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Altech raises $18m to underpin HPA plant construction

High purity alumina, or “HPA”, development company Altech Chemicals has completed a successful share placement to raise $18m in support of the Stage 2 engineering and construction phase of its HPA plant in southern Malaysia.

The placement was strongly supported by two new German investors – Deutsche Balaton and Delphi – who have each subscribed for $5.425m of Altech shares at an issue price of 10.85 cents a share.

Existing shareholders SMS Investments and the Melewar Group will also kick in $2m each for a new allotment of Altech shares at the same issue price.

Several other professional and sophisticated investors have also supported the placement, with Sydney-based Petra Capital acting as the lead manager for the capital raising. 

The company commenced site clearance works for the Johor plant last July, with Stage 1 construction now in progress.

Management previously said that the majority of Stage 1 works have been funded and pre-paid to German engineering, procurement and construction contractor and significant shareholder, the SMS group.

These works by SMS will be credited against the USD$280 million lump-sum, fixed-price HPA plant engineering, procurement and construction, or “EPC”, contract.

Altech Managing Director Iggy Tan said: “The company is extremely pleased with the support that it has received for the placement. We are delighted to welcome German strategic investors’ Deutsche Balaton and Delphi which will have a combined 13.6% shareholding in the company once the placement is completed. The placement was also well supported by existing substantial shareholders, including SMS Investments and the Melewar Group.”

“At our Malaysian HPA site, Stage 1 construction is (continuing) and SMS group’s construction team is making solid progress. We are keen to maintain construction momentum at the site whilst project finance is being finalised.”

“Altech has … signed a mandate with Macquarie appointing it as the exclusive mezzanine lender for a proposed facility of up to US$90 million. Next steps will include non-technical project due diligence such as legal, detailed HPA market research, bank project financial modelling and inter-creditor discussions with KfW IPEX-Bank.”

KfW-IPEX has already committed to a US$190m senior debt package for Altech’s HPA project.

Mr Tan added: “The company continues to engage closely with a wide variety of investors (both existing and potential), including parties that have expressed interest in investing directly at the project level. Any direct project equity investment is likely to occur only after the mezzanine debt is finalised.”

Altech is planning to produce up to 4,500 tonnes of HPA annually at its Malaysian plant from very pure kaolin clays sourced from a shallow open pit mine near Meckering in WA.

The Meckering deposit has a 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 combined measured and indicated resource of 4.8 million tonnes grading 30% alumina, which has very low impurities of iron, potassium and sodium.

With the ongoing progress of the Stage 1 works at its Malaysian plant and appointment of Macquarie as its preferred mezzanine lender, Altech is well placed to become a top tier HPA producer globally.

It seems that others agree, with this week’s $18m placement for the Stage 2 phase being a major vote of confidence in progressing the project.

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