Advanced Engineered Materials (AEM) Investor update summary

Market Position and Growth Outlook

• Commercial-scale plant in Quebec produces high-purity alumina (HPA) with 2,000 tpa capacity, targeting 4N+ and up to 5N purity, with plans to expand to 3,000 and then 6,000 tpa by 2029.

• HPA demand is forecast to grow at a 10% CAGR through 2034, driven by semiconductors, advanced ceramics, LED lighting, batteries, and synthetic sapphire, with global supply expected to be in deficit from 2026–2029.

• Positioned to be the third largest HPA producer outside China at full 3,000 tpa capacity, leveraging low-cost, renewable hydroelectricity and efficient proprietary processes.

• Product qualification pipeline includes 225 projects, with 18 in commercial relationships and 38 in advanced industrial trials.

• Sales are expected to rise from 12.5 tons in the last half to 40–60 tons in the current half, with accelerating growth through 2027.

Commercial Strategy, Customer Engagement, and Sales Pipeline

• Customers are increasingly open to five-year supply framework agreements due to tightening supply, with pricing negotiated annually or semi-annually.

• The qualification process is lengthy but results in sticky, long-term customer relationships; once qualified, customers rarely switch suppliers.

• The sales pipeline is robust, with 6,500 tpa in unrisked aggregated demand and a 60% increase in projects at advanced stages since January.

• Customer base is diverse, with no significant concentration risk; semiconductor applications account for 50–60% of current projects, but there is sectoral and geographic diversity.

• In-house sales team and global distributor network provide broad market coverage, with the qualification pipeline reaching 225 projects by August 2026, up 50% since January, and 56 in advanced stages.

Operations, Technology, and Supply Chain

• The Cap-Chat plant benefits from low-cost, 98% renewable energy, stable jurisdiction, and strong political support from Quebec and the Canadian government.

• Feedstock is sourced from Rio Tinto, with negotiations underway for long-term contracts and alternative sources available in Quebec.

• The company holds over 50 patents, mainly covering the purification process, and relies on significant technical know-how as a barrier to entry.

• Expansion to 3,000 and 6,000 tpa is on track, with feasibility studies progressing and no major technological or personnel constraints identified.

• Montreal Technology Development Centre focuses on process innovation, margin expansion, and customer collaboration.