Altech Chemicals piques German curiosity
Altech Chemicals (ASX:ATC) has a “major German bank” on board with its high purity alumina plant plan – but there’s a catch.
In a notice to its shareholders yesterday, ATC said that it had bagged a letter of intent with a major German bank – the identity of which went undisclosed.
The LOI is for a senior debt facility which will bankroll the plant’s construction, but to turn the LOI into a bona fide facility the deal will need to use ‘export credit insurance’ to cover the financing.
Because the loan is essentially an export loan, Euler Hermes, the German Export Credit Agency, will need to provide the cover.
The loan qualifies as an export loan because the majority of the HPA plant and equipment will be sourced from German and other EU manfuacturers.
German group M+W will also be doing the engineering procurement and construction work on the project.
So, ATC, the German bank and M+W will need to present to Euler Hermes to get the debt cover sorted.
While there’s no guarantee, getting to this stage with a German bank is a boon managing director Iggy Tan said.
“There is still a way to go in the due diligence process and there is no guarantee that ECA eligibility or final funding will eventuate,” he said.
“However the interest of this highly experienced and well regarded bank in our project at this early stage is significant.”
The company is aiming to mine a 65Mt JORC-compliant aluminous clay in WA which will be processed at a beneficiation plant on site, producing 25,000t of alumina-rich kaolin clay per year.
It recently snagged a $3 million deal with Dana Shipping and Trading for the shipping company to access mining rights for the clay ATC doesn’t need.
The clay will then be taken to a manufacturing plant in Malaysia with production capacity of 4000t per year, using its technology to turn the clay into a 99.99% pure HPA product.
Recently it signed up industrial giant Mitsubishi to act as a sales agent for its finished product, giving ATC an entry into the lucrative Japanese market.
ATC has previously told investors that Japan accounted for 21% of HPA demand in 2014.