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Altech Chemicals is looking to sell up to 49% of its HPA project to Frankfurt-listed Youbisheng Green Paper Credit: Deutsche Börse AG

Altech proposes USD$100m sale of HPA project stake

Altech Chemicals could sell up to 49% of its high purity alumina, or “HPA”, project for USD$100 million to Frankfurt Stock Exchange-listed company, Youbisheng Green Paper, following strong expressions of interest from European investors.

Under the plan, Altech will acquire a 29% interest in Youbisheng for about €2,73 million in cash and shares.

Youbisheng will be renamed Altech Advanced Materials and will seek to raise up to €70 million in new equity.

The German company has also been granted a non-exclusive option to acquire a minimum of 10% in Altech’s HPA project for USD$20.4m and a maximum of a 49% interest for USD$100 million by subscribing for shares in Altech’s wholly-owned subsidiary, Altech Chemicals Australia.

Following the end of year six after project financial closing, Youbisheng must sell-back to Altech all of the HPA project interest that it acquired for a price that would deliver a 15% return per annum for Youbisheng.

Altech also has the option to trigger the sell-back at any time before this under the same terms.

Management said the deal was developed after it received an unsolicited approach and consulted with German advisors and potential investors.

This deal taps into the growing desire for battery metals exposure from European investors and is also likely to be less dilutionary compared to a capital raising by Altech at its current share price of about 11 cents.

It also highlights the ongoing German interest in Altech.

In April, German investors Deutsche Balaton and Delphi provided strong support to the company’s $18m share placement.

Altech is also continuing to work with Macquarie Bank towards finalising a USD$90m project mezzanine debt facility.

Separately, the company continues to progress the Stage 1 construction of its HPA plant in Malaysia, with structural steel erection for the maintenance workshop frame and the roof now complete, along with cladding of the roof and canopy.

Construction of the retaining wall along the western and eastern site boundaries is now 90% completed, while development of the on-site storm water tanks is proceeding to plan.

The plant in the Tanjung Industrial complex in Johor will produce up to 4,500 tonnes of HPA from very pure kaolin clays sourced from a shallow open pit mining operation near Meckering in WA.

Altech’s Meckering deposit has a current JORC resource of 12.7 million tonnes grading 29.5% alumina, which is sufficient to support a staggering mine life of 250 years at the expected throughput rate.

This includes a measured and indicated resources of 4.8 million tonnes grading 30% alumina. In addition, the deposit has less than 1% of penalty impurities such as iron, potassium and sodium.

HPA is utilised in high tech applications such as LED lighting, advanced mobile phones and as a separator in lithium-ion batteries to improve both safety and performance.

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