The Sophisticated Investor Analysis on Altech Chemicals Ltd

Debt Financing Nears Completion for HPA Developer
Debt Financing Nears Completion for HPA Developer
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:

About Altech Chemicals Ltd

Altech Chemical Ltd ASX:ATCAltech Chemicals Limited (ASX:ATC) (FRA:A3Y) is aiming to become one of the world's leading suppliers of 99.99% (4N) high purity alumina (HPA) (Al2O3).

HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire. Synthetic sapphire is used in the manufacture of substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components. There is no substitute for HPA in the manufacture of synthetic sapphire.

Global HPA demand is approximately 25,315tpa (2016) and demand is growing at a compound annual growth rate (CAGR) of 16.7% (2016-2024), primarily driven by the growth in worldwide adoption of LEDs. As an energy efficient, longer lasting and lower operating cost form of lighting, LED lighting is replacing the traditional incandescent bulbs.


About The Sophisticated Investor

The Sophisticated Investor

The Sophisticated Investor is a new equity investment tool which seeks to assist investors in becoming more informed in their investment decision making. We show and tell investors about a company in a series of short, informative videos. We possess specialist equity analyst skills and are complemented by video professionals. We conduct site visits and interview management, in a way most investors simply aren’t able to access. We promote long term value creation for investors by employing detailed financial analysis and intrinsic value calculations.

Customer notice
Adam Kiley trading as The Sophisticated Investor ('TSI'), (AR No. 458224), is an authorised representative of Intelligent Financial Markets Pty Ltd (AFSL No. 426359). The information contained in this communication is intended as general advice only. Your personal objectives, financial situation and needs have not been taken into consideration. Accordingly, you should consider how appropriate the advice is (or is not) to your objectives, financial situation and needs before acting on the advice. The information in this communication should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.

Conflict of interest
TSI does and seeks to do business with companies featured in its articles and videos. As a result, investors should be aware that TSI may have a conflict of interest that could affect the objectivity of some articles or videos. Investors should consider TSI articles and videos as only a single factor in making any investment decision. The publishers also wish to disclose that they may hold stock in some companies featured in their articles and videos, and that any decision you make to purchase the stock of a company TSI profiles should be made only after you have initiated your own enquiries as to the validity of any information contained in those articles and videos.

Publisher's note
TSI will only initiate coverage of a company that passes our internal investment checklist. Once a company has passed this checklist, we will initiate coverage of that company and follow up with ongoing updates and commentary on its activities. Articles and videos produced and published by TSI are NOT Research Reports in terms of ASIC Regulatory Guide 79.




Iggy Tan
Managing Director
Altech Chemicals Limited
Tel: +61-8-6168-1555
Email: info@altechchemicals.com

Shane Volk
Company Secretary
Altech Chemicals Limited
Tel: +61-8-6168-1555
Email: info@altechchemicals.com

Investor Relations (Europe)
Kai Hoffmann
Soar Financial Partners
Tel: +49-69-175-548320
Email: hoffmann@soarfinancial.com

Related Companies

The Sophisticated Investor
Altech Chemicals Ltd    

ABN Newswire This Page Viewed:  (Last 7 Days: 21) (Last 30 Days: 71) (Since Published: 10702)