Pure Alumina signs binding agreement to acquire emerging high purity alumina producer
ASX Announcement 20 March 2019
Completion of the acquisition of Canada based Polar Sapphire would position Pure Alumina to become a low cost producer of high purity alumina in under a year
Key Points
- Pure Alumina Limited (“Pure Alumina”) has signed a binding agreement, subject to the conditions outlined below, to acquire Polar Sapphire Limited (“Polar”) from private equity interests for C$25.75m* (A$27.1 m) in Pure Alumina shares and cash
- Acquiring Polar is expected to fast track Pure Alumina’s plans to commence commercial production of premium 99.999% 5N high purity alumina (HPA) in 2019
- Assuming completion of the acquisition, Pure Alumina aims to rapidly expand HPA production to 5,000tpa within three years to capture exceptional growth in HPA demand for use in LED lighting and coatings on lithium battery separators for electric vehicles
- Pure Alumina is now examining debt and equity options to fund the transaction and expansion
HPA being produced at Polar’s plant in Toronto
Transaction details:
- Pure Alumina will purchase 100% of the outstanding equity in Polar for:
- C$13.75m (A$14.5m) in Pure Alumina shares*; and
- C$12m (A$12.6m) in cash.
- Conditions Precedent to the agreement include:
- Satisfactory completion of due diligence
- Regulatory and shareholder approvals
- Raising A$30m through a combination of debt and equity
- Progress towards Pure Alumina’s planned sale of its gold assets
- Other standard CPs for a transaction of this nature
- The A$30m in capital will fund the acquisition, construction and commissioning of the first 1,000tpa of production capacity, R&D into the integration of Pure Alumina’s existing kaolin-based HPA process into Polar’s technology, product marketing and general corporate working capital.
- Pure Alumina has held preliminary discussions with debt advisors and equity brokers regarding raising the necessary capital. Now that the transaction details have been finalized, mandates are expected to be finalised in the coming weeks to undertake the process for securing the necessary capital. The expected strong forecast cashflow from production could support a robust debt structure. Any equity component is expected to be via a rights issue and share placement.
Pure Alumina is currently preparing a notice of meeting pursuant to which the requisite shareholder approvals required to complete the acquisition will be sought, including amongst others, approval pursuant to ASX Listing Rule 11.1.2. The notice of meeting will be provided to shareholders once finalized and subsequently approved by the ASX.
It is expected that the transaction will be completed in the third quarter of the 2019 calendar year.
Details of the anticipated effect of the transaction on the capital structure of Pure Alumina is set out in the schedule to this announcement.
Pure Alumina makes significant progress in negotiations with Polar Sapphire
ASX Announcement 14 February 2019
Negotiations to acquire global high purity alumina leader Polar Sapphire proceeding well
Key Points
- Negotiations on the binding agreement for Pure Alumina to acquire unlisted Canadian company Polar Sapphire are progressing well, with most of the major terms agreed
- The due diligence is taking place in parallel with the negotiations in an effort to accelerate completion of the transaction (assuming agreement is reached on all issues)
- Technical due diligence is being conducted by Primero Group Ltd. (ASX:PGX), a specialist in hydromet processes and manager of Pure Alumina’s successful PFS on its Yendon HPA process
- Accounting and governance due diligence is being undertaken by the Pure Alumina CFO and company secretarial team
- Legal due diligence is being undertaken by Canadian legal firms specialising in corporate and IP law
Pure Alumina Limited (ASX:PUA) is pleased to advise that its negotiations to acquire global high purity alumina (HPA) leader Polar Sapphire are proceeding well, with agreement reached on most of the major terms
Pure Alumina Limited (ASX:PUA) is pleased to advise that its negotiations to acquire global high purity alumina (HPA) leader Polar Sapphire are proceeding well, with agreement reached on most of the major terms
As part of the acquisition process, hydromet specialist Primero has completed a site visit to Polar’s pilot plant. At the time of the visit, Polar’s plant was producing the top-quality 5N HPA to supply 6.3 tonnes to one of the market’s largest sapphire producers as part of its final stage of product qualification.
Primero’s Montreal-based team spent considerable time going through the operations of the pilot plant with Scott Nichol and Dan Smith from Polar Sapphire. Comments from the site visit highlighted the significant amount of R & D that had successfully been taken from concept through the laboratory scale to the pilot plant stage by the Polar team and noted the quality construction and operability of the plant
Pure Alumina Managing Director Martin McFarlane said Primero was going through the process documentation, capital and operating costs and construction plans to provide a complete view of the proposed development plans. The final report is expected once Primero has completed its work, but the outcome of the site visit is a very good start.
Mr McFarlane said that the strong relationship that has developed between Pure Alumina and Polar Sapphire had allowed for effective negotiations on key issues.
“We expect to update the market further on the binding agreement in the short term,” Mr McFarlane said.
Highly successful quarter puts Pure Alumina on track for production of high purity alumina this year
ASX Announcement 30 January 2019
Proposed acquisition of leading Canadian producer would see Pure Alumina produce top quality HPA in 2019 with very low capital costs
Highlights
- Pure Alumina has signed a non-binding term sheet to negotiate terms for the possible acquisition of unlisted Canadian company Polar Sapphire (www.polarsapphire.com)
- Polar’s patented high purity alumina (HPA) process produces exceptionally high quality 99.999% (5N) high purity alumina (HPA) in Toronto
- Polar has established HPA sales with sapphire producers and is developing relationships in the battery separator sector
- Polar’s process has extremely low capital costs of ~A$12m per 1,000tpa HPA and its modular design enables rapid expansion
- HPA demand is growing rapidly due to its use in LED lighting and demand is set to escalate from 2019 as lithium batteries for electric vehicles roll out.
- After completion of the acquisition, the strategy would be to build a 1,000 tpa HPA plant in 2019 then expand to 5,000 tpa HPA production within 3 years to capture projected HPA growth. Integration of Pure Alumina’s kaolin process would be developed to reduce production costs
- Sale of Pure Alumina’s Hill End gold project has been extended to allow bidders more time to finalise their finance
- R&D tax incentive of $488,000 received in January 2019 to maintain acceptable cash position
Corporate
On 1 November 2018, following a successful shareholder vote, the Company’s name changed to Pure Alumina Limited. This aligned the Company name with its stated strategy of becoming a leading producer of high purity alumina.
Pure Alumina signed a non-binding term sheet which contemplates exclusive negotiation of terms for the acquisition of 100% of Toronto-based high purity alumina (HPA) producer Polar Sapphire. Both parties have committed to work towards agreeing formal terms of a potential transaction on or before 31 January 2019. There is no certainty that formal terms for the proposed acquisition will be agreed or a transaction completed. Any formal terms will be subject to a range of conditions including (without limitation) confirmatory due diligence and receipt of necessary shareholder, third party and regulatory approvals.
Since signing the non-binding term sheet, development of a binding acquisition agreement has proceeded to an advanced stage. Due diligence by both Polar and Pure Alumina is underway.
Polar is currently producing HPA at its pilot plant in Toronto, generating cashflow in the process.
Polar’s patented HPA process produces 99.999% (5N) HPA which is the highest purity commercial grade HPA available. The 5N HPA market generates attractive premiums over 4N and lesser purity HPA segments. The demand for 5N HPA is growing rapidly due to requirements to produce higher output LED lights and other high precision optical products. It is a relatively exclusive market because only a few companies globally have achieved commercial production achieving the specifications for 5N HPA.
Polar has already passed stringent qualification processes for its HPA with multiple synthetic sapphire producers receiving positive feedback that Polar HPA produces synthetic sapphire with fewer flaws in the crystal lattice and more transparent sapphire. This enables sapphire producers to generate higher yields of payable sapphire per kg of HPA and target premium white LED lighting segments. Sales orders from sapphire producers now exceed the capacity of Polar’s pilot plant and therefore it is seeking to expand production.
Polar’s production process has low capital. The estimated cost of constructing a 1,000 tpa HPA plant is circa A$12 million. The entry cost of constructing the first 1,000 tpa of HPA production is approximately 3 per cent of Pure Alumina’s 8,000 tpa Yendon HPA project and one quarter of the overall cost to build a plant with equivalent HPA output.
Polar’s production can be rapidly expanded to meet forecast growth in HPA demand. The modular nature of Polar’s process requires approximately only 6 months to build each 1,000tpa of output.
During January 2019, Pure Alumina received an R&D tax incentive payment of approximately $488,000 in connection with the tax year ended 30 June 2018 to maintain an acceptable cash position.
Pure Alumina signs non-binding term sheet to negotiate a possible merger with next-generation high purity alumina producer
ASX Announcement 3 December 2018
- Key Points
Pure Alumina has entered into a non-binding term sheet to negotiate terms for the possible acquisition of unlisted, Canadian company Polar Sapphire (www.polarsapphire.com) - Polar produces 99.999% (5N) high purity alumina (HPA) at its facility in Toronto
- Polar’s patented HPA process gives it one of, if not the, lowest HPA production costs in the world for 5N HPA
- Polar has established HPA sales with a number of sapphire producers.
- Polar’s HPA process is modular with expansion achieved by installing additional modules. This keeps capital cost extremely low
- HPA demand is growing rapidly on the back of its use in LED lighting and lithium batteries for electric vehicles. HPA demand is forecast to quadruple to ~100,000tpa by 2030
Pure Alumina Limited (ASX:PUA) is pleased to advise that it has signed a nonbinding term sheet which contemplates exclusive negotiation of terms for the acquisition of 100% of Toronto-based high purity alumina (HPA) producer Polar Sapphire. Both parties have committed to work towards agreeing formal terms of a potential transaction on or before 31 January 2019. There is no certainty that formal terms for the proposed acquisition will be agreed or a transaction complete. Any formal terms will be subject to a range of conditions including (without limitation) confirmatory due diligence, receipt of necessary shareholder, third party and regulatory approvals.
Polar is currently producing HPA at its pilot plant in Toronto, generating cashflow in the process.
Pure Alumina has been progressing development of its Yendon high purity alumina project in Victoria and recently completed a Pre-feasibility Study (PFS) on this project
Pure Alumina’s Managing Director, Mr Martin McFarlane, said “We are very impressed with the technology that Polar Sapphire has developed to produce high purity alumina and look forward to advancing discussions with Polar with the objective of finalising a binding agreement.”
Pure Alumina will continue to keep shareholders informed of developments.
Board of Directors
Tom Eadie
Chairman
Mr Eadie is a geologist/geophysicist with extensive experience across many commodities and as a Company Director. He is currently a Non?Executive Director of ASX listed companies Strandline Resources, Alderan Resources and New Century Resources. Mr Eadie was the founding Chairman of Syrah Resources (ASX: SYR). During his time in this role, Syrah discovered and began the development of the world?class Balama graphite project in Mozambique. Prior to this, Mr Eadie was Executive General Manager of Exploration and Technology at Pasminco Limited, at the time the largest zinc producer in the world. This came after technical and later management responsibilities at Cominco and Aberfoyle in the 1980s.
Martin McFarlane, B.Eng., B.Bus
Managing Director
Mr McFarlane has more than 25 years resources experience with major resource companies including Minerals and Metals Group, OZ Minerals Limited, Zinifex Limited, Pasminco Limited and Conzinc Rio Tinto of Australia including successfully holding senior roles for the past 13 years either as CEO / President of the company or being responsible for major business units reporting directly to the CEO.
David Leavy, B.Ec., M. App. Fin.
Finance Director
Mr Leavy has over 25 years of experience in the banking and mining industries covering a wide range of commodities. He has significant experience in debt and equity markets, physical and derivative commodity markets, specifically in gold, bauxite, iron ore, base metals, oil and LNG. Recent roles have included CFO of several mining companies undergoing project development, requiring implementation of appropriate business processes, government negotiations, team establishment, logistics etc. in Australia, Ghana, Guinea and Sierra Leone. Prior to this Mr Leavy held a number of roles at Westpac through financial markets (FX and commodity derivatives), project finance, relationship management, credit analysis and capital solutions. A significant focus for these roles was on the Mining and Oil & Gas sectors.
Graham Charles Reveleigh, M.Sc., MAusIMM, CPMan, MCIMM
Non-executive Director
Mr Reveleigh has wide experience in the mining industry, covering exploration, development, construction and mine operations including Mine Manager at Noble’s Nob, where he ran the operations for seven years. He has worked as a consultant on numerous projects both in Australia and overseas such as at Hill End in New South Wales, Red Dome in Queensland and as Project Manager at the Moline Gold Mine in the Northern Territory, at Gold Ridge in the Solomon Islands and as part of the Kennecott team at Lihir and in other assignments in the Philippines, New Caledonia, Siberia and most States in Australia. Mr Reveleigh was the Site Manager for Nugget Resources Inc at Hill End NSW since the commencement of the project, and for four years was Managing Director of the Company.
Robert Boston
Non-executive Director
Mr Boston is an experienced resources corporate executive having worked in legal, business development, strategy, marketing and commercial positions with BHP Billiton (Nickel West), Rio Tinto Exploration and Poseidon Nickel Limited. Robert holds a law degree having worked for national law firms Freehills and Mallesons Stephen Jaques. Robert has multi commodity expertise in particular exploration, early stage resource development, M&A, joint ventures and marketing. Robert also holds a Bachelor of Commerce, Bachelor of Laws, a Post Graduate Diploma in Applied Finance (FINSIA), and a Diploma of Management. Robert is admitted to the Supreme Court of Western Australia and High Court of Australia.
