Thanks for the company while it lasted.
Printable View
Good on you for getting out - I guess the price couldn't rise if nobody would sell - couldn't it?
Personally I would think that the chances for the KfW Finance approval look quite good (SMS, the company who designed the factory has not just lots of experience with the German export credit system, but as well with ATC's specific process).
Plan to hang in for the longer run (within the framework of my personal diversification policy - if SP gets too high, I intend to sell some of my shares to mitigate risk).
As if the rising SP wasn't already an indication of a positive announcement it has just been confirmed that it received a positive decision for the German Export credit cover.
Company update via http://www.proactiveinvestors.com.au...ns-193040.html
Altech Chemicals has key catalyst on the horizon as it trades at steep discount to broker valuations
11:50 14 Mar 2018
High purity alumina (HPA) is a high-value, robust margin and heavily sought-after product.
HPA is used in LED lighting
INVESTMENT
OVERVIEW: ATC
THE BIG
PICTURE
DJ Carmichael's modelling points to maiden revenues of about $100 million in fiscal 2020
Altech Chemicals Ltd (ASX:ATC) made significant progress towards becoming one of the world's leading suppliers of 99.99% high purity alumina (HPA) in the last 12 months.
HPA is a high-value, robust margin and heavily sought-after product as it is the critical ingredient required for the production of synthetic sapphire.
There is no substitution for HPA in the manufacture of synthetic sapphire, which in turn is used in the manufacture of mass-market products.
Is there a significant re-rating in the wind?
There are multiple share price catalysts on the horizon which could see Altech trade more in line with broker valuations in 2018.
It is worth noting at this stage that DJ Carmichael’s valuation of 37 cents per share implies potential upside of about 140% to Tuesday’s closing price of 15.5 cents.
Iggy Tan, managing director, pointed to some of the upcoming developments at Altech during an interview with Proactive Investors.
He said, “The major catalyst for the company is when we finalise the balance of funds for the project, which is expected to occur in mid-2018.
Highlighting the already strong financial support the company has received, Tan said, “The project is backed by world-class companies like Mitsubishi for the offtake, KFW IPEX for debt finance and SMS Group as EPC (plant construction) partner.
"From a standing start three years ago, the team has advanced this project to close of debt funding in such a short time."
Technology drives demand for synthetic sapphire
Synthetic sapphire is used in the manufacture of substrates for LED lights, semiconductor wafers used in electronics, and scratch-resistant sapphire glass.
There are numerous applications for sapphire glass including wristwatch faces, optical windows and smartphone components.
Looking specifically at LED lights, Navigant Research is forecasting demand to increase to more than 4.1 billion by 2024, equating to growth of about 400% in less than 10 years.
Exponential growth in HPA demand
With increased usage of LEDs and a myriad of other applications on the horizon, Navigant forecasts demand for HPA to increase to about 87,000 tonnes per annum by 2024.
Annual global HPA demand is about 25,000 tonnes, but it is growing at a compound annual growth rate of 16.7%, primarily driven to date by the worldwide adoption of LEDs.
However, this rate of growth could accelerate as applications in the lithium-ion battery industry materialise.
Patents provide path to protection
Altech lodged a new provisional patent application with the Australian Patent Office in February.
READ: Altech Chemicals patent application further protects high purity alumina technology
This incorporates the finished product HPA technology developed for its HPA project, expanding on a previous patent lodged in October 2014.
An impression of the proposed Malaysian HPA plant
The new patent application incorporates various refinements made to the company’s HPA processing route during project due diligence.
New product taps into lithium-ion battery industry
The expanded patent incorporates the company’s latest invention, the flexible finished product line.
This is capable of producing HPA product for the synthetic sapphire industry and the lithium-ion battery industry (powder at sub-micron particle size).
Altech cited research indicating that third-generation battery safety will make current battery technology obsolete.
The company’s HPA product can be used as a lithium-ion battery separator that is situated between the cathode sheet and anode sheet of a traditional lithium-ion battery.
Use of similar technology would represent patent breach
As an emerging player in the HPA market, Altech’s competitive position and the strength of its technology has recently been enhanced.
The company undertook extensive due diligence in terms of confirming its distribution markets and the protection of its intellectual property.
The search confirmed Altech’s view that its intellectual property for producing HPA from kaolin/aluminous material using its hydrochloric acid-based processing technology is unique.
As such, any other party that employs a similar process to produce HPA would most likely be in breach of Altech’s patent applications.
Financing substantially de-risks project
Altech negotiated a total debt package of US$190 million in early February, dispensing with one of the more significant hurdles the company faced in bringing its project to market.
The financing consists of a US$170 million debt package negotiated with the German export credit agency (ECA), with the balance of US$20 million at normal commercial terms.
The ECA covered loan is for an extended period with highly attractive terms, providing Altech with ample time to build the plant and bring it into production.
READ: Altech Chemicals finalises US$190 million finance package for alumina plant
Increased clarity surrounding funding provided positive investor sentiment with the company’s shares increasing from about 15 cents to 17.5 cents in the ensuing week.
While subsequent volatility in broader global equity markets has eroded some of these gains, there are catalysts on the horizon that suggest this retracement could present a buying opportunity.
Broker updates valuation following financing
Paul Adams, analyst at DJ Carmichael, upgraded his valuation by 15.6% to 37 cents following the financing agreement.
This implies upside of about 150% to the company’s current trading range.
He believes there is the prospect of a part equity sell down in terms of achieving the equity component of project financing.
Based on his assumptions regarding this scenario, his valuation would move to 42 cents.
Maiden revenues in 2020
Adams’ modelling points to maiden revenues of about $100 million being generated in fiscal 2020, increasing to $180 million in 2022.
At this point, Adams estimates that the company will be generating underlying earnings of about $125 million.
With the prospect of minimal taxation during this period, these numbers appear particularly impressive.
Tax benefits
The HPA project’s financial fundamentals would be boosted by Altech being attributed ‘Pioneer Status’ by the Malaysian government.
Tan views this prospect as a key development, saying, “The approval of pioneer status for the project and the associated tax incentives will be another important catalyst.”
The possibility of this coming to fruition increased in February when the government received a manufacturing licence approval for its 4500 tonnes per annum plant.
READ: Altech Chemicals has manufacturing licence approved for HPA plant in Malaysia
Should this be formalised, the company will benefit from income tax exemption relating to 100% of the company’s statutory income for a period of five years from commencement of commercial production.
Any accumulated losses and unabsorbed capital allowances during this period can be carried forward and deducted from post-Pioneer Status period income.
Should Altech be awarded Pioneer Status, a large proportion of the underlying earnings projected by DJ Carmichael would drop to the bottom line.
Given its earnings sensitivity, such a development could be a share price catalyst.
Article of interest:
This is one of the most sought-after substances among ASX investors
https://stockhead.com.au/resources/h...rices-soaring/
New Company presentation: https://www.altechchemicals.com/site...ts/6883083.pdf
Petra Capital Research Report (target 41c): https://www.altechchemicals.com/site...Apr%202018.pdf
cheers for posting - interesting research report, particularly the comparison to ATC's competitors.
I do note that based on the Petra Capital assumptions ATC will be only in 2022 cash flow positive (that's two years later than the Carmichel report which came out in February), not flash but probably more realistic. It does take time to build a factory and get it running.
Interesting that they still come up with a higher value (Petra Cap 41 cts vs Carmichels 37 cents) ... but obviously both don't know how the final funding will look like - i.e. we shall see.
Yes I did like the direct comparison to the competitors too. As it's such a new industry I feel comfortable seeing ATC being way ahead of them. In addition we have a fantastic debt deal and SMS Group as the lead engineer firm. I hope the financial close is not too far away and we can start constructing. I'd think that by 2022 ATC will have additional fires in the oven.
First mezzanine debt term sheet for up to US$120m received. Coupled that with the already signed-off senior debt we hopefully have the expected equity raise soon and can start construction.
I'm still expecting and hoping that despite the mezzanine debt that a small portion of the funds will be raised by the company from existing shareholders at an attractive price.
Pretty sure they will.
Though actually - there might be an opportunity to raise this in the coming AGM - just to make sure they consider this. Noticed that resolution 11 (to raise $30m to have funds to start site preparations) just talks about a fund raising from "sophisticated" investors.
Will certainly be buying back into ATC when funds become available from NKP / IRC getting to fair values ..
Great long-term BUY here
Latest news on HPA demand.
http://media.abnnewswire.net/media/e...ATC_Report.pdf
- HPA joins lithium, cobalt, nickel and copper as a recognised key input to lithium-ion batteries
Thanks Trev. Im not trading or Investing in ATC atp and have no explanation for that. Those 5 key battery ingredients give one a lot of shares to look at and will make a lot of dough if the right stocks are picked.ATC has gotta be in the mix, timing it is the thing. I read about EV's everywhere including commercial EV planes, its happening and thats great for we only have one green world.
Something going on? Huge overhang on the buyers side and price slowly creeping upwards. Finance announcement imminent?
The Mezzanine Debt Deal might take another 6 months to finalize so by then I expect main construction work to start. I still expect the company to do a small CR before then to start clearing the site in preparation.
https://stockhead.com.au/resources/a...umina-project/
Altech Chemicals has inked a non-binding deal for $US60 million ($80.4 million) in new financing to build its high purity alumina (HPA) plant in Malaysia.
The “stream finance facility” is being provided by a US-based global investment firm with $US4.5 billion under management, the company (ASX:ATC) told investors this morning.
A stream finance facility provides a cash advance in exchange for a percentage of future gross sales.
Altech’s share price advanced 6.1 per cent to 17.5c on Friday morning on the back of the news.
Earlier this year Altech agreed on a $US190 million loan from German government-owned KfW IPEX-Bank to build the HPA plant in Johor, Malaysia — but the release of the funds depends on securing the rest of the costs.
Altech is also considering a $US90 million mezzanine loan from a global investment bank.
The company told investors the new US$60 million stream finance facility will need to be “acceptable” to KfW IPEX-Bank and any mezzanine debt provider.
Altech Chemicals (ASX:ATC) shares advanced over 6 per cent on Friday morning.
Altech Chemicals (ASX:ATC) shares advanced over 6 per cent on Friday morning.
Misunderstood market
HPA is not a widely understood commodity and there are currently only about four ASX-listed players.
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.
High purity alumina is used in the separator of a battery to make the chemistry more stable.
One of the most highly valued substances among ASX investors… High Purity Alumina. Pic: Getty
It is currently a small global market of about 25,000 tonnes annually.
But that is tipped to grow to around 48,000 tonnes by 2025 and 86,000 tonnes by 2030.
Altech is the most advanced player after earlier this month received the manufacturing licence it needs for its 4500-tonne-per-annum HPA plant.
Petra Capital Valuation 18/6
https://www.altechchemicals.com/site...20Facility.pdf
Still what, 5 years before ATC is really making profits, thats so far away.
Scroll down to chart, a few years orphaned and going nowhere maybe, until production.
url
To those interested their latest presentation to RRS:
https://youtu.be/JT-LSmE2bDo
Stand By. Trading Halt. Pretty sure it's to raise a small(ish) amount. IMO about $30mio.
https://www.afr.com/street-talk/lith...0180704-h129li
Stockbroker Petra Capital has launched a $20 million equity raising for ASX-listed "high purity alumina" project owner Altech Chemicals.
Petra was offering clients new shares in Altech at 16.5¢ each, which was a 13.2 per cent discount to the last close and a 16.3 per cent discount to the 10 day volume weighted average price.
Funds raised were for pre-construction site works and finalisation of plant engineering, according to terms sent to fund managers.
Petra was calling for bids into the placement by 2pm on Friday.
The placement was part of a targeted $20 million raising, which also includes a $3 million share purchase plan at the same price.
hi silu i own this company have a small parcel held for about 5mths been waiting for cash issue to get more planning to hold for a long time looks like a good project
Has anyone read through Collerina Cobalt's (CLL) announcement from yesterday? https://www.asx.com.au/asxpdf/201807...j17bj5f82z.pdf
Apparently they can make 4N HPA 99.99% purity from available industrial products but compared to ATC they are still way behind. The plan to produce 1kg of it by September for marketing samples and a modified PFS by October.
Anyone worried? I trust the Germans would have done extensive due diligence on alternate productions of HPA too and decided that being first counts for more than being best.
In the meantime ATC is in the early stages of construction.
Not quite clear to me what their benchmark is (better than what?) - probably their first quite inefficient and expensive process.
Nothing in this announcement I could see which compares to ATC's (patented) process - and their reference to the benefit of not mining ... mining is for ATC not a risk, but an asset. Remember - they own a fully licenced open pit mine with several hundred years worth of feedstock which they just need to pick up.
On what basis do you think CLL might be "best"? They are ways behind ATC and I don't see any data stating that their process might be better or cheaper than the ATC process. As well - even if they would compare what they think about their process with the ATC process, they clearly would not know yet how well their process works, given that they have not even produced their first kg. But still good to see some others working in this area, ATC alone could never supply 100% of the forecasted HPA demand ...
Yes my comment about "being best" was not in direct correlation to CLL but more a general comment that even if CLL's process were better it might not be preferred by financiers and the market. Way too many questions surround Collerina imo. Didn't even notice that their CR was at a 26.6% discount. DAMN!
ATC on the other hand has ticked off so many boxes already and have lined up all their little ducks that I will try go get as many shares as I can afford in the SPP
Article of interest:
https://stockhead.com.au/columnists/...f-asx-quartet/
Iggy Tan’s Altech Chemicals is off and running to become the first producer of high purity alumina (HPA) among the ASX-listed quartet which have hitched their future to the boom material.
Drawing on last month’s $20 million equity raising, Altech (ASX:ATC) has begun early construction works at its HPA plant site in Johor, Malaysia, which will draw its feedstock from an aluminium-bearing kaolin mine to be developed in Western Australia.
The start to early construction works comes ahead of the financing package for Altech’s HPA plans being bedded down. But that’s exactly the point.
“With these sort of projects it’s all about momentum,” Tan told this column. “It’s all about getting up and getting going.
“We want to maintain project momentum and that’s the reason we raised the equity last month, to get early construction started.”
Tan knows all about the importance of project momentum.
It was his push and shove that established Galaxy Resources (ASX:GXY) as a leading lithium well before the lithium-ion battery boom gripped the market.
Galaxy is now a $1.2 billion company.
But when Tan left the company in 2013 the boom had yet to arrive and things got a bit tough, prompting Tan’s exit and his arrival at Altech a year later in another trail-blazing role, this time in the HPA space.
Altech Chemicals shares (ASX:ATC) over the past year
Altech Chemicals shares (ASX:ATC) over the past year
Financing for Altech’s plan to become a 4,500 tonnes per annum HPA producer is coming together and has export credit finance from Germany’s KfW IPEX-Bank at its core. It’s said to be the best debt in the world.
But facing six months or so for all of the financing plans to fall in to place, Tan decided to get moving now with the early construction works.
His momentum focus comes at an interesting time for the ASX-listed HPA stocks in general. Other key HPA stocks are Collerina (ASX:CLL), Hill End (ASX:HEG) and FYI Resources (ASX:FYI).
>> Read Stockhead’s quick guide to High Purity Alumina
Because HPA is enjoying high demand growth as a thermal separator to prevent fires inside lithium-ion batteries, it is seen by many as purely a battery material.
That was a positive until the heat came out of the lithium stocks earlier this year on forecasts that supply would soon swamp demand. It has become a negative by association for HPA ever since, in the minds of investors anyway.
The main uses of HPA
The reality is that the biggest use of HPA remains in LED lights and in the production of scratch-resistant glass.
More importantly, unlike lithium, HPA is forecast to be in short supply for years to come.
HPA is not a big-tonnage market, with global demand of about 30,000 tonnes in 2017. But industry forecasters predict double-digit compound growth to as much as 122,000tpa by 2025.
That means multiple HPA plants like Altech’s Johor baby will be needed.
The boom outlook is being reflected in prices for 99.99 per cent HPA product. While most of the HPA project aspirants assume long-term prices of less than $US30/kg for their projects, recent pricing in Japan is $US40/kg.
HPA pricing
Not unlike the lithium market, pricing for HPA is opaque. But unlike the lithium market, prices have remained strong.
“Our view is that we are going to see very strong demand in coming years,” Tan said. “The market is growing by 20 times the size of our plant so there is no fight for market share.”
He might as well have added that it’s a different outlook for the lithium producers where the supply window of opportunity is fast closing.
Altech plugged in a long-term price of $US26.90/kg for HPA in its investment study in to its integrated project.
The project is the first of the “disruptive’’ projects being brought forward in that its feedstock is kaolin based compared with the world’s existing production which starts out with finished aluminium metal.
It means potentially much lower operating costs.
Altech’s investment study forecast production costs of $US9.90/kg, indicating a gross margin of 63 per cent on the long-term price estimate, and an annual earnings capability of $US76 million.
Altech last traded at 16.5c for a market cap of $87 million.
Altech Chemicals Johor Opening Ceremony
https://youtu.be/LtaY_Xo1w_4
What do you mean with "once they confirm German funding"?
German funding (KfW) has been confirmed already in December last year. The project is rolling. What they still working on is to tie up the "funding gap" and it sounds like they have more financiers interested in filing that than they need.
https://www.altechchemicals.com/site...20Facility.pdf
Great position to be in to negotiate optimal conditions for share holders.
So - where are we?
- they do have a guaranteed takeoff for their product (Toshiba for 10 years)
- they do have the German KfW loan facility with outstanding conditions
- they do have a patented and scrutinized process and more feed material than they can use up in my, my childrens and my grandchildrens lifetime ...
- they do have a German contractor committed to do the work with expertise in this area, guaranteeing the process parameters and the output
AND with skin in the game (they are shareholder as well);
- They have all the necessary mining and manufacturing licenses, they have the place and they have a supportive environment
(members of the Royal family in Malaysia are shareholders as well)
- It looks quite likely that they will get quite friendly conditions re tax treatment (but I think the final confirmation on that is still out).
Where do you see the biggest remaining risks?
Agree with the above,
but
They are still awaiting financial close which sounds non binding to me. All the other funding is non binding which has it's own risk. They had to capital raise to begin works and it is possible another raise could be required if construction out paces awaiting financial close.
https://www.asx.com.au/asxpdf/201807...5t48xsyyb6.pdf
If the plant does not work shareholders are left with millions in debt and no income. Hpa producer Orbite had this happen to them.
Happy to accumulate/trade with loose change in this one and learn alot about HPA product.
The funding in my view has been confirmed but obviously there are stipulations to on what the loan can be used for hence the CR to clear the site and ongoing costs until construction can start. Given that SMS, KfW, Altech, Malaysian royalty, Australian High Commissioner etc were there at the Opening Ceremony I'd assume all from now is mostly matter of fact. Sure hiccups can happen but I couldn't foresee any myself at the moment. ATC management has the great opportunity to actually shop around for the best terms for its Mezzanine Loan and Stream Finance as we have the Germans and Malaysian Royal Family on board.
Can you elaborate what you mean with "but with you on GNX"?
HEG another potential HPA player is up nearly 40% today on no news?
Research report out valuing HEG at 38c
http://www.resourcesrisingstars.com....senior-analyst
http://www.resourcesrisingstars.com...endent Investment Research - HEG July '18.pdf
So here I was putting some money into my broker account to buy more ATC below 16c and now they have gone into a TH with regards to proposed funding counterparties. Well at least by Friday we know what a big piece of the puzzle will look like.
Battery makers are planning to use a lot more HPA to stop cars catching fire
https://stockhead.com.au/resources/b...atching%20fire
New video up:
Altech Chemicals - Meeting a sapphire future
https://youtu.be/dfjvTTGKwdU
JT that article was from March 2017 so much has changed since then.
Barry FitzGerald: why it’s time to revisit these High Purity Alumina stocks
https://stockhead.com.au/columnists/...lumina-stocks/
HPA pricing used by ATC financial modeling US$27/kg vs current trade price of US$40/kg which could earn ATC's proposed 4500tpa plant US$133m/year. Reminder ATC's MC is a mere A$83m at the moment.
At the beginning of the year I sat down and wanted to buy some shares that I believe will be my retirement fund with a 10-20 year horizon. ATC is definitely one of them - the first plant is only the start in my view. I can see it happen that over the next 2-3 years other additional plant sites will be identified.
Scary,
limited funds. limited approval, works have started.
Hopefully just some small kinks an iron will easily fix.
Care to expand?
Not sure I know about any organisation with access to unlimited funds ... and what exactly is limited about their approvals?
But sure - there is risk ... as in any other business venture.
The industry might find a cheaper replacement for HPA ...
The process might (despite lots of due diligence) not work as well as envisaged on a grand scale
The sky might fall in and nobody needs LED's, smartphone screens or high capacity batteries anymore
But than - there are unlimited opportunities as well :): a huge increase of the market for HPA separators in vehicle batteries due to a rapidly increasing electric vehicle mrket, new application for high capacity batteries like e.g. a power bank for electric networks; new generation of smartphones needing more unscratchable glass screens, new applications for saphisglass, LED lighting still only in the beginnings of its reign, ...;
Anything in particular you would want to highlight?
patent for ATC's HPA production process granted:
https://www.asx.com.au/asxpdf/201810...1pdhd0qh43.pdf
It took them 4 years, but well worthwhile. This will make life for copycats a bit more difficult and expensive ...
Well done, Iggy & team!
Pretty sure they haven't gained building consent from local authorities.
Stage targets and amounts seem to be changing.
I feel i have been feed information after the fact, regarding exact finance timeline.
I dont hate this investment prospect, but i will be careful digesting future information/timelines the company is going to release.
No building consent with local authorities in Malaysia?
WOW. Clearly - you need detailled building plans (which are a requirement for a building permit and a deliverable for their contract with SMS) to do that.
As they announced in July - this is one of the things they are currently working at togehter with the site preparation
https://www.asx.com.au/asxpdf/201807...hfb7g0psx7.pdf
Sure - this is a process, but where exactly do you see the issues given that the building is in a designated industrial zone (with other compatible chemical industry around) and given that they have already a manufacturing licence? The authorities clearly want this to happen ...
Timelines are changing? True, they have and they might keep doing that. However - haven't yet seen a lot of non-trivial projects where this was not the case on the way from concept to finalisation ...
I do measure management not at their capability to predict the future with absolute accuracy, but at their capability to work with uncertainty and to adapt to changing circumstances.
HC poster reporting on presentation he attended in Brisbane. Thks Accumul8r.
https://hotcopper.com.au/threads/ann...st_id=36176086
Had a look at the HPA process chart and there are re 33 different process stages!. That looks complicated and like a lot can go wrong.All those operations have to be operating perfectly to reach the right highgrade material. Rebuttal?
Download Document 7.95MB re page 22
https://www.asx.com.au/asxpdf/201810...sdfwdz8n35.pdf
"allowing for the submission of site development order application to local Johor Authorities."
happy to be wrong about this, but to me it reads they have not started building yet. All they have done is basic requirements to get consent.
My point is, timing is everything and i am scared that works have been charged to investors but works are a while from starting and they have no finance except from investors. we have circa 4 month wait till funds are approved. maybe another month till funds are released. i detect a time frame error
LOL. Have another look at this chart and try to understand it. The first 6 steps of this oh-so-complicated chart are to pick up the Alumina in Meckering (which requires a digger, probably a loader, a container and a truck) and to transport the container with said truck over a sealed Australian highway to the port in Perth.
Now comes step 7 - and we are already 20% into the process ... and sure, the loader can break down or the truck can blow a tyre ... but get real - if this is a complicated process for you, than there are not too many companies you should invest into ... :p;
Nobody said that they started to build. They are clearing the site and did some ground tests they need to determine the fundament and to get the building consent.
Not sure I understand your position. If you are so scared I assume you are not holding. But if you are not holding, than why are you scared? Confused.
Looking at the details - they had recently a CR to fund the site clearance and preparation ... and that's what they are currently doing. What other works have they charged to investors?
Still less complicated than the processes currently used to produce the 4N-HPA the industry requires. But absolutely - there is risk as in any other activity, even staying in bed :).
That's what the markets are all about. If the markets overrate the risks you can buy bargains ;) ... and we only know with the benefit of hindsight whether the risks have been under- or overrated;
BTW - congratulations to selling into end of last years funding announcement peak. I wouldn't call this investing, but it certainly was great timing!
I did fluke it near /at a top no skill there. Am keeping a watch on this, good luck in the meantime.
Came yesterday evening across a webinar which Iggy gave for the German market (Saturday 10 am in Germany, 9 pm in NZ) - and linked myself in.
https://www.wallstreet-online.de/nac...gen-investoren
I guess the company presentation was quite standard (though a bit more in depth than what I've seen so far in the publications) - though probably just due to his comments and explanations including a quite detailed walk through the process steps.
Quite interesting - but honestly - I have heard from him nothing outrageously complicated when he went through the process. Mainly cleaning of input material (first filtering), than putting the aluminium into solution, removal of the residuals and afterwards regeneration of the solvent. Didn't sounded like rocketscience to me ...
Admittedly - my background is electrical (and not chemical) engineering, but I have seen factories operating with similar materials and temperatures. No red light started flashing in my head when I listened to his explanations ;);
Other points of interest:
There was some question re the recently published patent (actually asked by myself ...) and he explained that there are still a number of other patents pending, most of them "ordinary" patents (i.e. not innovation). He said as well that there are some patents pending abroad (e.g. Malaysia), but that the national patent would be already protection for ATC's IP.
There have been (not surprisingly) questions related to future capital rises. He said that the final capital need is not yet clear (depending on the final finance package), but yes, there will be further capital rises. He indicated that in projects like that typically 30 to 40% of the total are financed with equity. Do your sums ...
Responding to another question he stated that all money spent now for site preparation are part of the $280m funding budget (i.e. not additional cost).
Timeschedule:
They are currently finalising the application for a building permit (should be done in the next 3 weeks or so) and he said that "hopefully in November there will be much more activity on the site" (whatever this means).
His indication for first production: early 2021;
Commenting on the share price he said that the ATC share price is sort of linked to the Lithium shares, which lost as well roughly 40% over this year. Nothing the company can do about that - the market giveth and taketh (my words ...).
Overall - good presentation. If you have an opportunity to join one of his investor seminars - I do recommend to take it. Ah yes ... and he will be November 9th in Munich - nice city, great beer and I am sure another interesting presentation - though probably appalling weather - but hey, you can't have everything ...!
Thanks for sharing.
Sorry about the delay BP.
Busy building houses.
Small holding, very interested, but until they secure their finance I have no interest in giving more funds to a business awaiting "financial close". Far to many risks.
I Believe the first CR included substantial Foundation works inc piling, Tanks, Maintenance workshop, a lot more than Site Clarence and prep. In NSW consent is needed to undertake these works. And usually foundation works are never fixed price.
I must have mis understood the golden shovels and the website when it announced "works begin". more like "works await consent"
Can someone clarify the fixed price for this project and how the 30-40% shareholder fits the funding process. USD currency effects. Currently completely confused how much shareholder funding is needed? and why it is needed.
I do not understand how Altech can have any legal/financial recourse if this plant does not work to optimal levels, so the "turn key" sales pitch really annoys me. monies get paid during the process, not on turning a key.
Sorry to be the glass half full man.
No need to appologize for having second thoughts - and clearly, this is - until the factory is up, running and proven - a high risk investment.
I hold a medium sized package which is in my books less than 5% of my portfolio.
So - why am I reasonable optimistic?
The German contractor (SMS) does have previous experience with the process, and they guaranteed in the contract with ATC as well the production parameters ... I suppose this is the reason the business case is that conservative (to make it not too hard on SMS to comply).
SMS is a cornerstone shareholder in ATC (https://thewest.com.au/business/publ...-ng-b88655925z) and indicated they are prepared to put more money into it. Would you do that as contractor if you don't believe in the outcome?
I guess the discussions about when building preparations stop and when building begins is more a semantic one. I assume however that you have with your background a better grasp of the lingo - if I expressed myself not to Australian builder standards, than I ask for forgiveness. We do know that they cleared the section, did the tests and I thought hearing Iggy saying that piling started. Pretty sure that they work within their consent ... the rules in Malaysia might be different than in Australia.
Iggy said that any work undertaken now is part of the budgeted sum. He made however some allowance for changes to price of building materials (he mentioned steel price) - and yes, I guess if the USD goes up (pretty sure the contract is in USD), than it will be dearer. On the other hand - pretty sure that HPA is charged in USD as well. So I guess we do have some sort of hedge here ...
Not sure about the usefulness of guarantees if the parties see themselves in court and SMS would play hardball ... however - do you really believe a German industry giant like SMS would risk their brand (and the invested capital) without doing anything they can to make this happen? I do trust in German engineering :) and I think they are motivated enough;
Iggy was himself not yet sure about the funding ... i.e. all we could do is making uneducated guesses. I didn't keep a tally so far of the CR's (and am too lazy to do the numbers now), but if we take the marketcap as a representation of shareholders input and assume the project and maintenance is (roughly) USD 300m, the market cap at current is roughly $68m AUD - say $50m USD, than it would be fair to assume that they need to raise the same order of magnitude of money they did raise so far until the project is complete.
And yes - sh*t happens.
I take it if the HPA price stays where it is (or goes higher), than there shouldn't be any issues, but if the industry finds out they don't need HPA anymore (or it is cheap like chips due to oversupply), than the deal might look less attractive.
Not too worried about building consents and SMS not being able to deliver to spec.
Thanks BP, I appreciate a detailed response . Give me a little time to think about your points.
I need to spend time projecting
MC
All the future capital raising
Project value
possible debt structure
and apply it to currency rates.
At the moment my gut tells me, current capital raising are funding the companies going concern. This makes me very nervous.
Soooooo still trying to figure this one out, so appreciate any clarification,
SMS group only becomes a cornerstone shareholder once finance is approved. Once finance is approved SMS takes a 15 million dollar holding at a much diluted price (maybe 2cents). This is done after Altech have spent shareholder funds to progress the site and paid SMS from shareholder funds? wtf? Very smart from SMS. (So silly Iggy).
I feel SMS group have factored this into their construction costs and is likely to get a free holding from the situation. So SMS have best intentions, but at the end of the day they have zero risk)
Thinking construction will not start this year.
I think the latest market release should read, once our development order is approved then stage one can commence. Again read between the lines to time your investment.
Thinking share price will continue to get slammed while the company continues the blurry worded jargon.
Sorry out of time to share more thoughts.
Nice story. Only issue is - SMS group is currently already the largest shareholder! They do hold nearly 39 million shares (close to 7%).
https://www.altechchemicals.com/top-20-shareholders
No matter what games will be played with the shareprice - they certainly want the project to succeed. And yes - they committed to put another $15 million or so in the pot when finance is approved.
As well - I don't think that any committed stakeholder will be interested to see the SP drop close to or below NTA - which is around 6 cents per share. This would be a takeover target too juicy for any of the competitors chasing ATC to ignore. Just imagine - if your 2 cent would be anywhere close to reality than they could buy the company, the process (including IP), the resources, all consents and a well planned and consented factory at 1/3rd of bookvalue. Yeah - right.
Thanks Bp,
2 cents was a throw away comment. I havnt yet worked out how future capital raisings and delays could effect current share price.
Again, i am looking to time my buy in. But i think the SP has a long way down to go.
My first purchase at 17 cents is looking pretty grim. Mabye in 4 years it will be 170 cents.👍
OK - I do see your problem. My average buy in price is around 11 cents ... makes me a bit more relaxed ;);
Not sure about 170 cents in 4 years (unless HPA stays the only realistic separator for high capacity lithium batteries, which is possible). I think however that something between 40 to 80 cents would be more realistic.
And yes - it might go lower before that - but depends on the finance story. Might come as a Christmas present (didn't they talk about end of November)? After finance is settled people will wonder why they didn't buy more shares at the current sale prices.
Chairmans letter to SH.
https://www.altechchemicals.com/site...ts/6908600.pdf
Seem to remember but happy to be corrected the IRR re 22%. If so ,just not enough to justify the risks for me.
Shoot, what is going on? funding issues or the opposite? maybe being a bit more sensible regarding the timing of capital. thoughts everyone? i suppose this is expected when a company goes ahead to maintain momentum.
Hard to say - the proposed $30m placement might have been just part of the negotitation tactics with the stream and mezz finance partners to demonstrate that ATC have alternatives in raising the capital if they don't like the conditions offered by the partners.
Just sort of misfired ... I think first time I have seen them screwing up ...
Anyway - does not change the fundamentals, but might have improved the hand of the finance partners.
Considering today's announcement, I suspect no substantial works will be done this side of Christmas, could be a Feb start. I hate having to read between the lines of their announcements.
So maybe they will complete stage one within the next 5 months. I suspect this could be a factor why the last CR was put on hold.
We will need to keep an eye on this loan commitment fee and how it effects cash flow. First time I have heard of a loan commitment fee.
I wonder how much the share price will jump when the sort out finance and building consent.
My spidey senses are telling me that maybe an announcement re the mezzanine debt is imminent. I know there will be another CR raise coming but it wouldn't go amiss rewarding shareholders with some cherries on top.
Its who you know not what ehh situ;). One step closer, good luck there.
Altech Appoints Macquarie Bank as Mezzanine Debt Arranger 2 pages 638.1KB
Taking longer and capital cost certainly far greater than originally envisaged BUT getting a Rolls Royce production plant with bonus extras-almost on an upward trajectory from here.
A little bit of a nothing announcement (again). If one says this bank will be the lender wouldn't have they already inked out all the details and done their due diligence? But I shouldn't be too upset. With an avg price of 13.8c I'm in the money and holding a sizable parcel. I still believe that SMS is going to build a wonderful HPA producing plant in Johor. And if HPA requirements world-wide are going to increase as predicted it won't be the only one.
Project is inching forward, however latest valuation from Petra Capital yesterday who attended the first steel raising at Johor site, reveals info. on finance and timing of project with conservative assumptions.
https://www.altechchemicals.com/site...20May%2019.pdf
Holders (and non holders) will be interested in this report on future HPA prices by CRU Consulting. CRU are providing a report for Macquarrie (preferred financier) for US$90m.
https://www.altechchemicals.com/site...ts/6935662.pdf
Still holding. Still waiting for financial close. What do you reckon Trev? If we get the first plant up and running a second one should be relatively easy to build and with re-financing much cheaper too given we have the off-take agreement with Mitsubishi?