Ann: Quarterly Activities and Cashflow Report, page-2

Final stage of project financing advanced

Subsequent to the formalisation of the US$190 million senior debt package with German government owned KfW IPEXBank, the Company advanced the final stage of project financing during the quarter. Since the KfW IPEX-Bank debt funding was confirmed in early 2018, there is heightened interest in the Company and its HPA project. The path to finance close and the ability to draw-down on the senior debt package involves the Company satisfying various conditions precedent, which includes securing a balance of funds for the HPA project. The options and proposals being considered by the Company include mezzanine debt (subordinate to the senior KfW IPEXBank loans); potential project partnerships; a traditional equity issue by the Company; and the sale of a royalty stream over future HPA sales revenue. The Company is encouraged by the interest and the rapid recognition of the potential of the high purity alumina market. Altech currently estimates that it may take until mid-2018 to determine the optimal funding solution for the HPA project. The Company's objective remains to achieve a robust project funding solution that maximises shareholder returns and minimises dilution.

I. Mezzanine Debt
A number of groups were appointed to assist the Company with identifying potential financiers and securing indicative terms for proposed mezzanine debt, which will be subordinate to the US$190 million senior loan package. The Company's HPA project is extremely cash positive and can support a potential mezzanine debt facility of between US$70 and US$120 million. More detailed due diligence activities by several financier groups including site visits (to both Malaysia and Australia) have occurred during the quarter. Direct discussions between the potential mezzanine debt providers and KfW IPEX-Bank, the due diligence consultants, the Company's off-take partner and the appointed EPC contractor have also taken place. In addition to the mezzanine debt providers, there is also interest in financing from the convertible bond market. Other options including a potential royalty stream and a US denominated bond issue directly at the project level. Work streams with potential financiers are expected to continue over the next quarter.

ii. Joint Venture
The Company is assessing the option of a project level joint venture investment with several industrial groups, which if successfully concluded, would likely result in a major reduction in the amount of equity contribution required from Altech shareholders as part of the balance of funds. A partial sale at the project level in conjunction with mezzanine debt is an attractive option for the Company to secure the majority of the balance of funds, as it will significantly reduce shareholder dilution. The Company is targeting potential joint venture partners that have speciality industrial materials experience and a strong balance sheet. Various meetings were held during the quarter with potential partners.

iii. Project Equity
Several groups were appointed to assist the Company with the anticipated equity raising that is likely to be required to secure the total balance of funds. The final equity amount has not yet been determined, as it will depend on the amount of mezzanine debt secured; the outcome of the joint venture and project sell down option; any royalty stream sale; plus final financing costs, the working capital requirements and any additional contingency amount. Altech is targeting potential equity partners that share its longer-term vision for the Company, which is to be a substantial force in the global HPA market. Roadshows and presentations by the Company to the various target regions like Europe, USA, Australia and the Asia-Pacific will continue in the coming quarter.