Altech Batteries Ltd Stock Market Press Releases and Company Profile
Quarterly Activities and Cashflow Report
Quarterly Activities and Cashflow Report

Perth, Oct 31, 2016 AEST (ABN Newswire) - Altech Chemicals Ltd (googlechartASX:ATC) is pleased to provide the company's Quarterly Activities and Cashflow Report for the period ended 30th September 2016.

HIGHLIGHTS

Altech targets increased project debt of US$70 million

- Altech targeting total project debt of US$70m

- Export credit cover component increased to US$60m

- Uncovered debt portion of up to US$10m

- Simplified sole lender structure proposed for the US$70m of debt by KfW IPEX-Bank

Positive pre-assessment of Altech's US$60m export credit application

- Positive pre-assessment of ECA application by German inter-ministerial committee

- Important milestone in the credit cover application assessment process

- Initiates project detailed due diligence

Appointment of due diligence consultants

- Lenders' due diligence consultants appointed

- Technical, market and legal due diligence commenced

- Due diligence initiation meeting held in Stuttgart, Germany

- Site visits to Meckering and Johor completed

Loan indicative terms and conditions received from KfW IPEX-Bank

- Lenders first draft loan facility indicative terms and conditions received

- Contemplates total project debt of US$70m

- Export credit cover (ECA) component of US$60m

- Incorporates a sole lender structure for the entire debt

HPA project detailed design update

- German M+W Group commenced detailed design and engineering of Malaysian HPA plant

- Design and engineering undertaken in Stuttgart, Germany and Singapore

- Final planning phase before the commencement of construction

- M+W Group has extensive Malaysian construction experience with offices in Malaysia and Singapore

Maiden Ore Reserve and Mineral Resource estimates for Altech's Meckering kaolin deposit

- Maiden Ore Reserve of 1.2Mt @ 30% Al2O3 (JORC 2012)

- Ore Reserve will support an initial 30 year mine-life providing kaolin feedstock to HPA plant

- Updated Mineral Resources estimation of 12.7Mt @ 29.5% Al2O3 (JORC 2012)

- Mineral Resources sufficient to provide 250 years kaolin feedstock to proposed HPA plant

Altech targets increased project debt of US$70m

During the quarter the Company announced an increase in the targeted project debt finance amount for its proposed Malaysian high purity alumina HPA project plant to US$70 million (previously US$60 million).

The export credit cover component of targeted debt, which is subject to the approval of German export credit agency (ECA), Euler Hermes, increased from US$40m to US$60m. Accordingly, Altech reduced the amount for the remaining uncovered debt portion from US$20m to US$10m. The interest rate charged by lenders on project finance debt supported by ECA cover is typically very attractive, consequently the overall cost of debt for the Company shall be reduced compared to the originally contemplated structure.

Furthermore, German government-owned KfW IPEX-Bank, mandated to provide debt structuring and advisory services to the Company, has proposed a simple and cost effective "sole lender" debt structure whereby the entire US$70 million of project debt is potentially provided exclusively by KfW IPEX-Bank (subject to due diligence and respective loan approval).

Altech managing director Mr Iggy Tan said, "Increasing the ECA application amount to US$60m for our proposed HPA project is an extremely positive outcome for the Company and testament to the project's financial robustness.

"A single project lender will significantly simplify and streamline financing, documentation and securitisation. Also, the increased proportion of ECA covered debt will reduce the overall interest rate that will apply to project borrowings.

"The next steps for project financing include a formal application for the in-principle ECA cover and the completion of the bankinitiated independent due diligence", he concluded.

Positive pre-assessment of Altech's US$60m export credit application

During the quarter the Company was officially advised by Euler Hermes Aktiengesellschaft (Hermes), the German export credit agency (ECA), of a positive pre-assessment of its export credit application for cursory review by the German government interministerial committee (IMC) and Hermes (refer ASX announcement dated 3 August 2016 for details).

The positive pre-assessment of Altech's export credit application was an important milestone in the assessment process of the (HPA) project. Whilst it is not legally binding and issued without prejudice to any decision to provide ECA cover, the positive preassessment shows significant progress of the German government approvals process. The outcome sets in motion a formal detailed due diligence of the HPA project (including addressing specific requirements for Hermes) that will be undertaken by various consultants appointed by the Company's mandated German financier, KfW IPEX-Bank. Upon completion, the due diligence process will culminate in an "expert opinion" report on the HPA project to the IMC, and will form the basis of a decision on the approval to offer ECA cover by the IMC and Hermes. The Company has collaborated with KfW IPEX-Bank to select and appoint lenders' consultants.

Altech's managing director Mr Iggy Tan said that the positive preassessment by the IMC and Hermes is a significant milestone in the Company's endeavours for funding its HPA project.

"Obtaining this positive pre-assessment of the project from Hermes in such a short period of time is a real boost to the team.

"Another great effort by our Perth-based management team, our German-based financing consultants, KfW IPEX-Bank and our German EPC contractor M+W Group".

Hermes is the appointed ECA that administers the export credit scheme for the German government. The scheme is an instrument for the promotion of German exports. It provides a cover to bank lenders to insure against the risk of an export loan. The scheme was identified as applicable to Altech's HPA project because the majority of the proposed project's plant and equipment will be sourced from both German and European Union manufacturers, and the appointed EPC contractor is German company M+W Group.

HPA project detailed design update

During the quarter the Company provided an update on the detailed design and engineering work for its proposed Malaysian HPA plant being conducted by German-based engineering firm, M+W Group.

M+W Group is a leading global high-tech engineering firm with around 6,000 employees worldwide. Established in 1912, M+W Group has a strong presence in Asia with regional offices in both Singapore and Penang, Malaysia. The firm manages projects of all dimensions on behalf of clients from various sectors, including electronics, chemicals and pharmaceuticals, energy and information technology. It has completed over 700 projects in the Asia Pacific region, where it employs around 2,200 highly skilled and experienced staff.

M+W Group was appointed as Altech's engineering, procurement and construction (EPC) contractor in March 2016 and its Germanbased division commenced detailed design and engineering of the Company's HPA plant in June 2016.

Detailed design is the final planning phase for the Malaysian HPA plant prior to the actual commencement of construction. Detailed design involves the complete definition of every aspect of the plant including detailed diagrams and drawings for construction, civil works, instrumentation, control systems, electrical facilities, management of suppliers, schedule of activities, costs, procurement of equipment and management of environmental impacts. Once completed and subject to funding, the Company and M+W Group will be in a position to order long-lead time capital items (subject to finance) and finalise supplier contractual arrangements for the commencement of construction activities.

Altech is in the fortunate position of having been able to fast-track the detailed design and engineering phase, primarily because of the comprehensive engineering work undertaken during the bankable feasibility study (BFS) phase of the HPA project.

M+W Group's lead process engineers conducted a precommencement review of the BFS engineering work, and only minor items were identified. Consequently, the BFS engineering drawings such as process flow diagrams were imported directly into M+W Group's systems without requiring re-drawing, saving considerable time and expense. The pre-appointment of key equipment suppliers such as SGL Group (HCl equipment) and Drytech (kilns) during the BFS gave Altech early access to their equipment specifications enabling incorporation into the BFS; and thereafter directly transferred to M+W Group's database for final detailed design work.

M+W Group (Singapore), with its extensive South East Asian operating experience, was also engaged to manage all Malaysian permitting and project approvals on behalf of the Company. M+W Group (Singapore) will also co-ordinate the instrument and electrical detailed design as well as the management of construction supervision.

Maiden Ore Reserve at Altech's Meckering kaolin deposit

Subsequent to quarter end, the Company announced the estimation of a maiden Ore Reserve based on the production of high purity alumina (HPA) using feedstock from its 100%-owned Meckering Kaolin Deposit (M70/1334), Western Australia (Meckering) (refer to ASX announcement dated 11 October 2016 for details). The Ore Reserve was derived from a Mineral Resources estimation at Meckering, which was delineated for the purpose of HPA production.

A maiden Ore Reserve was estimated at 1.2 million tonnes @ 30% Al2O3(alumina) in the minus 300 micron (µm) kaolin fraction with a cut-off grade of 25% Al2O3. The Ore Reserve at Meckering is more than sufficient to support the proposed HPA processing operation (ore delivery rate of 41,000tpa) for the initial stage 1 mine-life of 30 years.

A Mineral Resource estimated 12.7 million tonnes @ 29.5% Al2O3 (alumina) in the minus 300 micron (µm) kaolin fraction with a cut-off grade of 25% Al2O3. The Mineral Resources estimation at Meckering is potentially sufficient to support Altech's proposed HPA production for over 250 years.

The Mineral Resources estimate is inclusive of the above Ore Reserve estimate and based on data from the Company's April 2016 drilling program and subsequent test work results.

Altech managing director Mr Iggy Tan commented, "The Company is pleased to present both the maiden Ore Reserve and Mineral Resources estimation.

"The Ore Reserve statement is a significant milestone that confirms an initial stage 1, 30 year mine-life at Meckering, producing over 1.2Mt of high-quality, alumina-rich kaolin feedstock to supply the proposed HPA plant.

"The Mineral Resource estimate is sufficient to supply the proposed HPA operation for over 250 years, which will also allow further capacity expansions in the future.

"The next step of the process to bring Meckering into production is the submission of the mining proposal and mine closure plan as part of the approvals required for the commencement of construction in early 2017", he concluded.
To view the report, please visit:
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About Altech Batteries Ltd

Altech Chemical Ltd ASX:ATCAltech Batteries Limited (ASX:ATC) (FRA:A3Y) is a specialty battery technology company that has a joint venture agreement with world leading German battery institute Fraunhofer IKTS ("Fraunhofer") to commercialise the revolutionary CERENERGY(R) Sodium Alumina Solid State (SAS) Battery. CERENERGY(R) batteries are the game-changing alternative to lithium-ion batteries. CERENERGY(R) batteries are fire and explosion-proof; have a life span of more than 15 years and operate in extreme cold and desert climates. The battery technology uses table salt and is lithium-free; cobalt-free; graphite-free; and copper-free, eliminating exposure to critical metal price rises and supply chain concerns. 

The joint venture is commercialising its CERENERGY(R) battery, with plans to construct a 100MWh production facility on Altech's land in Saxony, Germany. The facility intends to produce CERENERGY(R) battery modules to provide grid storage solutions to the market.

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Contact

Corporate
Iggy Tan
Managing Director
Altech Batteries Limited
Tel: +61-8-6168-1555
Email: info@altechgroup.com

Martin Stein
Chief Financial Officer
Altech Batteries Limited
Tel: +61-8-6168-1555
Email: info@altechgroup.com



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