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- The June quarter saw positive growth in Altech Chemicals’ (ATC) long-anticipated HPA Project, which has now completed stage two of construction
- The project was also certified “green” by the Centre of International Climate and Environmental Research (CICERO)
- Altech ended the quarter with over $800,000 in the bank, having spent $939,000 on operating costs in the same period
- The company plans to shore up its balance sheet with a controlled placement facility agreement with Specialty Materials Investments (SMI)
- While in the long term it will sell a 49 per stake in the HPA project to its European cousin Altech Advanced Materials (AAM)
- Shares in Altech are trading up 1.23 per cent at 4.1 cents per share
Altech Chemicals (ATC) has used the June quarter to shore up its finances and advances its flagship HPA Project in Malaysia.
HPA update
Construction work at the high purity alumina site recommenced on June 3, following the lifting of COVID-19 shutdown restrictions by the Malaysian Government.
Since then, stage two of the construction work has been completed, with all outstanding work also finished and the handover now complete.
Critical electrical work is now taking place at the substation at the project, connecting the site to the wider local electrical grid.
The HPA project also received an important green tick during the quarter – with the Centre of International Climate and Environmental Research (CICERO) certifying it’s “green”.
The certification may help Altech gain finance for the project via green bonds, a growing market which turns over almost US$250 billion annually (around A$348 billion).
The CICERO assessment was initiated by Altech’s European cousin, Frankfurt listed Altech Advances Materials (AAM), who aim to buy a 49 per cent stake in the Malaysian plant for a price of US$100 million (around $A139 million).
Financial update
AAM announced its intention to buy into Altech’s project back in January, and since then has been working with an international investment bank to secure finance.
It’s hoped the green certification will help that process. However, Altech noted the COVID-19 pandemic had dampened global markets and made securing finance more challenging.
Despite the setback, the company said it remained committed to “bringing about the close of the project financing”.
One of the potential financing avenues is the proposed US$90 million mezzanine loan facility with Macquarie Bank.
Work remains ongoing in finalising that deal, with Altech speaking to groups within the European Electrical Vehicle industry, who are interested in securing a HPA supply.
The European Commission recently announced a €750 billion Green Recovery Plan – which has a focus on the electric vehicles and renewable energy sectors – and Altech said the announcement has drummed up interest in its HPA project.
Cash in hand
Altech ended the June quarter with $833,000 in cash, having spent $939,000 on operating costs in the same period, the majority of which went to staff and admin costs.
Unfortunately, that bank balance is not enough to keep the company going for long, with estimates released today’s showing it had enough funding for 0.9 estimated quarters.
In a bid to shore up its balance sheet in the short term, the company signed a share purchase subscription agreement with Specialty Materials Investments (SMI).
Under the deal, SMI can buy up to $2 million worth of Altech shares, and subject to shareholder approval, an additional $981,000 worth of shares.
Second plant flagged
Looking ahead, Altech has announced its interested in potentially opening up a second HPA plant, this time in Germany.
The company signed an option agreement to purchase a 10-hectare industrial site in Saxony, after the State Government there invited them to consider building a plant in its territory.
Altech has 12 months to exercise its purchase option for the Saxony site or ask for a one-year extension.
Following today’s quarterly report release, shares in Altech are trading up a slight 1.23 per cent at 4.1 cents per share at 2.11 pm AEST.
