Half Yearly Report and Accounts
The Company continued with its efforts to finalise overall project financing for its HPA project, and in August 2020 announced that it had initiated a listed green bond project funding option and mandated a Perth based corporate advisor and a London based structuring agent for the planning and execution of a bond offer. The bond offering preparation process is targeting an offer amount of US$144 million and commenced in October 2020. As at the date of this report preparations for the offer are ongoing, with good progress having been made including completion of an environmental, social and governance (ESG) audit, a draft facility agreement and a preliminary offering document. Senior project debt provider, German government owned KfW IPEX-Bank remains committed to the provision of a US$190 million loan facility. In addition to the senior loan the HPA project requires approximately US$100m of further funding to position it for financial close, as in addition to the total project capital cost estimate of US$298m published in the project Financial Investment Decision Study (ASX announcement 23 October 2017), the senior lender requires pre-funding of a contingency reserve account of US$28 million, a debt service reserve account of a similar amount, pre-funded working capital of US$21m and various bank fees and lending charges need to be funded.
The sale by Altech of 25% of its wholly owned German subsidiary, Altech Industries Germany GmbH (AIG) to Frankfurt stock exchange listed Altech Advanced Materials AG (AAM), for EUR5 million (~A$8.3 million) was announced on 26 October 2020. Consideration for the sale comprises a EUR250,000 (~A$415,000) payment upon signing of a share sale agreement and shareholder agreement - which completed in December 2020, then deferred consideration of 3 equal instalments of EUR1.583 million (~A$2.63 million) payable on the 1st, 2nd and 3rd anniversary of the initial cash payment date, plus quarterly interest is payable on the outstanding deferred consideration at a rate of 3% p.a.. Payment of the deferred consideration is secured via the pledge by AAM of its AIG shares, which would revert back to Altech if the deferred consideration and interest is not paid in full by the 3rd anniversary date. AIG was incorporated by Altech in 2019, and has secured an option to acquire a ~14Ha site at the Schwarze Pumpe Industrial Park in Saxony, Germany.
Altech was pleased to announce the appointment of experienced German based non-executive director Mr Hansjoerg Plaggemars to its Board in August 2020. Mr Plaggemars is based in Heidelberg, Germany and is an experienced company director and manager. He was a previous member of the boards of Delphi Unternehmensberatung AG and Deutsche Balaton AG (major shareholders of Altech) and currently acts as their representative.
In September 2020, the Company announced that it had developed a method for coating graphite particles, typical of those used within the anode of lithium-ion batteries, with a nano-layer of alumina. This development has the potential to increase lithium-ion battery life and to also reduce the first cycle capacity loss (which currently sits at ~8%) in lithium-ion batteries. In December 2020, Altech announced confirmation of the successful demonstration of its coating technology via a first phase demonstration at Curtin University, Western Australia. Also, in November 2020, a collaboration agreement was signed between Altech and a leading silicon producer to collaborate in developing a high capacity, long cycle life silicon anode active material targeted for use in lithium-ion batteries - by application of Altech's nano-particle coating technology. Altech believes that the development of its nano-coating technology for both graphite and silicon particles represents a significant opportunity for the Company, as lithium-ion battery producers are moving to improve battery anode performance and increased storage capacity via increasing the amount of silicon in batteries - as publicly announced by electric vehicle and lithium-ion battery manufacturer Tesla.
The Company initiated a pro-rata entitlement offer in November 2020 to raise up to $14.5 million (before costs). Available to all shareholders, the offer was on the basis of two (2) new shares for each five (5) shares held at $0.04 per new share, plus one free attaching option (exercise price $0.08, expiring 31 May 2022) for each two new shares subscribed and allotted. The offer was underwritten by the Company's major shareholders Deutsche Balaton / Delphi and the Melewar group, which on a combined basis supported the offer for $7.6 million. The offer closed on 11 December 2020, with $12.6 million subscribed, and in January 2021 the Company placed the offer shortfall of ~$1.9 million to complete a fully subscribed offer of $14.5 million. Funds from the offer will be applied to the Company's various European initiatives - including listed green bonds, for ongoing work to secure the balance of project finance, to pay various amounts relating to HPA plant stage 2 construction, the deferred consideration for the acquisition of shares in AAM and for ongoing corporate costs and working capital.
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About Altech Chemicals Ltd
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 19,000t (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.
Altech Chemicals Ltd