Annual Report to Shareholders
Annual Report to Shareholders
Perth, Oct 29, 2020 AEST (ABN Newswire) - Altech Chemicals Limited (ASX:ATC) (FRA:A3Y) is aiming to become one of the world's leading suppliers of 99.99% (4N) high purity alumina (Al2O3) through the construction and operation of a 4,500tpa high purity alumina (HPA) processing plant at Johor, Malaysia.

Feedstock for the plant will be sourced from the Company's 100% owned kaolin deposit at Meckering, Western Australia and shipped to Malaysia.

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. Increasingly HPA is used by lithium-ion battery manufacturers as the coating on the battery's separator, which improves performance, longevity and safety of the battery.

With global HPA demand approximately 19,000tpa (2018), it is estimated that this demand will grow at a compound annual growth rate (CAGR) of 30% (2018-2028); by 2028 HPA market demand is forecast to be approximately 272,000tpa, driven by both the increasing adoption of LEDs worldwide as well as the increasing demand by lithium-ion battery manufacturers to serve the surging electric vehicle market.

Conservative (bank case) cash flow modelling of Altech's HPA project shows a pre-tax net present value (NPV) of US$505.6 million at a discount rate of 7.5%. The project is forecast to generate annual average net free cash of approximately US$76 million at full production (allowing for sustaining capital and before debt service and tax), with an attractive margin on HPA sales of approximately 63%.

German engineering firm SMS group GmbH (SMS) is the appointed EPC contractor for the construction of Altech's Malaysian HPA plant. SMS has provided a US$280 million fixed price turnkey contract and has proposed clear and concise guarantees to Altech for plant throughput and completion.

The Company executed an off-take sales arrangement with Mitsubishi Corporation's Australian subsidiary, Mitsubishi Australia Ltd (Mitsubishi) covering the first 10-years of HPA production sales from the plant.

The Company has been successful in securing senior project debt finance of US$190 million from German government-owned KfW IPEX-Bank as senior lender. In addition to the senior debt, Altech has mandated Macquarie Bank (Macquarie) as a potential mezzanine lender (on a non-exclusive basis) with a target facility amount of US$90 million.

Technical and market due diligence is complete, however Macquarie has requested that Altech secure pre-sales for a proportion of its planned future HPA production to an end user at predetermined prices, to demonstrate some pricing transparency in an otherwise opaque market. The Company continues to engage with a number of European electric vehicle (EV) sector participants that are potential product end users interested in securing future HPA supply.

Altech has raised approximately A$39 million in the last 24 months to maintain project momentum and commence Stage 1 and 2 construction of the Company's HPA plant in Malaysia during the period leading up to financial close. Stage 1 construction commenced in February 2019 and Stage 2 completed in June 2020.

In July 2019, Altech announced the sale of an option to Frankfurt Stock Exchange listed Youbisheng Green Paper (since renamed Altech Advanced Materials AG - AAM), whereby AAM can acquire up to a 49% direct interest in Altech's HPA project for US$100 million.

Importantly for AAM, Altech has guaranteed that 6 years from the date of project financial close it will re-purchase the project interest that AAM does acquire, with a pre-determined re-purchase price that will deliver AAM an annual compound return equal to 15% of its original purchase price. AAM has the right to cancel Altech's re-purchase agreement at any time and thereby retain its interest, guaranteeing project upside for AAM.

To view the Annual Report, please visit:
https://abnnewswire.net/lnk/6P219VE6


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 (Al2O3) through the construction and operation of a 4,500tpa high purity alumina (HPA) processing plant at Johor, Malaysia. Feedstock for the plant will be sourced from the Company's 100%-owned kaolin deposit at Meckering, Western Australia and shipped to Malaysia.

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. Increasingly HPA is used by lithium-ion battery manufacturers as the coating on the battery's separator, which improves performance, longevity and safety of the battery. With global HPA demand approximately 19,000t (2018), it is estimated that this demand will grow at a compound annual growth rate (CAGR) of 30% (2018-2028); by 2028 HPA market demand will be approximately 272,000t, driven by the increasing adoption of LEDs worldwide as well as the demand for HPA by lithium-ion battery manufacturers to serve the surging electric vehicle market.

    


Contact

Corporate
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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