ATC 2.94% 7.0¢ altech batteries ltd

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    Subject: Aus update: (mm) Altech Chemicals to seek capital for HPA production plants, divest exploration projects - MD
      
    1. (mm)Altech Chemicals to seek capital for HPA production plants, divest exploration projects - MD

    Altech Chemicals (ASX:ATC), an Australian mineral and chemical processing company focused on producing high purity alumina (HPA) from aluminous clay, will seek to raise up to AUD 80m (USD 61m) to build two plants, said MD Iggy Tan.

    The Western Australia-based company is seeking to build a mining plant in Australia and a manufacturing plant in Malaysia, where it has set up a separate subsidiary, Tan said.

    The company does not require advisors for the capital raise as it is not looking to raise a huge amount, but it is willing to hear from advisors with potential investors. It may need to hire advisors on the ground in Malaysia at some point, Tan said.

    Altech Chemicals, which expects the results of its bankable feasibility study (BFS) in 3Q15, will seek to raise 70% of the necessary sum from debt funding from Malaysian banks in 4Q15, and 30% from equity funding in 1Q16, Tan said.

    It will raise the equity by selling shares to existing and new investors, Tan said, noting that it is seeking financial investors such as institutionals, and will seek to raise the capital from investors in Australia, the UK, Canada and Asia, including Malaysia and Hong Kong. The company’s board and management own 36%, with the top 20 shareholders owning 25%.

    Altech Chemicals is different from other HPA manufacturers because it manufactures in a single process, from the ore to the final product, Tan said. This, coupled with manufacturing in Malaysia, makes it a low-cost option, he said, adding that the company also owns 100% of its aluminous clay feedstock used to produce the HPA.

    The company expects to start sales of its HPA at the end of 2017, Tan said. HPA has applications in a variety of industries including LED lighting and semiconductors as well as in wearable technology like the Apple watch and in smartphones, Tan said.

    Global HPA demand is expected to increase from 19,040 tons in 2014 to 48,230 tons per annum in 2018, according to Technavio Research, he noted.

    Once the company starts production, it is expected to be valued at AUD 260m-AUD 360m, according to a Breakaway Research report, Tan noted.

    Meanwhile, Altech Chemicals (formerly Australia Minerals & Mining Group) is looking to divest its exploration projects to focus on HPA production, Tan said. According to its website, these projects include the Constance Range Iron Ore/DSO Project in Queensland, and the Donnelly Graphite Project and South West Titanium Project in Western Australia.

    An industry analyst thought companies like Mineral Deposits (ASX:MDL), Iluka Resources (ASX:ILU) and Grange Resources (ASX:GRR) could be interested buyers, particularly of the titanium project in Western Australia.
 
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