Announcement PDF 28 August 2020 ASX ANNOUNCEMENT FULLY UNDERWRITTEN SHARE PURCHASE PLAN TO FURTHER YANGIBANA PROJECT Further to the capital raise announcement on 26 August 2020 Hastings Technology Metals Ltd (ASX: HAS) (“Hastings” or the “Company”) is pleased to provide details of the Hastings 2020 Share Purchase Plan (the “Plan” or “SPP”) offer to eligible shareholders to raise $3 million. Eligible shareholders are those who are registered holders of ordinary shares in the Company as at 5.00pm WST on 25 August 2020 (Record Date) resident in Australia or New Zealand. Hastings has made significant progress during 2019/2020: ✓ 18% increase in ore reserves, extending the mine life to 13 years ✓ Subsequently a 73% increase in mineral resources at Simon’s Find ✓ Potential to increase mineral resources demonstrated by further drilling at Auer and Yangibana ✓ State and Federal Government Environmental Approvals received ✓ DRA Pacific awarded the Engineering, Procurement and Construction and Management (EPCM) contract ✓ Master Supply Agreement signed with Schaeffler, a global Tier 1 automotive industry component supplier ✓ $68m in capex savings arising from the decoupling of the beneficiation from the hydrometallurgical plant ✓ In principle eligibility for Finnvera (Finnish Government Export Credit Scheme) debt financing The SPP will enable shareholders to participate by acquiring additional shares without incurring transaction costs. The SPP is fully underwritten and the Directors and senior management have confirmed their participation in the SPP. Under the Plan, eligible shareholders may subscribe for up to $30,000 worth of ordinary shares in the Company (New Shares), in bands as outlined in the Offer booklet attached, subject to a discretionary scale back in the event that shareholder demand exceeds the Offer Amount, at a price of 12.5 cents per share (Issue Price) The issue price is at a 21.9% discount to the last traded price of $0.16 on 21 August 2020 and a 9.8% discount to the Company’s 10 day VWAP. The Company is offering up to 24,000,000 New Shares under the Plan to raise $3 million (Offer Amount), before costs. The Company reserves the right to scale back a shareholder’s subscription (in its absolute discretion) in the event total shareholder demand exceeds the Offer Amount. The Company also reserves the right to accept oversubscriptions, subject to compliance with all laws, regulations, ASIC class orders, requirements or policies or any ASX __________________________________________________________________________________________ Hastings Technology Metals Ltd ABN 43 122 911 399 Level 8 167 St Georges Terrace Perth WA 6000 T +61 8 6319 0000 www.hastingstechnologymetals.com Listing Rule. An offer booklet, attached, will be mailed to eligible shareholders on Monday, 31 August 2020 and the Offer will close on Monday, 21 September 2020. The Offer is fully underwritten for $3 million by shareholders of the Company. The funds raised from the SPP will be used to fund the following ongoing work: a) Procure equipment arising from the decoupling of the beneficiation plant and the hydrometallurgy plant; b) Further engineering design; c) Grade and resource drilling to increase mining reserves; d) Mine site works; and e) Working capital. TIMETABLE Event Date Record Date Announcement Date Dispatch of Offer and Application Forms to Eligible Shareholders Opening date for acceptances 25 August 2020 26 August 2020 31 August 2020 Closing date for acceptances Allotment Date Dispatch of holding statements 5.00pm WST on 21 September 2020 24 September 2020 24 September 2020 31 August 2020 For further information please contact: Charles Lew, Executive Chairman +65 9790 9008 Guy Robertson, Finance Director, +61 407 983 270 Guy Robertson Company Secretary __________________________________________________________________________________________ Hastings Technology Metals Ltd ABN 43 122 911 399 Level 8 167 St Georges Terrace Perth WA 6000 T +61 8 6319 0000 www.hastingstechnologymetals.com Share Purchase Plan Hastings Technology Metals Ltd ABN 43 122 911 399 This is an important document. The Offer does not take into account the individual investment objectives, financial situation or particular needs of each Eligible Shareholder. Accordingly, before making a decision on whether or not to accept the Offer, you should consult your financial or other professional adviser. If you have any questions in relation to the Offer or how to complete the Application Form, please call the Company’s Share Registry, Automic Group Pty Limited on +61 2 9698 5414 or Mr Guy Robertson – Company Secretary on +61 407 983 270. This document is not a prospectus or other disclosure document under the Corporations Act. The distribution of this document (including electronic copies) outside Australia and New Zealand may be restricted by law. NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS. Important Notice The Offer contained in this document is not a recommendation to purchase Shares. If you are in any doubt about what to do with the Offer, you should consult your financial or other professional adviser. If you apply to participate in the Offer by making a BPay® payment (using an Australian bank account) or completing and returning the Application Form with a cheque or bank draft, you are accepting the risk the market price of Shares may change between the date of the Offer and the Issue Date for the New Shares. This means it is possible that, up to or after the Issue Date, you may be able to buy Shares at a lower price than the Offer Price. Participation in the Offer is not being offered, directly or indirectly, in the United States or to any person that is, or is acting for the account or benefit of, a US Person. The New Shares to be offered and sold in the Share Purchase Plan have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended, or under the securities laws of any state or other jurisdiction of the United States. This document and any related documents including the Application Form must not be mailed or otherwise transmitted or distributed in or into the United States or to any person that is, or is acting for the account or benefit of, a US Person. Directors recommend you monitor the Company’s announcements, which can be found on its website at www.hastingstechmetals.com and on the ASX website at www.asx.com.au (ASX: HAS). The Company recommends that you obtain your own financial and taxation advice in relation to this Offer and consider price movements of Shares in the Company prior to making an Application under the Plan, which can be found on its website, the ASX website or in the financial pages of major Australian metropolitan newspapers. Timetable to the Offer Record Date - Date for determination of Eligible Shareholders 5.00pm WST 25 August 2020 Announcement of Share Purchase Plan 26 August 2020 Opening Date for receipt of acceptances - Offer documents and Application Forms mailed to Eligible Shareholders 31 August 2020 Closing date for acceptances to be received by the Company 5.00pm WST 21 September 2020 Issue Date of New Shares under the Share Purchase Plan 24 September 2020 Dispatch of holding statements for New Shares issued under the Share Purchase Plan 25 September 2020 Date on which the New Shares are expected to commence trading on ASX 24 September 2020 This timetable is indicative only and subject to change. The Company reserves the right to vary the above dates, subject to the ASX Listing Rules and the Corporations Act, without notice. Offer Booklet - 2020 SPP v2_CL Page 2 Key steps Step 1: Step 2: Read the terms and conditions of the Share Purchase Plan in full. • There is no requirement to participate in the Share Purchase Plan. • Participation in the Share Purchase Plan is entirely voluntary. Are you an Eligible Shareholder? (see section 3) You are eligible to apply for the New Shares if: • your registered address in the Company’s registered members is in Australia or New Zealand; and • you were registered as a holder of Shares as at 5:00pm (WST) on 25 August 2020 (Record Date). The Offer is not being extended to any Shareholder, as at the Record Date, whose registered address is not situated in Australia or New Zealand. Neither these terms and conditions nor the Application Form constitutes an offer to buy securities in the United States (or to, or for the account or benefit of, US Persons). Step 3: Step 4: If you choose to participate in the Share Purchase Plan, you may purchase a parcel of New Shares for one of the following amounts (see section 6): $2,500 $5,000 $7,500 $10,000 $15,000 $20,000 $25,000 $30,000 To apply for New Shares under the Share Purchase Plan, Eligible Shareholders must (see section 11): • complete the Application Form attached to these terms and conditions; or • make a BPay® payment by using the personalised reference number shown on your Application Form, which is required to identify your holding. Questions If you have any questions in relation to the Offer or how to complete the Application Form, please call the Company’s Share Registry, Automic Group Pty Limited on 1300 288 664 or from overseas +61 2 9698 5414 – or Guy Robertson Company Secretary on +61 407 983 270 or email guy.robertson@hastingstechmetals.com, or consult your financial or other professional adviser. Offer Booklet - 2020 SPP v2_CL Page 3 Letter to Shareholders Dear Shareholder, Offer to participate in Hastings Technology Metals Ltd Share Purchase Plan The Directors of Hastings Technology Metals Ltd (Hastings or Company) are pleased to extend an invitation to Eligible Shareholders to participate in the Company's Share Purchase Plan (Plan or SPP). The Plan allows Eligible Shareholders to purchase up to $30,000 worth of fully paid ordinary shares in the Company (Shares) without any brokerage or transaction costs. The Plan was announced by the Company to the Australian Securities Exchange (ASX) on 26 August 2020. The Shares under the Plan will be issued at 12.5 cents per Share, which represents a 21.9% discount to the last traded price of $0.16 on 21 August 2020 and a 9.8% discount to the Company’s 10 day VWAP. The offer of Shares under the Plan is open to all Eligible Shareholders (as defined in the attached Offer) as at 5:00pm (WST) on 25 August 2020 (Record Date). Hastings has made significant progress during 2019/2020: ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 18% increase in ore reserves, extending the mine life to 13 years Subsequently a 73% increase in mineral resources at Simon’s Find Potential to increase mineral resources demonstrated by further drilling at Auer and Yangibana State and Federal Government Environmental Approvals received DRA Pacific awarded the Engineering, Procurement and Construction and Management (EPCM) contract Master Supply Agreement signed with Schaeffler, a global Tier 1 automotive industry component supplier $68m in capex savings arising from the decoupling of the beneficiation from the hydrometallurgical plant In principle eligibility for Finnvera (Finnish Government Export Credit Scheme) debt financing The SPP will enable shareholders to participate in acquiring additional shares without incurring transaction costs. The Directors and senior management, who are current shareholders, have confirmed their participation in the SPP. The Plan is to raise up to $3.0 million through the issue of up to 24,000,000 New Shares. The Company reserves the right to scale back an Eligible Shareholder’s subscription (in its absolute discretion) in the event total Shareholder demand exceeds 24,000,000 New Shares. The Company reserves the right to accept oversubscriptions, subject to compliance with all laws, regulations, ASIC class orders, requirements or policies or any ASX Listing Rule. The SPP is fully underwritten to $3 million. Participation in the Plan is entirely voluntary. Offers under the Plan are non-renounceable, meaning that you are not permitted to transfer your rights to subscribe for Shares under the Plan. If after reading the attached Offer you wish to participate in the Plan, you must complete and return the attached personalised Application Form, together with a cheque and return it to the Company’s Share Registry on or before 5.00pm (WST) on 21 September 2020. Alternatively you may use the BPAY® facility described later in this documentation. The funds raised from the SPP will be used to fund the following: Offer Booklet - 2020 SPP v2_CL Page 4 a) Procure equipment arising from the decoupling of the beneficiation plant and the hydrometallurgy plant; b) Further engineering design; c) Grade and resource drilling to increase mining reserves; d) Mine site works; and e) Working capital. Further details of the Plan are set out below. The Plan allows Eligible Shareholders, irrespective of the size of their shareholding, to apply for any number of Shares up to a maximum of $30,000 ie. 240,000 Shares. (240,000 X $0.125 =$30,000) Hastings Projects Hastings has two JORC 2012 compliant rare earths projects in Western Australia –the Yangibana project and the Brockman project (formerly Hastings). Hastings focus in on its flagship Yangibana project. Yangibana Health & Safety The Health & Safety of the Company’s employees and contractors is paramount. The execution of COVID-19 systems and protocols has been a focus since early calendar 2020 providing support to our employees at Yangibana, Perth and Singapore offices. The company continues with the cost saving measures implemented at the start of Covid-19 lockdown where the majority of its workforce were put on a reduction in working hours for the 6 months period till September. Environment With state and federal environmental approvals having been received, secondary approvals for the Yangibana Project are progressing with receipt of a Works Approval on 17 June 2020 for prescribed facilities including: Environmental permit update actions for the Yangibana Project are currently being evaluated for: • • Yangibana proposed site layout revisions; and Decoupling of the process plant and relocating the hydrometallurgical plant to a potential coastal location (see below). Environmental and approvals considerations for the above have been assessed by Hasting’s. The approvals timeframe for the relocation of the hydrometallurgical plant can be attained within a suitable timeframe due to the designated land use of the area and previous completion of the majority of environmental assessments. Additionally, preliminary discussions with key stakeholders including government, port and community groups has been very positive with support provided in favour of the coastal location. Project Development Update The Hasting’s engineering team continues to progress work fronts in several areas without the support of its key engineering consultant DRA Global. The Covid-19 delay has allowed the team to rapidly progress an internal project review process, which has been undertaken at a desktop level targeting opportunity around decoupling the plant and internal site layout optimisation. The concept of decoupling the hydrometallurgical portion from the beneficiation plant and relocating the hydrometallurgical plant to a coastal location has resulted in a potentially significant CAPEX Offer Booklet - 2020 SPP v2_CL Page 5 reduction. The relocated acid-baked kiln inside the Hydrometallurgical plant to a fully serviced coastal location would remove the requirement for the gas pipeline and place the Hydrometallurgical plant closer to ports for export of the mixed rare earth carbonate (MREC) and imported reagents. The Yangibana site layout as per the definitive feasibility study contained opportunities to realise operational improvements by relocating the camp and slightly re-arranging the process plant and Tailings Storage Facilities to a more central and customised location. Benefits of the re-arrangement include: • • reduction in internal haul road length and construction cost; and a much-reduced main access road length. To support these proposed changes additional Flora and Fauna surveys have been undertaken. Technical engagement through 3rd party specialists continues to solidify these concepts as a precursor prior to re-starting engineering engagement. FLSmidth has been placed on hold for the past quarter and no further progress has been made on the kiln package in this area. TAPC (Kiln Off Gas Scrubber) engineering works are now at 96% complete, with the delivery of the last of the off-gas scrubber engineering around the filter press requirements. 2020 Resource Definition Program Hasting’s commenced the 2020 drilling program in mid June with a Reverse-Circulation (RC) drilling rig mobilised to site. The program will continue until 4Q2020 and has been designed to achieve three goals: • • • Validate the existing Mineral Resource Estimates with close spaced grade control drilling; Increase the Yangibana Project Measured and Indicated Mineral Resource; and Obtain core samples for additional metallurgical test work and ore characterization studies. The Company’s geological interpretation suggests that there is substantial opportunity to add additional Mineral Resource tonnages in the area Bald Hill - Simon’s Find – Fraser’s trend. This trend presents the highest opportunity to add Mineral Resources within close proximity to the Processing Plant. Existing results support and warrant additional drilling, where near-surface extensions to known mineralisation can be traced and identified. Observations from field mapping continue to provide new insights into the local geology and its structural settings, which conceptually offer the greatest opportunity to host additional resources. As of the end of June 2020 Hastings has completed 3,455m of close space grade control drilling over the Bald Hill deposit. Geological logging of these holes has confirmed ore zones correlate well with existing geological interpretations. Samples have been submitted but no assay results have been received as at the date of this report. Post 2Q2020, an additional 4,745m of Resource Definition drilling within the Bald Hill -Simon’s Find – Frasers trend has been completed. Metallurgy Continued development on an alternative flotation collector reagent selected from the initial screening testwork previously completed. The latest test results indicated the new collector can deliver the same or similar performance as the existing collector but at a lower dose rate. Results show that recovery drops with decreasing temperature, however this can be offset by increasing reagent addition. The testwork with the new collector has produced a much cleaner rougher concentrate and indicated faster kinetics and good selectivity on the recovered minerals. The next step is to understand the Offer Booklet - 2020 SPP v2_CL Page 6 kinetics in detail and optimise the flotation performance with a lower collector dose rate at a lower temperature. Ore Sorting Progress focused on the initial engineering for ore sorting and completion of the process design criteria, mass balance and evaluations on how to incorporate the ore sorting facilities into the existing flowsheet to maximise the benefits to the project is underway. The 2020 drilling program will provide additional ore samples from different deposits for the planned variability testwork to validate the sorter’s process design criteria. Commercial In June, Hasting’s signed a 10-year binding Master Agreement with Schaeffler Technologies AG (Schaeffler) for the supply of its MREC. This Master Agreement governs the purchasing, scheduling, quality compliance and regulations, and ethical business conduct between Hasting’s and Schaeffler. Hasting’s and Schaeffler are currently in discussions on the logistics, product delivery timeline and floor price formula to be agreed with its lenders. With the signing of this agreement, Schaeffler continues to commit support towards Hasting’s in its eligibility for the German Government’s untied loan guarantee scheme (known as UFK) in its project financing for the construction of its mine and processing plant. Since the announcement of the MOU in June 2019, Schaeffler and Hasting’s have expressed their joint commitment to work together on a long term partnership to enable Schaeffler to develop an independent supply chain for its e-motor business for the emerging Electric Vehicle industry. Hasting’s continues to have advanced discussions with other European offtake customers, which Hasting’s believe could lead to long term contracted offtakes in the future. Discussions were initiated with customers in the US and Japan for long term sales opportunities, which are ongoing and complex due to the different demands of each customer in the supply chain. The combined volume from these offtake contracts will further support the project finance loan terms. Project Finance Following Hasting’s commitment to purchase a significant value of equipment for its processing plant from Metso-Outotec, a globally recognised Tier 1 processing equipment supplier, Finnvera Oyj, the Finnish state-owned export credit financing company has confirmed Hasting’s’ eligibility for concessionary financing terms. The inclusion of Finnvera to the financing group (along with KFW/Euler Hermes and NAIF) reaffirms the Yangibana project’s financing credentials. With the recent announcement of the decoupling of the beneficiation from the hydrometallurgy plant to a coastal location in the Pilbara and the $68m capex savings arising from this plant relocation, work is also underway to identify operational cost savings associated with this strategic move. The recently commenced drill program (see below) expected to be completed later this year will potentially add additional mine life thereby extending loan tenures and reducing monthly repayment amounts. Samples collected from the drilling program will be utilised to finalise work on the flotation collector reagents and ore sorting technology to be incorporated into the financial modelling further strengthen the mine economics. The results of the activities, when combined, should have a major influence in the negotiations on the financing terms and covenants for the senior debt facility with the three lenders. Management remains focussed on the objective of delivering long term value to its stakeholders during the final stages of debt negotiations for optimal commercial and financing loan terms. Offer Booklet - 2020 SPP v2_CL Page 7 Brockman The Brockman deposit contains JORC Indicated and Inferred Resources totalling 41.4 million tonnes (comprising 32.3mt Indicated Resources and 9.1mt Inferred Resources) at 0.21% TREO, including 0.18% HREO, plus 0.36% Nb₂O₅ and 0.90% ZrO₂. Given the focus on Yangibana, limited work is being undertaken on Brockman at present. Should you have any questions in relation to this offer please contact the company secretary, Guy Robertson on +61 2 9078 7671 or seek your own financial advice. Yours faithfully, Charles Lew Chairman Offer Booklet - 2020 SPP v2_CL Page 8 Hastings Technology Metals Ltd ABN 43 122 911 399 Share Purchase Plan - Terms and Conditions 1 THE OFFER 1.1 The Offer The Offer is an invitation to all Eligible Shareholders, made under ASIC Class Order 09/425 (Class Order), to subscribe for New Shares at the Offer Price of 12.5 cents per New Share, up to a maximum subscription of 240,000 New Shares ($30,000) per Eligible Shareholder. You may choose not to accept the Offer or to accept a less amount. The Offer to each Eligible Shareholder is made on the same terms and conditions. The Offer is non-renounceable (i.e. you may not transfer your right to acquire a New Share to anyone else). The number of New Shares you receive will depend on the value of the parcel of New Shares you apply for and on the total number of New Shares applied for by all Eligible Shareholders. The Company reserves the right to scale back Applications or (subject to the Listing Rules) accept oversubscriptions where the total value of New Shares applied for by all Eligible Shareholders exceeds $3.0 million (see section 7 below). The Offer Price is fixed regardless of any changes in the market price of Shares during the Offer period. 1.2 Offer not taken up If you are an Eligible Shareholder and do not wish to subscribe for New Shares, you are not obliged to do anything. You will not receive any benefits or New Shares. The number of Shares you hold as at the Record Date and the rights attached to those Shares will not be affected if you choose not to participate in the Share Purchase Plan. All New Shares not subscribed for under the Share Purchase Plan will be taken up by the Underwriters at the Offer Price. 2 OPENING AND CLOSING DATES The Offer will open on 31 August 2020 and close on 21 September 2020. The Directors reserve the right to close the Offer early or extend the Closing Date (as the case may be) at their absolute discretion without any notice to you, subject to the Corporations Act and the Listing Rules. Offer Booklet - 2020 SPP v2_CL Page 9 3 ELIGIBILITY 3.1 Eligibility You are eligible to apply for the New Shares if: 3.2 (a) your registered address in the Company’s register of members is in Australia or New Zealand; and (b) you were registered as a holder of Shares in the Company as at 5.00pm (WST) on 25 August 2020 (Record Date). Individual Shareholders If you are the sole registered Shareholder of a holding of Shares, but you receive more than one Offer under the Share Purchase Plan (for example, because you have multiple individual holdings of Shares), you may only apply for one parcel of New Shares with a value of up to $30,000. 3.3 Joint Shareholders If you are recorded with one or more other persons as the joint Shareholder of a holding of Shares, that joint Shareholding is considered to be a single registered Shareholding for the purpose of the Share Purchase Plan. The joint Shareholders are entitled to participate in the Share Purchase Plan for the single holding only. If the same joint Shareholders receive more than one offer under the Share Purchase Plan (i.e. due to joint Shareholders having multiple registered holdings), the joint Shareholders may only apply for one parcel of New Shares up to $30,000. 3.4 Custodians If you are a Custodian (as defined below) and hold Shares on behalf of one or more persons resident in Australia or New Zealand (each a Participating Beneficiary), you may be entitled to apply for up to $30,000 worth of Shares for each Participating Beneficiary provided each Participating Beneficiary is not in the United States and is not acting for the account or benefit of a person in the United States and subject to you providing a certificate to the Company containing the information prescribed by ASIC Class Order 09/425 as modified by ASIC Class Orders 10/105, 10/789, 11/162, 13/762, 13/854, 14/757 and 14/977 (Custodian Certificate). If you are a Custodian and would like a Custodian Certificate or further information on how to apply, you should contact the share registry, Automic Group Pty Limited (within Australia) on 1300 288 664 or (outside Australia) on +61 2 9698 5414. In providing the Custodian Certificate under this section 3.4, the Custodian may rely on information provided to it by the Participating Beneficiary and any person who holds beneficial interests in the Shares held by the Custodian. If you are a Custodian and you hold Shares on the Record Date jointly on behalf of 2 or more persons: (a) the $30,000 limit applies in relation to that joint holding as if you held the Shares on behalf of a single person; and Offer Booklet - 2020 SPP v2_CL Page 10 (b) you are taken to have been instructed to apply for Shares on behalf of those persons if: (i) you have received such an instruction in accordance with the terms on which the Shares are held; or (ii) where the terms on which the Shares are held do not cover the giving of instructions of this kind, you have received such an instruction from any of those persons. If you, as a Custodian, are not able to provide the Custodian Certificate, then the maximum you, as an eligible Custodian, may invest under the Share Purchase Plan in all capacities is A$30,000. 3.5 Trustee or nominee If you hold Shares as a trustee or nominee for another person, but are not a Custodian, you cannot participate for beneficiaries in the manner described in section 3.4. In this case, the rules for multiple single holdings set out in sections 3.2 and 3.3 apply. 3.6 Directors and employees Directors and employees of the Company who hold Shares and are Eligible Shareholders may participate in the Offer in accordance with its terms. 3.7 Treatment of overseas Shareholders The Offer is not being extended to any Shareholder, as at the Record Date, whose registered address is not situated in Australia or New Zealand and no action has been taken to register the New Shares or the Offer or otherwise to permit an offering of the New Shares in any jurisdiction outside those jurisdictions. Recipients may not send or otherwise distribute this document or the Application Form to any person outside Australia (other than to Eligible Shareholders or Participating Beneficiary). Shareholders who hold Shares on behalf of persons who reside outside Australia or New Zealand, are in the United States, or are acting for the account or benefit of a person in the United States are not entitled to participate in the Share Purchase Plan on behalf of those persons. A trustee, nominee or custodian must not participate in the Share Purchase Plan on behalf of, nor distribute this document or any other document relating to the Share Purchase Plan to, any person in the United States. Failure to comply with these restrictions may result in violations of applicable securities law. The Off