Perth, Oct 10, 2017 AEST (ABN Newswire) - Altech Chemicals (
ASX:ATC) (A3Y:FRA) is at an advanced stage of development for their High Purity Alumina (HPA) Project, which upon construction will be the first fully integrated HPA processing operation globally. Altech recently provided an update regarding the project's development.
Highlights include:
- Target date for a decision by the German government Inter-Ministerial Committee (IMC) for German ECA cover - 14 December 2017;
- Lender's due diligence - final stage;
- Successful due diligence with no fatal flaws;
- Expert Opinion report for Euler Hermes nearing completion; and
- Finalisation of EPC contract.
Analyst Comment: Whilst the progress of debt financing has been slower than originally anticipated, it appears these negotiations are now drawing towards a positive conclusion. The major reason for the delay was due to a change in EPC contractor earlier this year (SMS Group).
In the long run it appears the change in contractor may have been a blessing in disguise, given SMS Group's long standing relationship with the German debt providers and the export credit agency, as well as their vast experience in building facilities similar to Altech's planned HPA project.
Catalysts: The company has highlighted a number of short term milestones that investors should be aware of in the coming months. These include:
- Mid October - All due diligence consultants to submit final reports to the expert opinion consultant;
- Mid October - finalise the EPC contract price;
- 9 November - expert opinion report submitted; and
- 14 December - decision on the offer for export credit project finance cover.
Valuation: We maintained our valuation at $0.55 / share (SP $0.17 / share). We kept all assumptions in-line with previous guidance despite the company flagging capital costs will increase due to a change in the processing facility specifications, as well as a deterioration of the Euro/USD exchange rate.
It is likely that any increase in capital expenditure will potentially be matched by an increase in the size of the debt facility. This should result in only a minor change on a valuation per share basis, given future dilution will remain similar and the likely favorable terms that will be offered by the credit agency (low interest rate, long term repayment profile). We will review these assumptions once debt terms are offered.
In addition, our current valuation assumes an additional 40% discount to account for project development and financing risk. Once financing has been finalised this discount will be reduced.
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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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