Key Highlights

• AEM produces high purity alumina at its Cap-Chat plant in Quebec.

• HPA is used in semiconductor and advanced ceramic components.

• The pipeline is growing faster than current deliveries.

• Capacity and partnerships will determine how much of the pipeline converts.

Advanced Engineered Materials (ASX:AEM) is betting on semiconductor and advanced-ceramics Demand for high purity alumina (HPA), and the evidence so far is a fast-growing pipeline sitting on very small sales. The materials company is spending heavily to build a plant long before Revenue covers its costs.

What the company makes

AEM produces HPA at its Cap-Chat plant in Quebec, Canada. HPA is a refined form of aluminium oxide used in semiconductor components, advanced ceramics, synthetic sapphire for LEDs and batteries. The company also has a nano-particle HPA product route.

It was previously named AEM Ltd. On 12 July 2026 it announced the change to Advanced Engineered Materials (ASX:AEM), with its ASX Code unchanged. It listed on the ASX on 24 December 2025, and ASX data lists it in the S&P/ASX Emerging Companies Index.

The half-year numbers

For the half-year to 30 June 2026, AEM reported revenue of A$459,518 from 12.5 tonnes of HPA, up from A$248,486 in the first half of 2025. The net loss after tax widened to A$13.4 million from A$9.1 million.

Cash and equivalents were A$23.7 million at 30 June 2026, compared with A$39.8 million at 31 December 2025. Operating cash outflow was A$13.3 million, while Capital Expenditure fell to A$2.9 million from A$12.9 million a year earlier.

Net Assets were A$175.7 million, and the accounts were prepared on a going-concern basis. Ordinary shares on issue were 589,503,245.

Pipeline versus delivery

In a commercial update on 24 August 2026, AEM said first-half sales averaged US$25.4 per kilogram and orders reached 17.6 tonnes, with 5.1 tonnes of orders carried into the second half. It expects second-half sales of roughly 40 to 60 tonnes.

The reported customer pipeline was about US$190 million, or around 6,300 tonnes across 216 projects, at the end of July 2026. The company describes that figure as un-risked, and most projects were still laboratory trials rather than industrial or commercial relationships.

Four long-term Supply framework agreements were in place, with three more targeted by the third quarter.

By end-August 2026 it counted 225 projects, up about half since January, with 18 in commercial relationships (investor presentation).

Capacity and partnerships

The Cap-Chat plant has nameplate capacity of 2,000 tonnes a year, with a target of 3,000 tonnes in 2026. Against that, 12.5 tonnes sold in six months shows how much of the plant is unused.

The company expects its 4N+ circuit to reach full run rate by the end of 2027. It now expects the 3N5 circuit to reach full run rate by mid-2028, later than earlier guidance.

On 15 July 2026 AEM announced an ongoing cooperation agreement under which it is exclusive supplier of nano HPA to Swiss ceramics maker Zürcher Frères for zirconia-alumina products. No financial terms were disclosed.

Risks and what to watch

The main risks are ones that apply to a plant ramping up. Customers must qualify the material before ordering at volume, and qualification can take longer than planned, as the revised 3N5 timetable suggests. Pricing in a niche market, cash consumption and the possibility of further capital raisings also matter.

The cash balance fell by A$16.2 million in six months, so the pace of second-half sales and spending is the key test.

Upcoming checkpoints include delivery against the 40 to 60 tonne second-half sales expectation, the further supply agreements targeted by the third quarter, and a definitive feasibility study for a possible Stage 2 expansion to 6,000 tonnes a year. That expansion would need an Investment decision and financing, with initial capital cost estimated at US$215 million in an investor presentation.

Share supply is another factor. On 1 October 2026, 40,948,518 voluntarily escrowed shares were released, leaving 332,583,606 still restricted, according to an announcement dated 6 October 2026.