Altech Chemicals advances European finance strategy for Malaysian high purity alumina plant

• Electrical substation construction underway at the HPA plant site;[hhmc]
  

• Mine to gate study shows low carbon production process compared to conventional competitors;[hhmc]
  

• US$90 million mezzanine loan facility progressing with Macquarie Bank;[hhmc]
  

• European financing strategy underway with AAM capital increase approved.[hhmc]
  

HPA plant construction[hhmc]

Altech Chemicals Ltd (ASX:ATC) is building a 4,500 tonnes per annum plant in Johor, Malaysia, where it will make 99.99% (4N) high purity alumina (HPA) from feedstock at the 100%-owned kaolin deposit at Meckering, Western Australia.

Altech picked Malaysia for processing because of the access to infrastructure and ports and recently received approval from the Malaysian government for no corporate profit tax on business income until year 10 of operations.

Construction of the electrical substation within the plant site is ahead of schedule and expected to be completed in April, with major structural works complete and the majority of external detailing of the building finished.

The EPC (engineering, procurement and construction) consortium comprising SMS group and Metix and sub-contractors have started internal finishing and architectural detailing, completing sewerage and drainage works, and finalising vehicle access requirements.

Altech has all the permitting in place for the project, has completed stage one of the HPA plant construction and is progressing with stage two of construction in the near-term.

Green production process[hhmc]

The company has undertaken a detailed mine to gate study to compare the greenhouse gas emissions and energy consumption from the industry-standard HPA production process versus the companys process, after requests from potential institutional investors and investment banks in Europe for a demonstration of Altechs kaolin-alumina HPA production process.

The current industry standard is to reprocess high-grade aluminium metal feedstock by dissolving the metal in alcohol, hydrolysing, then calcining back to alumina.

This is a high energy-intensive process as the feedstock is produced via bauxite which is initially processed into smelter grade alumina which is then fed into an aluminium refinery to produce aluminium metal ingots or power.

In comparison, Altechs process is direct; it involves the extraction of high purity alumina from a kaolin (alumina silicate) ore feedstock using a hydrochloric acid process, rather than from expensive aluminium metal.

Altechs process is estimated at one third to half the cost of the conventional production process and because the company doesnt produce aluminium metal it has a 46% less carbon dioxide footprint for one tonne of HPA and costs 41% less energy to make one tonne of HPA than chemical companies.

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HPA plant outline

Controlled placement agreement[hhmc]

Altech has entered into a controlled placement agreement (CPA) with Acuity Capital for up to $10 million of standby equity capital for the period to January 31, 2023.

The company will control if and when the CPA is utilised, the quantum of shares issued, the minimum issue price of shares and the timing of any issue.

Altech also retains full flexibility to use all other methods or arrangements to raise capital whist the CPA is in place.

Loan facility progressing[hhmc]

The company is currently advancing a proposed US$90 million mezzanine loan facility following a recent meeting in London with its preferred mezzanine lender Macquarie Group Ltd (ASX:MQG) (OTCMKTS:MQBKY) with the bank reaffirming its continued interest in providing the facility to Altech – especially given the increased profile of planned lithium-ion battery plant construction in Europe.

The proposed mezzanine loan remains subject to Macquarie satisfying due diligence, various internal approvals and inter-creditor arrangements with senior lender KfW IPEX-Bank in Germany.

Fixed price offtake[hhmc]

While Altech has a 10-year offtake sales arrangement with Mitsubishi Corps (TYO:8058) Australian subsidiary, Mitsubishi Australia Ltd, Macquarie highlighted the importance of it selling a proportion of the planned HPA production to an end-user at fixed product prices to demonstrate some pricing transparency in an otherwise opaque market.

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