Altech Chemicals will use A$1.2 million raised in a placement to finalise the detailed design of a proposed high purity alumina (HPA) plant at Johor, Malaysia. The ASX-listed company raised the funds via a placement of shares to a variety of professional and sophisticated investors.
As well as the design work for the 4000 tonnes/annum plant, funds will be used for the completion of debt financing and for general working capital.
Altech has also launched a share purchase plan which allows existing shareholders to apply for up to $15,000 of new fully paid ordinary shares, at the same price as the placement.
The Malaysian plant forms an integral part of Altech’s plan to become one of the world’s leading suppliers of 99.99% (4N) high purity alumina. HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for production of artificial sapphire.
Artificial sapphire is used in the manufacture of substrates for LED lights, semi-conductor wafers used in the electronics industry and scratch-resistant artificial sapphire glass used for wristwatch faces, optical windows and smartphone components. There is no substitute for HPA in the manufacture of artificial sapphire.
Altech has also received the results of an update to the bankable feasibility study for the Johor plant. Key outcomes include:
- Increased estimated pre-tax NPV of US$358 million, up from US$326 million.
- Higher Internal Rate of Return (IRR) of 33%, up from 30%.
- Capex of US$78.7 million, up from US$76.9 million.
- Long-term sale price forecast unchanged at US$23,000/tonne for 99.99% (4N) product.
- Cost of goods sold slightly higher at US$9074/tonne.
- EBITDA of US$55.7 million per annum at full production.
Altech’s managing director Iggy Tan said, “This updated BFS confirms the financial and technical robustness of the company’s HPA project, as was identified in the original BFS.
“Since the completion of the BFS in June 2015, the various technical consultants have taken time to conduct a detailed review of the entire HPA project, identifying optimisation opportunities, critically reviewing equipment selection, and updating all equipment and operating cost pricing.
“This is quite important given the changes that have transpired in the resources industry since the BFS was completed.
“The focus for Altech now is the finalisation of project financing, completion of final design and construction drawings, the formal appointment of the EPC contractor and the subsequent award of various works packages to enable the commencement of construction in early 2017.”
The company recently secured a 30-year lease over a site in Johor Bahru for its proposed HPA plant. Johor is a highly sought after state for project development in southern Malaysia, linked to Singapore by causeway and is the only state in Malaysia with three ports and an international airport for cargo.
It is also a catchment for skilled labour, prized by companies as a site for operation with a proximity to an international container sea-port and international airports of Johor Bahru and Singapore.
Altech has previously flagged it had reserved the land with Johor Corporation which is in a section of the industrial complex set aside for chemical facilities. The location in Tanjung Langsat Industrial Complex also has the ready availability of required consumables such as hydrochloric acid, limestone, quicklime, electrical power and natural gas, at highly competitive prices.