Australia-listed FYI Resources has failed to win over shareholders with an announcement of a potential joint venture (JV) with Alcoa to develop the junior’s High-Purity Alumina (HPA) project.
FYI on Friday announced a binding term sheet with Alcoa for the joint development of the project, in Kwinana, Western Australia. The term sheet sets out the pathway to a future JV, subject to final investment decision.
A joint development with Alcoa was considered to be the “surest pathway to derisk and progress the development of the project”, FYI said in a statement.
However, shareholders were not impressed by developments, and FYI’s stock tanked by 36% to A$0.53 a share on Friday.
The term sheet contemplates three phases for the development of the project of which FYI would own 35% and Alcoa would own 65%. At the end of each phase, each party would be able to decide whether or not to proceed to the next phase.
Alcoa would be the manager of the development activities, including the proposed future JV. A joint development committee would comprise three Alcoa members and two FYI members.
The parties have agreed to the parallel development of both a demonstration plant, with capacity of 1 000 t/y HPA in a yet-to-be-confirmed location, and the primary production facility with a capacity of 8 000 t/y HPA.
Development and construction of the demonstration plant and primary facility would start as soon as practical, following final engineering completion, FYI said.
FYI in June reported that the Australian federal government had awarded the HPA project 'major project' status.