ION: Critical Minerals Processing and Recycling in US$8.5BN USA-Australia Deal

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 22,246,000 ION Shares. The Company has been engaged by ION to share our commentary on the progress of our Investment in ION over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs.

Yesterday the USA and Australia signed a historic US$8.5BN critical minerals and rare earths “Mining and Processing” deal:

The deal commits both governments to:

• Mobilising $1 billion in financing within six months for new projects in mining and processing
• Streamlining approvals to accelerate project delivery
• Investing in recycling technologies to manage e-waste and black mass scrap
• Establishing a Rapid Response group to secure priority mineral supply chains

Point #6 of the framework is a commitment to invest in “minerals recycling technology”

(Source - read the full agreement)

This news adds to the US$1BN announced back in August to be given to the US Department of Energy to allocate into recycling tech companies (source)...

We think our minerals recycling and processing tech Investment IonDrive (ASX:ION) is now firmly in the right place with the right assets to potentially attract US funding.

...and processing deals with new miners of critical minerals and rare earths.

Globally, mining critical minerals is largely controlled by China. It’s using this leverage against the USA.

But after digging it out of the ground, it’s the critical minerals processing technology that China ALSO controls that is perhaps the biggest problem to solve for the US.

Here’s Elon posting about this very point back in April this year:

(Source)

Back to ION...

Last week ION announced it would be:

“participating in a fully funded Australian Government-led delegation to the U.S. focused on critical minerals and energy security”

“Meetings with US government, defence, investors and innovation leaders are now underway”

And that ION CEO Dr Ebbe Dommisse would be:

“attending invitation-only investment and R&D roundtables in San Francisco with U.S. officials, defence representatives, and innovation leaders”...

(Source)

You can see Dr Ebbe on that tour in some photos posted to the company’s Linkedin account here and here.

That invitation came 6 weeks after ION signed a BINDING agreement for rare earths recycling in the USA...

...with Colt Recycling - one of the USA’s largest and most advanced eWaste recycling companies...

(Source)

As part of the agreement, IF ION could successfully show its tech can recover rare earths commercially, Colt could push ION’s tech into its metals recycling facilities across the US.

ION’s tech is a chemical process that combines “Deep Eutectic Solvents” together with “benign organic solvents” to pull out specific metals.

It can be applied to extracting critical minerals from mined ore AND from “electronic waste” (recycling it from old electronics, industrial parts etc)

(On the ‘mined ore’ front - yesterday ION signed a binding term sheet with ASX listed Latitude 66 to test its technology on concentrates that would be produced from Latitude’s project in the EU. This is the first deployment of ION’s sustainable DES technology on virgin mining concentrates, expanding ION’s commercialisation pathway beyond recycling.)

On the “electronic waste” front - ION has already proven its technology works on extracting lithium, nickel and cobalt from old electric vehicle batteries.

And it is currently testing its tech on rare earths, gold, copper, silver and graphite from things like printed circuit boards and E-waste...

Yes... ION has exposure to the whole US rare earth macro thematic... (more than the market is pricing in... more on that in a second)

Rare earths have been the single hottest critical mineral in the last two weeks after China announced new export restrictions and triggered a tariff threat from Trump:

(Source)(Source)(Source)

Suddenly everyone is learning about rare earths and it's almost inescapable in mainstream media - check out this Sky News UK educational primer.

Naturally, those China restrictions and the increased attention started a re-rate across the whole ASX rare earths sector - everywhere we looked rare earth stock prices were moving up last week.

We think ION is one of those tangential exposures to the rush into rare earths (and we think its share price hasn't really responded to it yet).

Right now the small cap market seems to be all about sourcing raw rare earths, we think attention will need to turn to processing.

Usually it takes the market a while to catch onto tangential applications and really understand them, but once they do they can be re-rated pretty quickly too.

Especially when the US government keeps setting aside billions in potential funding for a sector in general...

AND ION isn't just about rare earths either, wherever government/market attention turns to next, ION’s tech may still play a role.

The chemical process used in ION’s tech can be applied to recover a whole range of other critical minerals, including copper, cobalt, gallium, antimony, silver and gold to name a few.

Here is a chart showing which minerals Deep Eutectic Solvents in general have been tested on:

(Source)

ION has exposure to BOTH recycling and mineral processing

Another reason we think ION fits into the critical minerals macro is because it has exposure to both mineral processing AND recycling.

ION’s tech could be plugged directly into processing flowsheets on mine sites - offering an environmentally friendly option for miners to recover minerals.

(As well as being able to use it on circuit boards, e-waste and black mass to recover critical minerals)

ION is currently focused on two markets for mineral processing:

1. Cobalt - yesterday ION signed a deal with Latitude 66 to test its tech on concentrates that would be produced from Latitude’s project in the EU (Finland). (Source)
2. Nickel - ION has previously said it is testing its tech on US sourced feedstock in the nickel industry... (Source)

Again we think ION’s tech can be applied across other minerals too:

(Source)

Mineral processing tech can be very valuable when it works...

... first because sometimes it makes projects that were not economically viable work from a financing perspective...

... and second because the target market is basically any mining/processing company in the world.

If a large mining producer is able to get a better “recovery rate” on converting its ore into a concentrate, it could mean millions of dollars of extra revenue generated... all from the same mine.

And ION is well aware of this opportunity.

One of ION’s directors Hugo Schumann was the former CFO of Jetti Resources, which developed copper extraction tech.

Jetti went on to raise Series C funding of US$50M and then Series D funding of US$160M which valued the company at US$2.5BN in 2022.

Jetti was backed by top industry investors like Freeport, BHP, Mitsubishi and Blackrock - proof of the maturity of the minerals processing industry relative to the recycling industry.

(Source)

So any good news on mineral processing ventures could also be good for ION...

More on ION’s place in the US critical minerals macro thematic

As mentioned earlier, the US government has repeatedly stated that it wants to direct funds into the processing/recycling tech industry.

Yesterday the US government announced it would fund a gallium refinery in WA.

The complete statement is below.

And then there is the US$500M that was put aside by the US Department of Energy for demo/commercial scale plants:

(Source)

ION has already done a lot of work in rare earths (including being given a grant to test its tech on rare earths in e-waste back in June) and signed a deal with Colt Recycling in the US (we covered that higher up).

All of the work being done on the minerals processing front.

ION could actually be a stronger candidate for US government funding than a lot of the rare earths (mining only) stocks on the ASX that have performed very well over the past few weeks.

ION has already announced a Final Investment Decision (FID) on a battery recycling pilot plant...

ION will have its battery recycling pilot plant ready by “early 2026”.

(Source)

(ION is building its plant with a ~A$3.9M non-dilutive grant from the Australian government).

The plant would be built in Australia but ION’s CEO did say in a recent interview that it will be a “mobile unit” that can be moved anywhere in the world if needed.

The pilot plant will take ION’s tech out of the lab and to a point where it can run demonstrations for potential financiers who are seeking to fund something on a larger scale.

(Source)

Which is where we think the big US funding could come into play...

5 catalysts that could land for ION over the next 3-6 months:

Over the next 3-6 months, we think one (or multiple) of the below catalysts has the potential to trigger a sustained re-rate in ION’s market cap:

1. US rare earths partnership (possibly the most market topical right now) - ION will now test its tech on e-waste feedstock to see if it can commercially recover rare earths. IF successful, ION’s tech could be rolled out across recycling facilities processing ~40M lbs of e-waste feedstock annually.
   
2. Pilot plant build for battery recycling tech - as mentioned prior, we think this will be a big inflection point for ION. ION expects to have the plant built and commercially producing by “early 2026”.
3. EU grant decision - ION has also applied for a €3.1M EU grant with a consortium that includes “carmakers, battery manufacturers, material processors, and recyclers”. Any news on this front could also add a EU angle to the ION story.
4. ION’s mineral processing tech gets de-risked - Any news across the multiple mineral processing testworks ION is doing right now could trigger a re-rate in ION’s share price - especially if its in a material that the market is looking for exposure to (ION is testing cobalt and nickel to begin with and then hopefully many more critical minerals).
5. Application into new markets - ION is aiming to recover copper, gold, silver, osmium and rare earth elements from e-waste (Printed Circuit Boards). Results from these tests could come at arbitrary times. We could see the market re-rate ION if the results are positive.

Here is a nice slide from ION’s latest presentation that summarises everything that is coming:

(Source)

Ultimately, a combination of the above catalysts AND ION switching its pilot plant on and commercialising its tech is what we want to see.

Commercialisation is central to our Big Bet which is as follows:

Our ION Big Bet:

“ION re-rates to a +$150M market cap on successful large-scale production of commercial quantities of battery materials through its recycling process and/or by securing important partnerships in the recycling industry.”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is no guarantee that our Big Bet will ever come true. There is a lot of work to be done, many risks involved, including technology risk, scale up risk, regulatory risk and development risk - just some of which we list in our ION Investment Memo.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

What are the risks?

The main risk for ION in the short term is “Scale up / Technology risk”.

Now that ION is moving into new markets, there is no guarantee ION’s tech is able to produce the recovery rates needed for its tech to be deemed ‘commercially viable’.

There is also no guarantee that ION is able to replicate its bench scale performance in a larger pilot plant setting.

IF the market starts to price in expectations of positive results and ION is unable to deliver it could impact the company’s share price in a negative way.

Scale up / technology risk

There is no guarantee that the Pilot Plant is able to replicate the results from the large lab study. Also “feedstock reliability” both in terms of supply and consistency of material is a big risk for ION to scale up its operations.

Source: “What could go wrong” - ION Investment Memo 03 December 2024

We list more risks to our ION Investment in our ION Investment Memo here.

Other risks

Like any small cap technology and critical minerals company, ION carries a high degree of risk.

The company’s recycling and mineral processing technologies are still being proven at scale, and there is no certainty the pilot plant will deliver the expected commercial performance.

There is no guarantee ION’s technology will replicate laboratory results at a larger scale. Feedstock quality, process stability, or recovery efficiency could vary, affecting outcomes.

As a pre-revenue company, ION depends on capital markets and government grants to fund operations. Any new equity raises could dilute existing shareholders, and future funding may not always be available on favourable terms.

Operating across Australia, the EU, and the US exposes ION to multiple regulatory and permitting frameworks. Delays, compliance issues, or policy changes could affect project timelines and funding access.

Commercial success depends on industry adoption of new recycling and processing methods. Uptake may be slower than expected due to cost, competition, or technical barriers.

ION’s partnerships, including with Colt Recycling, are key to progress. Any breakdown in these relationships could affect execution or commercialisation.

Broader risks include commodity price weakness, market sentiment shifts, or changes in US/EU funding priorities—all of which could impact valuation regardless of company progress.

Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.

Our ION Investment Memo

Our Investment Memo provides a short, high-level summary of our reasons for Investing.

We use this memo to track the progress of all our Investments over time.

Click here to read our ION Investment Memo where you will find:

• What does ION do?
• The macro theme for ION
• Our ION Big Bet
• What we want to see ION achieve
• Why we are Invested in ION
• The key risks to our Investment Thesis
• Our Investment Plan