Perth, May 16, 2017 AEST (ABN Newswire) - Altech Chemicals Limited (ASX:ATC) (FRA:A3Y) advises that it has appointed German engineering firm SMS group GmbH (SMS) as the engineering, procurement and construction (EPC) contractor for its proposed Malaysian high purity alumina (HPA) plant.

A key condition of Altech's application for German export credit project finance cover is the provision of a throughput guarantee for the HPA plant by the EPC contractor. The previously envisaged EPC contractor was unable to provide this guarantee.
SMS, as the incoming EPC contractor has proposed the following to Altech:

1. Fixed price turnkey EPC contract (existing);

2. Completion and cost guarantees (existing);

3. Process guarantee including final product quality (additional);

4. Throughput guarantee (additional);

5. Commissioning and start up responsibility (additional);

6. Initial subscription of US$100,000 of Altech shares (additional); and

7. Project equity or subordinated debt support at project financial close (additional).

SMS has proposed a clear and concise guarantee to Altech for HPA plant throughput. In addition, having prior experience with the kaolin-HPA hydrogen chloride processing technique that Altech will use, SMS has proposed process and final product guarantees and this will significantly strengthen Altech's export credit project finance cover application. The additional guarantees proposed by SMS are extremely positive outcomes that significantly de-risk the project.

SMS has also agreed to an initial US$100,000 subscription of Altech shares upon formal execution of contract documentation, and has proposed an equity investment or subordinate debt support for Altech at project financial close.

By mutual agreement, the previously envisaged EPC contractor will cease its preparatory work for the project and transfer all information to the SMS project team. SMS will continue with finalising the project capital cost estimation, which is expected in the coming months following the transition of all project information.

SMS is a large privately owned German engineering company with an annual turnover of approximately 3.3 billion Euros. SMS builds turnkey solutions based on innovative plant technology, complete with buildings, infrastructure and auxiliary equipment for processing plants such as Altech's proposed HPA plant. SMS was founded in 1871 and is based in Dusseldorf, Germany with office locations worldwide. SMS has recent EPC contract experience in Malaysia, having successfully completed the Sakura smelting project, in Sarawak.

Commenting on the appointment of SMS as EPC contractor, Altech managing director Iggy Tan said, "The appointment of SMS as EPC contractor for the proposed Malaysian HPA plant, although only recently envisaged, will be a huge positive for the project. Not only does SMS have prior experience with the Company's kaolin to HPA hydrogen chloride acid leaching process, it has demonstrated its confidence in Altech and the process with an initial US$100,000 equity investment pledge and project equity or subordinated debt support upon financial close. SMS also has extensive experience with German ECA cover and is amongst the top three users of this facility in Germany."

About Altech Chemicals Ltd

Altech Chemical Ltd ASX:ATCAltech Chemicals Limited (ASX:ATC) (FRA:A3Y) is aiming to become one of the world's leading suppliers of 99.99% (4N) high purity alumina (HPA) (Al2O3).

HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire. Synthetic sapphire is used in the manufacture of substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components. There is no substitute for HPA in the manufacture of synthetic sapphire.

Global HPA demand is approximately 25,315tpa (2016) and demand is growing at a compound annual growth rate (CAGR) of 16.7% (2016-2024), primarily driven by the growth in worldwide adoption of LEDs. As an energy efficient, longer lasting and lower operating cost form of lighting, LED lighting is replacing the traditional incandescent bulbs.

    


Contact

Iggy Tan
Managing Director
Altech Chemicals Limited
Tel: +61-8-6168-1555
Email: info@altechchemicals.com

Shane Volk
Company Secretary
Altech Chemicals Limited
Tel: +61-8-6168-1555
Email: info@altechchemicals.com

Investor Relations (Europe)
Kai Hoffmann
Soar Financial Partners
Tel: +49-69-175-548320
Email: hoffmann@soarfinancial.com



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