Altech Chemicals Limited ASX: ATC FSE:A3Y Company Presentation Iggy Tan Managing Director
World leading producer of high purity alumina (HPA) Our Vision 4,500 tonnes pa
• Sapphire & Ruby Natural form of high purity alumina (HPA) Al 2 O 3 • Formed by mother nature like diamonds • Sapphire • Colour from impurities Gemstone Nearly as hard as diamond (Mohs 9) •
• Purified alumina (Al 2 O 3 ) 99.99% (4N) purity or greater • Smelter Grade Alumina (SGA) ~ 99.5% • (5,000ppm impurities, mainly sodium) What is HPA? Bayer Process uses sodium hydroxide • (NaOH) Sodium impurity is problem for • electronics industry
High price High Purity Smelter Grade High Purity High Purity for purity Alumina Alumina Alumina Alumina HPA 99.999% (5N) SGA 99.5% HPA 99.9% (3N) HPA 99.99% (4N) US$50,000 per t US$400 per t US$6,000 per t US$27,000 per t Our Target Business
LED’s & LITHIUM BATTERIES LEDs Sapphire Wafer Sapphire Furnace (2,000 o C) Sapphire Crystal Boule LITHIUM ION Nano Powder Separator Coatings BATTERIES
Sapphire Applications LEDs Sapphire Wafer / Substrate Light Emitting Diodes LED Sapphire Cores Sapphire Glass Smartphone and Lenses Glass
Light Emitting Diode
LED Expansions Xiamen Changelight Purchases AIXTRON MOGVD Technology to Expands ROY LED Production
Sapphire Glass HTC U Ultra (128Gb) o February 2017 o Sapphire crystal display Smartphone sapphire screen iPhone o Sapphire crystal lens o Finger print recognition
Sapphire Glass Scratch Test
HPA used in Lithium-ion Battery Separator Anode Sheet Separator Cathode Sheet Third-Generation Battery Safety Will Make Current Battery Technology Obsolete Sep. 26, 2016 4:29 PM
Global High Purity Alumina Forecast 2015 -2024 Source: Persistence Market Research 86,831 “High Purity Alumina Market – Global Industry Analysis and Forecast 2016- 2024” 75,637 Demand HPA Comsumtion tpa 65,036 55,350 for HPA 46,748 39,786 34,328 29,669 25,315 21,309 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 • Global LED light demand forecast to increase to 4.1 billion by 2024 (2015: 864 million) Source: Navigant Research “LED Lighting: Global Outlook”
• Six largest HPA producers: China (3), Japan (1), South Africa (1) France (1) Sumitomo Chemicals (Japan) 3,020 Current HPA Others (15), 3,570 Sasol (South Africa) Huantou, 800 1,800 Producers Dailian Rall, 600 Nippon Light Metal, 1,100 Hebei Pengda (China) Baikowski (France) 3,000 1,200 Xuancheng Jing Rui Zibo Xinfumeng (China) (China) 1,200 2,500 Source: Technavio Research
Altech’s Differentiation Current HPA Producers Alumina Alumina Aluminium Refinery Smelter Dissolution Bauxite Smelter Grade Alumina Aluminium Metal 99.99% (4N) 99.5% HPA ~US$3,000 per tonne ALTECH HPA PLANT One Single Process Step Kaolin 99.99% (4N) (aluminous clay) HPA
• Very low iron (Fe) due to weathering • 12.7Mt JORC Mineral Resources^ (250 yrs) • Measured Resources 1.5Mt @ 30% Al 2 O 3 • Deposit in Western Australia Low-impurity Bauxite Canadian Kaolin Feedstock Altech % Darling HPA HPA Project Range* Project Al 2 O 3 34.5 22.77 30.5 SiO 2 21.5 53.29 56.3 Fe 2 O 3 21.2 8.36 0.7 TiO 2 2.00 0.98 0.7 K 2 O 0.24 3.41 0.1 NaO 0.005 1.42 0.1 * Typical Mean Analysis ^ JORC (2012) Mineral Resources (refer ASX Announcement 11 October 2016); the Company is not aware of any new information or data that materially affects the information included in this announcement and confirms that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.
Mining approval granted • Works approval granted • Meckering Option to purchase land exercised • • Simple mining – 3 years feed in 2 months Kaolin Deposit Then just sea container loading operation • in West Aust Fremantle to Johor easy shipping •
Chemical-zoned industrial park • (Tanjung Langsat) 50-60% lower operating costs • HPA Plant to • HCL plant nearby be in Johor, Services, natural gas, electricity, water • Access to 17 th largest container port Malaysia • • Malaysian government incentives • Environmental approval completed
Johor HPA Plant Admin Site Entry Maintenance MCC Kaolin Beneficiation Silica Residue Acid Leach Warehouse Pelletising HCL Recycling Crystallisation Roasting
Altech’s HPA Process ROM Campaign Mining Sea Container MECKERING To Fremantle Shipping Sea Container Meta Kaolin Flash JOHOR Dryer Hydrochloric Acid Cooler Filter Screening Calciner Milling HCl Gas Polishing Screening Filter Filter 700 C Drum Scrubber > 0.3mm Quartz Oversize Stage 1 Crystalisation Acid Leach Sales Limestone & Lime Neutralised 99.99% Spray Centrifuge Jet Mill Cooler Silica Residue HPA Battery Grade Option Dryer Beads 1600 C Neutralising Al Cl 3 Sales Tank Crystals Filter Packaging Cooler Pelletiser Feed Tank Tunnel Kiln HCl Plant HCl Gas HCl HCl water water Gas Alpha Al 2 O 3 Centrifuge Centrifuge 1250 C 700 C Screen HX Al Cl 3 Al Cl 3 Calciner Roaster Cooler Bead Mill Stage 3 Polishing Wash Stage 2 Crystalisation Filter Crystalisation HCl Wash HCl Wash
SMS group German EPC contractor • Lump sum turn key contract • Completion and cost risk • Lump Sum • Throughout guarantee Turn Key Process & quality guarantee • Contract Third largest user of ECA finance • • Committed US$ 15 mil equity contribution 21
Pre-tax NPV 7.5 US$ 505 million • Internal Rate of Return (IRR) 22% • Final Payback (full rate) 3.9 years • Investment • EBITDA US$ 76 million p.a. Decision Study Capital cost US$ 298 million • Total target debt of US$ 185 million • FIDS • Production Costs - US$ 9.90/kg LT Sale Price - US$ 26.9/kg • Gross Margin – 63% • 22
Current price in Japan - US$ 40.0/kg • Pre-tax NPV 7.5 US$ 1.1 billion • Internal Rate of Return (IRR) 33% • High Case • Payback (full rate) 2.2 years Economics EBITDA US$ 133 million p.a. • Production Costs - US$ 10.50/kg • • Sale Price - Gross Margin – 74% 23
Competitors US$14 - 17,000/t (Breakaway Research) • 1. We own our feedstock 2. Main reactant HCl re-used Bottom 3. Plant in low cost country (Malaysia) Quartile for Op Costs Altech Source: Persistence Market Research “High Purity Alumina Market – Global Industry Analysis and Forecast 2016- 2024”
• Off-take sales agreement with Mitsubishi First 10 years of HPA operations • Secures sales for HPA plant production • Mitsubishi • Exclusive global distributor signs Experienced with HPA • off-take Strategic priority: lithium-ion batteries •
Debt funding with KfW IPEX-Bank • Total debt of US$ 190 million • Debt US$ 170 million export credit finance • Funding • 50% of plant – German suppliers Successful Low interest, long tenure • Best debt in the world •
Final required equity to be finalised • • Possible subordinated mezzanine finance Various reserve, contingency, fee • requirements Next Steps • Possible project level equity participation Equity Funding Number project funding options are in • consideration End of Q2-2018 to determine the optimal • funding solution Maximises shareholder returns • and minimises dilution 27
Altech Chemicals Limited Market Capitalisation - end of month ($m) $100.0 84 $90.0 $80.0 $70.0 60 $60.0 48 45 $50.0 40 39 36 36 36 35 35 35 31 31 $40.0 33 32 32 31 31 $30.0 16 Altech 17 17 14 16 15 15 15 $20.0 14 12 7 7 $10.0 $- Growth Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Performance • 10 x steady market cap growth (3 years) Ave trade value $2k/day to $350k/day • 350% increase in shareholders to 2,300 • • $9 m cash, no debt 420 m shares on issue • 28
Corporate snapshot Trading information Share price performance (last 12 months) Share price (31-Dec-17) A$0.21 52 week low / high A$0.098 / A$0.265 Shares outstanding 1,2 406m Market capitalisation A$85.2m Cash (31-Dec-17) A$9.3m Debt (31-Dec-17) Nil Enterprise value A$94.5m Top shareholders Board & management 9.64% SMS Investments SA 8.87% Source: IRESS German engineering firm mandated to construct HPA plant as EPC Notes: contractor 1. Excludes 20.7m performance rights MAA Group Berhad 7.75% Malaysian insurance, investment, credit and finance group Top 20 shareholders c. 44.5% A LEADING VERTICALLY INTEGRATED HPA DEVELOPER WITH A DEFINED STRATEGY TO REACH PRODUCTION ALTECH CHEMICALS LIMITED (ASX: ATC) INVESTOR MATERIALS / 29
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