Neo Material Technologies Inc. announced today that agreement has been reached with Hitachi Metals, Ltd.("Hitachi") on an exclusive field of use license, covering isotropic Rare Earth/Neodymium-Iron-Boron powders ("Nd-Fe-B" or "Neo Powders") by Hitachi to NEM of Hitachi's US Patent 5,645,651 ("651"). With the merger of Hitachi with NEOMAX Co., Ltd as of April 1, 2007, Hitachi became the successor to the NEOMAX patent portfolio covering Nd-Fe-B magnets.
The "651" patent is a basic patent covering the composition and key properties of matter for Nd-Fe-B which extends to July 2014. The validity and enforceability of this patent were upheld in a US International Trade Commission proceeding, in which Sumitomo Special Metals (predecessor of NEOMAX) and Magnequench (a division of NEM) jointly obtained a general exclusion order prohibiting the importation into the United States of products covered by six of their respective patents, including "651".
Magnequench and Hitachi have been cross-licensed under their respective patents since 1988 with Hitachi having domain in the sintered Nd-Fe-B magnet market and Magnequench in Neo Powders for bonded Nd-Fe-B magnets. The exclusive license announced today provides Magnequench with the ability to continue its current successful patent infringement and testing programs through to the expiration of the "651" patent in July 2014.
"This agreement with Hitachi further enhances our intellectual property and technological lead in the Neo powders market and allows us to continue to aggressively pursue growth through our longer term new applications strategy."
noted Constantine Karayannopoulos, President & CEO. "I am very pleased to welcome Hitachi as an important shareholder. Hitachi is one of the foremost producers and innovators in the magnet industry, with a leading position in magnets for hybrid car motors. We look forward to a continued collaboration with Hitachi, from the supply of rare earths to the development of new applications, for the benefit of both companies."
Magnequench will pay Hitachi a total of US$16,120,000 as follows: US$12,620,000 in cash, of which US$1,120,000 is payable on closing with the balance payable through to July 2014. In addition, the Company will issue to Hitachi 798,837 common shares, issued at a price of Cdn$4.60 per common share, equivalent to US$3.5 million in the aggregate, subject to the approval of the Toronto Stock Exchange. Hitachi has retained the right to manufacture and sell certain lower rare earth content magnetic powders, subject to specific volume and other application restrictions.