The Sophisticated Investor Analysis on Altech Chemicals Ltd
Sydney, Feb 16, 2017 AEST (ABN Newswire) - Altech Chemicals Ltd (
ASX:ATC) is at an advanced stage of development for its High Purity Alumina (HPA) Project, which upon construction will be the first fully integrated HPA processing operation.
Altech has simplified and streamlined the process to produce HPA with the use of kaolin as the feedstock, which will be sourced from the company's 100%-owned Meckering deposit located on the outskirts of Perth in Western Australia. After mining, the ore will be transported to the company's proposed HPA processing facility in Malaysia. The Bankable Feasibility Study (BFS) estimated the costs of production to be US$9,040 /t compare to the current reported HPA price in Japan of ~US$30,000/t.
HPA is a high-value and in-demand product, which is classified depending on its purity level. The major consumer of 4N (99.99% Al2O3) HPA is synthetic sapphire with future demand also being driven by lithium-ion battery and smartphone component applications. Demand for HPA is forecasted to more than triple to 87,000tpa by 2024.
Analyst Comment: Altech identified the growing demand for HPA more than six years ago as it became aware that many new technologies as well as traditional applications were dependent on HPA (synthetic sapphire, LED substrates, lithium-ion battery separators, and smartphone components).
This led the company to refine a known processing technology created by the US Government during the 1970/80's, which used kaolin (or aluminous clay material) as a feedstock for the production of HPA.
Six years later, the company has completed numerous studies including a Bankable Feasibility Study, signed a 10 year offtake agreement with Mitsubishi and is close to finalising all permits and approvals for the project's development.
The next major milestone for Altech is to close a debt financing facility with German bank KfW IPEX-Bank. Closing this facility will not only take the company one step closer to commencing construction (2H17) but should also see the significant appreciation in the current share price, which is currently at a significant discount compared to our valuation.
The information in this email should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.
Valuation: We initiated coverage on Altech with a valuation of $0.55 / share (SP $0.15 / share). As development milestones are achieved (debt & equity financing, construction and production) we will reduce our risk weighting (un-risked valuation $0.88 / share).
As always, we present our analysis differently as it is shown through a series of videos. This allows us to explain:
- A detailed review of our valuation analysis highlighting key assumptions and sensitivities;
- Investment and risk analysis, highlighting both upside and downside factors investors should be aware of before making an investment decision;
- Commodity Analysis - Review of HPA's uses, supply & demand factors as well as pricing;
- Offtake - Review Altech's 10 year offtake agreement with Mitsubishi;
- Virtual site trip to the Meckering Kaolin project and proposed facility in Malaysia; and
- A range of interviews with senior management.
To view the video, please visit:
http://www.abnnewswire.net/press/en/87046/ATC
About Altech Batteries Ltd
Altech Batteries Limited (ASX:ATC) (FRA:A3Y) is a specialty battery technology company that has a joint venture agreement with world leading German battery institute Fraunhofer IKTS ("Fraunhofer") to commercialise the revolutionary CERENERGY(R) Sodium Alumina Solid State (SAS) Battery. CERENERGY(R) batteries are the game-changing alternative to lithium-ion batteries. CERENERGY(R) batteries are fire and explosion-proof; have a life span of more than 15 years and operate in extreme cold and desert climates. The battery technology uses table salt and is lithium-free; cobalt-free; graphite-free; and copper-free, eliminating exposure to critical metal price rises and supply chain concerns.
The joint venture is commercialising its CERENERGY(R) battery, with plans to construct a 100MWh production facility on Altech's land in Saxony, Germany. The facility intends to produce CERENERGY(R) battery modules to provide grid storage solutions to the market.
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