The Quarterly Activities and Cash Flow Statement did not tell us a lot that has not already been flagged. Their estimated cash outflow for the September quarter was 6.05 million and the actual spend was 5.625 million, so a bit better than expected. In the previous two quarters their actual spend was about a million more than they estimated at the start of the quarter. Their estimated spend for the December quarter is 8.80 million, which is what you would expect in a project that is gradually gaining momentum. Their spend has been gradually increasing each quarter throughout 2019.
Given that they have 2.646 million in cash at the start of the Dec quarter and 2 million expected from Melewar provided the AGM approves the payment on the 14th of Nov, they are still quite a few million short. There will need to be either a small capital raise (from current shareholders?), SMS to put some of the additional roughly 10 million they have promised on completion of project financing, to put it in early, or some proceeds of the capital raise in Germany (AAM group) to be completed very quickly. AAM would need to raise, at least 20 million USD for the conditions of the transaction to be fulfilled and Altech would need the money to be passed on asap. Fourthly, some other potential investor (with a vested interest in the HPA project proceeding) would need to step up with some cash. Whilst the lithium market is suffering from an oversupply because lithium is easy to find, and prices have suffered as a consequence, HPA is both very expensive to produce and in short supply and supply cannot be increased quickly. This difference does not seem to have been fully appreciated in financial markets.
In the bigger picture Macquarie Bank seems to have found exactly the same thing as Kfw Ipex bank did up to this point. The technicals stack up, the financials stack up, the price estimates for the product seem OK, supply is short, and now the legal due diligence needs to be finalized. Kfw Ipex took 17 months before giving the tick of approval, Macquarie has been going for about 16 months. A decision should not be too far away. Given that Macqaurie only get a fee if the mezzanine loan proceeds, you would expect a deal to be done, given the time and money they have spent for as yet no return.
On another matter PUA (Pure Alumina) (one of a number of small Aussie companies trying to follow in Altech's footsteps) have scrapped their plans to build a 1000 tonne per annum HPA plant, because of their inability to raise capital in Australia. This vindicates Iggy's moves to try and raise the US $100 million that he needs for the equity component in Germany. Hopefully they are more receptive than our corporate sector has been here.
Altech is juggling quite a few balls in the air at the moment and as we have been for much of the last two years, us shareholders are on the edge of our seats hoping they can bring it all to a successful conclusion.
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