Neo Completes Sale of Majority Equity Interest of China Rare Earth Separation Assets

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TORONTO, April 1, 2025 /CNW/ - Neo Performance Materials Inc. ("Neo" or the "Company") (TSX: NEO) announced today that it has completed the sale to an affiliate of Shenghe Resources Holding Co., Ltd. ("Shenghe") of (i) 86% of the equity interest in Jiangyin Jiahua Advanced Material Resources Co., Ltd. ("JAMR") for USD $24.6 million cash; and (ii) 88% of the equity in Zibo Jiahua Advanced Material Resources Co., Ltd. ("ZAMR") USD $3.4 million cash, amended from the original agreement to sell 98% of the equity interests of ZAMR (collectively, the "Transactions"). JAMR sales proceeds represent a 10.6x multiple on average trailing five-year EBITDA for the facility. The ZAMR facility was valued using an asset-based approach, as the facility was closed in the second quarter of 2024.

Neo Performance Materials logo (CNW Group/Neo Performance Materials, Inc.)
Neo Performance Materials logo (CNW Group/Neo Performance Materials, Inc.)

The completion of the sale of its majority equity interests in JAMR and ZAMR marks another key milestone in Neo's operational transformation, as the Company continues to streamline its business globally and optimize its asset portfolio to support its long-term scale and growth ambitions.

"The sale of our majority interest in JAMR and ZAMR contributes to the streamlining of our business, while ensuring that our clients continue to benefit from this strategic partnership. Shenghe is a rare earth industry leader and has a record of commercial excellence by driving value from midstream assets. Shenghe's established global sourcing platform allows for continued growth of JAMR and ZAMR while we shift Neo's focus to downstream high-margin products," said Rahim Suleman, President and Chief Executive Officer of Neo.

"We look forward to building on Neo's growth of JAMR and ZAMR. Both will be integrated into our existing midstream assets in China and will play a vital role in our global platform. We look forward to continuing to work with Neo on their downstream needs and growth of both companies," said Huang Ping, the acting Deputy Chairman of Shenghe.

Neo retains a 9% equity interest in JAMR and a 10% equity interest in ZAMR and has executed an agreement securing the exclusive right to distribute JAMR's heavy rare earth products outside of China for an initial term of five years. This is expected to provide Neo's customers outside of China with continuity of supply for premium products like dysprosium for multi-layer ceramic capacitors and medical-grade gadolinium.

Shenghe is a leading rare earth company, with over 20 years of experience. Through its strong supply chain relationships both inside and outside of China, Shenghe has the capability to expand JAMR's access to raw materials. Shenghe is also expected to integrate ZAMR's remaining assets and employees into its operations.