A4N 2.50% 82.0¢ alpha hpa limited

Ann: Company Activities Update, page-13

  1. 13,811 Posts.
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    I haven't come across much by way of overseas HPA developers but Pure Alumina in Australia was recently hoping to purchase Polar Sapphire in Canada. Sapphire have a very small operation that Pure Alumina was hoping to purchase and then scale up. They claimed Polar are one of the lowest cost producers of 5N in the world, which is great because A4N will be 24% lower on operating cost based on their study. The deal to acquire Polar has since failed and I don't know what Polar's plans are from here. Pure Alumina is out of the HPA field for now.
    From Pure Alumina's announcement to acquire Polar;
    "Pure Alumina Limited (ASXUA) is pleased to advise that it has signed a binding agreement to acquire leading Toronto-based high purity alumina (HPA) producer Polar Sapphire Limited, subject to the conditions outlined above. The acquisition is expected to catapult Pure Alumina into the ranks of global HPA producers by funding construction of the first 1,000tpa of HPA capacity using Polar’s world-leading patented process, with commissioning expected to commence in early 2020. Polar’s process underpins an extremely low capital cost of US$12m (A$16.7m) per 1,000tpa of installed capacity and forecast operating costs of just US$6,750/t (A$9,375/t). This is expected to make Pure Alumina one of the lowest cost producers of 5N HPA in the world."

    On capital costs, Polar is at A$16.7mill per 1,000tpa or $167mill for 10,000tpa. So, if they achieved that, they would have lower capital costs than A4N's $199mill, although I don't know if Polar's was just an estimate that may blow out in reality or if it was supported by a FS.
    On operating cost, A4N comes out well ahead with around US$5,123 compared to US$6,750 for Polar.
    So Polar might be 16% cheaper on capital cost but A4N is 24% cheaper on operating cost. The difference in operating costs equates to an extra $16.3mill profit per year at 10,000tpa for A4N, which would only need two years of full production to make up the $32mill difference in capital cost.
    That makes A4N a significantly lower cost producer than Polar Sapphire and Polar also now would be looking for other funding options if they still hope to scale up.

    A4N remains the lowest cost on forecast cost of production that I have come across and still by a significant margin.


 
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