50 a share.

The notes will earn an annual coupon equivalent to the three-month bank bill swap rate plus 9%, payable in kind via the issue of additional notes.

Wyloo will also have the right to appoint a nominee director to the board of Hastings and retain that nominee while Wyloo’s equity interest in Hastings is 12.5% or more.

Wyloo Metals CEO Luca Giacovazzi said the investment fitted well with the company’s long-term strategy to invest in the critical minerals that supported renewable energy generation and electrification.

“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,” he said.

“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.

“We’re pleased to be investing in the stable and secure supply of minerals and permanent magnets that are inputs in essential products like electric vehicles and wind turbines.

“Wyloo is delighted to be partnering with Hastings as a cornerstone investor and we look forward to joining the board and working alongside the company as it delivers upon its strategy.”