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Mining

Alpha HPA to establish project in Gladstone Development Area, reaches MoU with Orica

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By Lorna Nicholas - 
Alpha HPA Orica ASX A4N ORI

Alpha HPA and Orica Australia will now look to make the agreement binding.

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Following due diligence, Orica Australia has agreed to supply Alpha HPA (ASX: A4N) with two chemical reagents for the HPA First project, with Orica (ASX: ORI) also to purchase back the by-product.

As part of the MoU, pricing mechanisms and volumes have been established, with both companies looking to enter into a definitive supply and offtake agreement.

The MoU also establishes scope for an engineering co-operation group with representatives from both companies to review and advise on engineering requirements of supply, offtake and project interface.

According to Alpha, the volume and nature of the reagents and by-product require the HPA First project to be located within 2km of a chemical counterparty.

In line with this, Alpha has secured an option for a 10-hectare land parcel within the Gladstone Development Area where Orica’s facility exists.

This allows for the reagents and by-product to be delivered in liquid form via a pipeline.

The MoU is for an indicative 20-year term, with pricing comparing favourably to those set out in Alpha’s pre-feasibility study that was published in March last year.

Commenting on the MoU, Alpha managing director Rimas Kairaitis said the company was “very pleased” to reach an agreement with Orica as well as finding a location for the HPA First project.

HPA First project

Alpha noted that the pricing mechanisms within the MoU would be incorporated in the definitive feasibility study which is scheduled for release in March.

HPA First is based on Alpha’s proprietary technology to process aluminium into high purity alumina (HPA).

The pre-feasibility proposes to process about 20,400t per annum of modified industrial aluminium feedstock to produce 10,200tpa of HPA, which can be sold at $33,333/t.

Capital expenditure of $198 million to generate annual free cash flow of $265 million.

During the December 2019 quarter, Alpha completed a phase three pilot plant production run which achieved consistent purity.