The Australian firm Pure Alumina Limited is planning to buy private Canadian high purity alumina (HPA) producer Polar Sapphire for $C25.7 million ($27.1 million). Polar Sapphire produces some of the lowest cost HPA at its Toronto pilot.
Pure Alumina announced its plan to its investors in the beginning of December 2018 and said that that both companies were negotiating towards “agreeing to formal terms of a potential transaction” by January 2019.
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Polar Sapphire’s Toronto pilot plant is already generating cashflow from its HPA production. Polar’s patented process produces 99.999 per cent purity HPA. Through this acquisition, Pure Alumina plans to fast track commercial production of 99.999 per cent alumina in its production facility near Toronto by early 2020. The company has an initial production target of 1000 tonnes a year and expects to achieve 5000 tonnes of production in three years.
Demand for HPA is growing for use in LED lights and battery separators for electric vehicles (EV).
“Polar’s process underpins an extremely low capital cost of $US12 million ($16.7 million) per 1000 tonnes a year of installed capacity and forecast operating costs of just $US6750 a tonne ($9375 a tonne),” Pure Alumina stated.
The acquisition will make Pure Alumina one of the lowest cost HPA producers in the world.
The acquisition will be funded by $C13.75m in Pure Alumina shares and $C12 million in cash. The acquisition is expected to complete by Q3 2019, for which Pure Alumina is required to raise $30 million in capital. The fund will be used to integrate its production process with Polar’s low cost patented process.
“Exceptionally low estimated capital and operating costs means, once the initial 1000 tonnes-a-year plant is established, strong forecast cashflows are expected to largely fund future expansions,”
Pure Alumina managing director Martin McFarlane has an optimistic outlook for the project and he expects the acquisition to fund the company’s future expansions.
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