Frankfurt am Main (pta016/23.12.2020/11:30) - Highlights:
* Extension of option agreement for up to 49% in in Altech Australia until July 1, 2021.
* AAM completed the acquisition of a 25.0% interest in Altech Industries Germany GmbH ("AIG"), Dresden, Germany, thereby securing exclusive rights to use Altech Australia's patents in the European Union relating to the production of high purity alumina ("HPA") and the new development of Anode Grade materials.
* Development of Anode Grade - Alumina Coating for Graphite Anodes by Altech.
* Development agreement (MoU) signed with leading global supplier of silicon powder for lithium-ion batteries regarding Altech's aluminum oxide coating for silicon anode.
* FMEA study (Failure Mode and Effects Analysis) launched with Frauenhofer Institute on the effect of sodium impurities in the aluminum coating of separators on the performance of lithium-ion batteries in the automotive sector. This is to verify the positive influence of the use of high-purity 4N HPA compared to other alumina materials presently used.
Altech Advanced Materials AG ("AAM") (FRA: AMA1) is pleased to provide our shareholders and capital market participants with a summary of 2020 and an outlook for 2021.
Due to the Corona pandemic that broke out in the spring of 2020, we also got to feel the uncertainty among investors. As a result, we were unable to implement our ambitious financing plans in 2020. We have, however, intensively prepared the European market by actively presenting the Altech 4N HPA as well as together with Altech, pushed ahead with new product development and adjusted our strategy, which allows us to look positively into 2021.
On this basis, we were able today to extend the option agreement entered into with Altech Chemicals Limited ("ATC") to acquire up to 49% of Altech Australia Pty Ltd ("Altech") for up to USD 100 million, which would have otherwise expired on January 1, 2021, by 6 months to July 1, 2021 on otherwise unchanged terms. These are essentially:
1. AAM has the right to subscribe for a minimum of 10% (for a pro rata amount of USD 20.4 million) up to a maximum direct HPA project interest of 49% for USD 100 million by acquiring shares in Altech Australia;
2. AAM agrees to sell the acquired shares back to ATC 6 years after project start ("Project Financial Close") on the basis of a fixed return of 15% p.a.;
3. ATC receives the right to request the repurchase of the acquired shares in Altech Australia on the same basis from AAM ahead of schedule within 6 years,
4. AAM may terminate its sell-back obligation at any time and thus retain its HPA project interest.
The ambitions of Altech
Altech aims to become one of the world's leading suppliers of 99.99% (4N) high purity alumina (Al2O3) ("HPA"). To this end, a state of the art HPA production facility will first be built in Johor, Malaysia by Altech's wholly owned subsidiary Altech Chemicals Sdn Bhd (the "Project") using Altech's patented production process. The raw material for the HPA plant will be sourced from Altech owned kaolin deposit in Meckering, Western Australia. The next plant for the production of HPA is then to be built in Germany.
HPA is a high-value product that leads to significant improvements in the capacity and lifetime of lithium-ion batteries ("LIB") and also increases battery safety. In addition to LIB, HPA is also used in many other growth markets, such as the production of substrates for LED lights, semiconductor wafers for the electronics industry, medical equipment and scratch-resistant sapphire glass for smartphone components as well as for heat dissipation in the semiconductor industry.
The Project shows a pre-tax net present value ("NPV") of USD 505.6 million at a discount rate of 7.5%, according to Altech's Definitive Feasibility Study calculations. The Project generates annual average net free cash of approximately USD76 million at full production with an attractive margin of approximately 63% on HPA sales at a conservative mid-price range basis.
The remaining investment volume for the Project in Malaysia is around USD 390 million, of which USD 190 million has been committed by KfW IPEX Bank under certain conditions and SMS group GmbH has made an equity commitment of USD 10 million. The remaining financing for the Project is to be provided in the form of USD 90 million in debt and USD 100 million in equity. We were unable to raise the remaining USD 190 million for the Project Financial Close during 2020. One major reason is the general uncertainty caused by the corona pandemic. The intransparency of the market for HPA and the large number of inferior product variants have added to this effect. Larger investors need the transparency of the market price development for HPA as a basis for the investment decision. Technological confirmation of the superiority of our product through its high-purity nature and innovative production process is already in place.
This is exactly what we want to resolve in 2021. We have what we believe is a very exciting new product development currently in the pipeline - Altech Anode Grade HPA. We are confident that this will allow us together with ATC to bring a successful product to market with a much lower investment volume bringing significant improvements for LIB. Beside potentially providing early cashflows, we expect being able to provide the necessary price transparency for HPA that in particular potential lenders are looking for in order to close the overall financing for the HPA production plant(s).
What is anode grade?
Anode Grade refers to the Altech propriety product composition and Altech's unique technology for coating nanolayer of Anode Grade HPA onto graphite or silicon particles, generally used in the anode of lithium-ion batteries. As disclosed in our September 23, 2020 Corporate News, Altech has developed processes for alumina coating of graphite particles that are currently in an independent verification phase. Although the newly developed product composition is confidential in detail, it contains high purity alumina slightly modified by Altech as well as additional supporting compounds. The new product lines will be called "Anode Grade APC01" and "Anode Grade ALC01." This Altech product and Altech's coating technology are expected to increase Coulomb efficiency (CE), especially CE in the first charge cycle, as well as improve cycling stability and fast-charge capability. Initial trials have been successful. The HPA-coated graphite particles have been studied under a transmission electron microscope (TEM) at the University of Western Australia. The next step is to move forward with battery performance trials. These trials will aim to quantify the potential performance and life cycle improvements of lithium-ion batteries with Altech's HPA-coated graphite anodes.
Shortly after our announcement about the start of the independent verification phase of Anode Grade, a leading manufacturer of silicon approached Altech. Based on the signed Memorandum of Understanding, the two companies will collaborate on the development of a coating of silicon metal powders with high purity alumina ("HPA") for the lithium-ion battery industry. The joint development will utilize Altech's application know-how in fine alumina particles to coat various lithium-ion battery grade silicon metal powders.
Implementation of the strategy in Germany
AAM also completed today the acquisition of 25.0% of ATC's German subsidiary Altech Industries Germany GmbH ("AIG"), Dresden. AIG holds the exclusive rights for the European Union to use Altech's patents relating to the manufacture of HPA and Anode Grade.
Currently, AIG is conducting a Failure Mode and Effects Analysis (FMEA) study on the effect of sodium impurities in the aluminum coating of separators on the performance of automotive lithium-ion batteries in collaboration with the Fraunhofer Institute for Ceramic Technologies and Systems (Fraunhofer IKTS) in Dresden. For this, AIG appointed a qualified and certified FMEA moderator with industry knowledge to develop the models, their parameters and the desired outcome based on consultations and knowledge from experts from Fraunhofer IKTS and others within the technology sector. Once the battery system model is designed and calibrated, Fraunhofer IKTS introduces leading automotive industry partners for this FMEA to be applied towards particular battery moduls and systems by partners from the automotive sector.
Furthermore, Altech intends to build a second plant in Schwarze Pimpe, Saxony for the production of high-purity alumina (4N HPA) through its subsidiary AIG with special focus on battery grade HPA materials. A feasibility study is currently being prepared for this purpose. AIG has already received grant commitments of over EUR 7 million for the construction of such an HPA plant. It is also planned to produce Anode Grade at AIG, which is currently under development, with purchased HPA in Germany before the start of construction of the HPA plant and to sell it to European customers in the lithium-ion battery industry.
For the beginning of 2021, we expect first discussions with manufacturers of graphite anodes about the use of the new product series "Anode Grade APC01" and "Anode Grade ALC01" for use in the automotive industry. This not only gives Altech the opportunity to offer additional products ahead of the production of its own 4N-HPA, but also puts us in a position to achieve the price transparency for 4N-HPA required by the capital market for the financing of the HPA Project.
In addition, in Q1 2021, we expect the results of the FMEA study to confirm that the use of high purity 4N HPA comparison to other products available today will have a significant positive impact on lithium-ion battery life and performance.
In the first half of 2021, based on the interim targets achieved, we intend to implement capital measures that will allow us to bring Anode Grade to market. The capital required for this will be significantly lower than for the construction of an Altech HPA production plant and thus represents a significantly improved risk/reward ratio for investors.
Following the successful introduction of Anode Grade to the market and thus creation of price transparency for investors with regard to Altech's HPA, the financing for the HPA production plant already under construction in Malaysia is to be completed first and then the second HPA production plant in Germany will be tackled.
Here's to an exciting 2021!
About Altech Advanced Materials AG
Altech Advanced Materials AG ("AAM") is planning to invest up to 49% in Altech Chemicals' subsidiary, Altech Chemicals Australia PTY LTD ("Altech Australia") for up to USD100 million.
Altech Australia is building a production plant for high-purity alumina (99.99%; 4N HPA) for 4,500 tons p.a. in Malaysia and also has its own deposit for mining the main raw material kaolin. 4N HPA is required, among other things, for the production of LED lights and as a separator for lithium-ion batteries, which are needed, for example, for electric vehicles and smartphones. Demand for 4N HPA is expected to grow by an average of 30% p.a. until 2028, according to market studies. Altech Australia's proprietary process allows HPA to be manufactured as a cost leader, as the HPA can be extracted directly from kaolin. This enables production without the use of energy-intensive aluminum. The purchase of the production volume for the first 10 years has been secured by an off-take agreement with Mitsubishi Australia and the production capacity and quality is guaranteed by the German plant manufacturer SMS group GmbH from Düsseldorf, which has also agreed to provide equity capital for the Altech HPA project.
The total project has a remaining investment volume of approximately USD 390 million, of which KfW-IPEX Bank has already committed USD 190 million under certain conditions and SMS group GmbH has already made an equity commitment of USD 10 million. Altech Chemicals Limited is currently in discussions with Macquarie Bank regarding the provision of USD 90 million in mezzanine capital. The remaining USD 100 million is to be provided by AAM.(end)
|emitter:||Altech Advanced Materials AG|
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|contact person:||Hansjörg Plaggemars|
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