Altech Chemicals finalises Kaolin mining rights agreement with Dana

Altech Chemicals Limited announced that it has reached agreement with Dana Shipping and Trading S.A. to grant Dana the exclusive right to mine up to 10Mt of kaolin from the company's Meckering kaolin deposit. The Meckering Deposit covers approximately 184km2 in area and contains indicated and inferred kaolin mineral resources estimated at 64Mt @ 83.4% brightness JORC (2004).

Under the terms of the kaolin mineral rights agreement, Dana will pay Altech $1 million cash for the right to mine 10Mt of kaolin (First Transaction) upon either the grant of mining lease ML70/1334 or the grant of any alternate mining lease that provides Dana with mining access to kaolin within an area of the exploration lease containing the Meckering Deposit (EL70/3923). If the conditions of the First Transaction are not satisfied by the end date (within 9 months of the date of the agreement), the parties have agreed to discuss the grant of the same kaolin mining rights to Dana on the other kaolin tenements held by the company, such as its Kerrigan kaolin project (E70/4737 and E70/4718).

Subject to the completion of the First Transaction, Altech has granted Dana an option whereby Dana has the right to increase its kaolin mining right to 30 million tonnes, by paying a further $2 million cash to Altech.

Based on its recently completed bankable feasibility study for the development of a 4,000tpa high purity alumina (HPA) plant (HPA Project), Altech will only require approximately 4Mt of kaolin to support a 100 year project life.

The grant of the mining rights to Dana will not constrain the company's HPA Project and under the agreement with Dana, Altech's right to mine kaolin for its project takes priority over the kaolin mining rights granted to Dana and reciprocal non-compete obligations apply to both Dana and Altech. The bulk kaolin that Dana intends to produce from its mining operations is predominantly used in the ceramics, paper, rubber and paint industries.

Also, under the agreement Altech will receive a 2% gross sales royalty on all bulk kaolin sales.

Altech Chemicals shares were trading as much as 15.8% higher on Thursday, October 29, after the company finalised the rights which could earn the company up to A$3 million in cash plus royalties.