ATC pulls off $3 million mining deal
Altech Chemicals (ASX:ATC) has tied up a deal worth a potential $3 million for kaolin it does not need.
The ASX-listed company has its foot on about 65 million tonnes of kaolin, a type of clay used in industrial applications, at its Meckering deposit in WA.
However, it only needs four million tonnes of kaolin for its planned high purity alumina (HPA) plant in Malaysia.
This, it told investors today, means that a third party could take some kaolin in exchange for a fee.
ATC said that it had tied up a deal granting Dana Shipping and Trading mining rights for up to 10Mt of kaolin from Meckering in exchange for $1 million.
The deal could rise in future to up to 30Mt for $3 million.
Dana will use the kaolin from Meckering in the paper, ceramics, rubber, and paint industries.
ATC was quick to add that ATC still had first crack at the kaolin, and ATC’s rights to the mine superceded those being granted to Dana.
Managing director Iggy Tan said the deal was a way to get more value out of its project without diluting shareholders.
“As our HPA project only requires 4Mt of kaolin for a 100 year life securing additional value for our shareholders from the kaolin resources at Meckering via this mining rights agreement with Dana is a great outcome,” he said.
Approaching midday, ATC shares were up 10.5% to 10.5c.
ATC is planning to mine a 65Mt JORC-compliant aluminous clay in WA to be processed at a beneficiation plant on site, producing 25,000t of alumina-rich kaolin clay per year.
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.
Mitsubishi is Japan’s largest general trading company, with more than 200 bases in about 90 countries around the world, including Australia.
The big growth market ATC is targeting is the consumer electronics manufacturer sector, which is increasingly using this advanced product in smart phones, tablets and laptops.
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