Altech weighs up financing for High Purity Alumina plant as demand surges
Altech’s high purity alumina (HPA) plant has been on the cards since 2016 but now the company has told investors finance for the project is not likely to be finalised until mid-year.
HPA is a high-value material needed for lithium ion battery components and synthetic sapphire used in LED lights, semiconductor wafers and scratch-resistant smartphone glass.
ASX-listed HPA players have enjoyed strong share price gains over the past year — though Altech has lagged behind some of its rivals.
Earlier this year Altech (ASX:ATC) agreed on a $240 million loan from German government-owned KfW IPEX-Bank to build a Malaysian HPA plant — but the release of the funds depends on securing the rest of the costs.
Managing director Iggy Tan told shareholders today it was weighing up its options in the final stage of project funding – mezzanine debt, joint venture or equity raising.
“We currently estimate that it may take until mid-2018 to determine the optimal funding solution for our HPA project,” Mr Tan said.
“The company’s objective remains to achieve a robust project funding solution that maximises shareholder returns and minimises dilution.”
The German loan had piqued institutional interest – and the news hadn’t been overlooked by the market, he said.
Shares in Altech (ASX:ATC) peaked at 26.5c at the announcement of the debt cover in December, but have fallen back to trade between 15c and 17c since February.
On Wednesday, shares opened at 15.5c.
Altech was looking at potential equity and joint venture partners that shared a long-term vision for Altech to be a substantial force in the global HPA market.
“A partial sale at the project level in conjunction with mezzanine debt is an attractive option for the company to secure the majority of the balance of funds, as it will significantly reduce shareholder dilution,” it said.
“The company is targeting potential joint venture partners that have speciality industrial materials experience and a strong balance sheet.”
Earlier this year the company lodged an Australian provisional patent application for its finished product HPA technology developed by it for its high purity alumina project.
Altech is aiming to be one of the world’s leading suppliers of 99.99 per cent high purity alumina.
Altech believes global HPA demand is around 25,315 tonnes per annum with demand growing at a compound annual growth rate of 16.7 per cent — mainly driven by growth in worldwide adoption of LEDs.