06:53 AM EDT, 08/20/2024 (MT Newswires) -- Neo Performance Materials ( NOPMF ) , which makes advanced industrial materials, on Tuesday said it will sell its stakes in China rare earth separation assets for a total of US$30 million.

The transactions, which are expected to close in the fourth quarter, are subject to approval by regulatory authorities in China.

Neo said it is selling an 86% stake in Jiangyin Jiahua Advanced Material Resources to Shenghe Resources Holding for approximately US$25.6 million cash; and also 100% of the equity in Zibo Jiahua Advanced Material Resources Co., Ltd. to Shenghe for approximately US$4.1 million cash.

Tuesday's statement noted JAMR sales proceeds represent a 10.7 times multiple on average trailing five-year EBITDA for the facility. It said the ZAMR facility was valued using an asset-based approach, as the facility was closed in the second quarter of 2024.

The company said it will retain a 9% equity interest in JAMR following the closing of the transactions and will execute an agreement securing the exclusive right to distribute JAMR's heavy rare earth products outside of China for an initial term of five years. It added this is expected to provide customers outside of China with continuity of supply for premium products like dysprosium for multi-layer ceramic capacitors and medical-grade gadolinium.

"As the rare earth industry in China has evolved, this is the right time to transition our rare earth separation businesses inside China to an integrated rare earth industry leader. It is our view that larger production and sourcing scale is required to create more value for these midstream assets. We are pleased to have found a partner for this vision in Shenghe," said Rahim Suleman, President and Chief Executive Officer of Neo.

Meanwhile, Huang Ping, the acting Chairman of Shenghe, added: "We are pleased to partner with Neo on this mutually beneficial agreement for both our companies and our customers. Both JAMR and ZAMR have had excellent reputations over the last three decades in Neo's ownership and management. By integrating them into Shenghe's large, global platform, we look forward to the next growth chapter for these assets."