Altech set to bank USD$100m for high purity alumina plant

Altech Chemicals has been given the go-ahead by a German corporate regulator to further rattle the tin in a USD$100 million fund-raising exercise that will provide it with a solid runway to breathe life into its proposed Malaysian high purity alumina plant that has already broken ground.

BaFin, Germany’s federal financial supervisory authority, has approved a plan by the ASX listed company to raise the money into Altech Advanced Materials AG, or “AAM”, via the issue of AAM’s own capital raising prospectus which, if successful, will allow it to take a 49% stake in Altech’s ground breaking HPA project.

Formally known as the Youbisheng Green Paper AG, the Frankfurt Stock Exchange-listed AAM earlier this year bought a USD$100 million option from Altech, effectively giving the Australian company’s stockholders dilutive immunity in the ASX-listed entity.

Amongst other things, Altech is looking to provide high purity alumina for the production of epoxy moulding compounds that are used by the semi-conductor industry to improve heat dissipation.

It is also targeting the LED lighting market, which is expected to grow by around 10% per annum into the foreseeable future according to some market commentators.

In fact, the market for all grades of HPA is expected to quadruple by 2025, growing from around 39,000t per annum in 2019 to 122,000tpa over the next five years, making this the perfect time for any savvy niche producer to enter the market.

Altech plans to mine kaolin clays at its wholly-owned deposit near Meckering in its home state of Western Australia before shipping it to its soon to be built processing facility within the Tanjung Langsat industrial complex near Johor Bahru in southern Malaysia.

As it stands, the company has 12.7 million tonnes of JORC-compliant resources in the ground – enough, it believes, for potentially 250 years of mine life.

So far everything is going to plan, with both sites now fully permitted and construction of the HPA plant underway. Giant German engineering firm, SMS Group, is the EPC contractor with a USD$280 million fixed price turnkey contract.

Meanwhile, a senior project debt finance commitment of USD$190 million was received from the German government-owned KfW IPEX-Bank with the majority of that amount guaranteed by the German Government under its scheme that rewards developers who use German contractors. In addition, Altech has mandated Macquarie Bank as the project’s preferred mezzanine lender.

Importantly, Altech has entered into an off-take sales agreement with Mitsubishi Corporation’s Australian subsidiary, Mitsubishi Australia, for the first 10 years of its HPA production.

As part of the latest capital raising, AAM’s shareholders have approved the issue of up to 63,102,080 new shares, which will raise €69.4 million that is fully subscribed for at an issue price of €1.10 per share.

The first phase will be in the form of a 1:40 rights issue offer to current shareholders, who may also take-up any unsubscribed rights not absorbed by existing shareholders, while the second will see the placement of any remaining unsubscribed rights to external investors.

Is your ASX listed company doing something interesting ? Contact : matt.birney@businessnews.com.au