Ann: Altech - Mezzanine Debt Technical Review Completed, page-45

SMS has plenty of stranded projects, incl. some that have been Ibex-Kfw approved. I understand their story, capex did not quadruple for nothing when they entered the picture. The only reason why this did not totally destroy NPV is that a higher price for HPA has been taken into account, what I am questioning is why this would not spur more supply by traditional producers. For instance Norsk Hydro, that are not even in the presentation, but they are signalling HPA as a separate product. They are one of the biggest alumina producers in the market, and are trying to move up in the value chain. PS, they would make a great jv partner, true   Most of supply additions were done in the beginning '10's I believe (Sasol; Sumitomo), if prices indeed have doubled, couldn't they ramp up more - I understand this would be higher opex production, but what in terms of capex, and what does this entail for combined cost. Most of the companies do not split out HPA economics, as it is buried in the rest of activities, but it would seem odd to me that prices can rise by this much and not trigger additional supply mitigating price rises.

Note that from SMS perspective, it is irrelevant what the margins for Altech are. They have no exposure other than turnover from the capex, and no I don't think one should read too much into their 'investure', because last time around they just wrote invoices to match (and those were pre financing by Ipex-kfw). I am happy to invest 1mm in Altech as well if I can write invoices for advisery fees to the same amount at the same moment. I didn't think they use any patents here, wasn't the process designed by Bayer? Does SMS have a royalty over Altech then?

It is hard to take a stab at dilution, as it really depends on any additonal finance. In the other topic it is suggested that the conditions for financing have been communicated by herr doctor Ahrens to shareholders, I would doubt that to be the case, or they would be in severe breach of compliance (und das vertragt sich nicht mit die Deutsche grundlichkeit wurde ich sagen )
In total they would need at least 400mm US$. It has been signaled all along that equity would be approx. 1/3 of this, so that would require them to raise in excess of 100mm US$ of capital. My assumption is that, assuming not sell of part of the project to a jv partner, or a streaming facility by Mitsubhsi, that they'll need to raise at least 2x their current market cap, and note that up till now the 'milestones' did not really result in a higher share price to limit dilution. And they need to raise a lot. Imho they cannot replace it by subordinated loans either, at least not at conditions much different from those of the shareholders. What financier would take on the risk comparable to the shareholder, without the upside? So I am planning to have them deliver on the funding package, and in my opinion the remaining capital raise will be so dillutive that that would be the best risk/reward getting into at that time. Right now it is a black box what financial projects will look like for shareholders, really, NPV can be almost anything based upon funding package - and sorry, but I still remember management quadrupling capex overnight, so I am a bit hesitant to believe them until they deliver.

What really turned me off was the plan of management to do a capital raise before financing had been arranged. I think we can agree that would be highly dillutive, and doesn't show much confidence of getting financing done on attractive terms. That did not seem logical to me, and I guess that was reflected in the share price movement. To me it seemed they were gunning for piecemeal capital raisings, and that only makes sense if you are trying to 

Furthermore I did not really appreciate the CEO selling a large chunk of his shares just before quadrupling the capex projections. Well, that is some time ago, I guess most of you may not remember. I do, they suddenly changed contractor as well. So yes, I am a bit hesitant. Management needs to deliver, and show that they can fund consistent with their talk . I would argue that the share price development until now has said that they haven't, agree? I thought that managements suggestion that this was caused by general marketconditions, and them trading in pair with lithium stocks was quite poor, actually. They are not even a mining stock. They are a specialty chemical company. Well, they hope to be one day.

Anyways, we'll see. I eagerly await management delivering on funding, and we'll take it from there. I would be happy to miss the first part of price appreciation if they would be able to avoid tripling or quadrupling share count.