Pure Alumina’s (ASX: PUA) future Canadian subsidiary Polar Sapphire has shipped commercial quantities of 99.999% (5N) high purity alumina (HPA) from its Toronto pilot plant.
Using its patented process, Polar has operated the Toronto plant at its full 150 tonne per annum capacity for the past two weeks to produce almost 10t of 99.999% HPA.
The HPA will be sold to several sapphire producers. Polar has had an active marketing and development program since 2014 when it first sent HPA samples to prospective buyers.
Due to the marketing initiatives and quality of Polar’s product, commercial 99.999% HPA sales have continued to grow, with current customers seeking larger quantities and many new customers making enquiries.
“The attractive market fundamentals of HPA has caught the attention of a number of companies,” Pure Alumina managing director Martin McFarlane said.
“Only Pure Alumina, through its proposed acquisition of Polar, has access to an HPA pilot plant making commercial sales today and low cost expansion plans could be delivered within a year,” he said.
Polar Sapphire acquisition
Pure Alumina announced a non-binding term sheet to acquire Polar in December last year as part of its strategy to fast-track its entry into HPA production this year.
The acquisition was made binding in March this year, with Pure Alumina to purchase 100% of Polar for C$13.75 million (A$14.5 million) in Pure Alumina shares and C$12 million (A$12.6 million) in cash.
To fund completion of the acquisition, Pure Alumina will raise $30 million through debt and equity including the sale of its gold assets.
Pure Alumina anticipates the capital will fund the acquisition, construction and commissioning of a planned 1,000 tonne per annum HPA plant, with construction to begin as soon as the acquisition has been completed.
Currently, Polar’s HPA is sold to synthetic sapphire producers. However, as production expands, Pure Alumina’s strategy is to diversify into HPA coating for lithium-ion battery separators, with uptake of lithium-ion batteries rapidly surging as a result of the accelerating electric vehicle market.
Pure Alumina aims to grow the plant further to 5,000tpa within the next three years to capture these growing markets.
Polar Sapphire’s HPA
According to Pure Alumina, Polar’s patented HPA process makes the company one of the lowest cost HPA producers worldwide.
“The Polar acquisition aligns the rapid growth of the HPA market with Polar’s proven HPA process to deliver HPA production, sales, and cash flow years sooner for the benefit of Pure Alumina shareholders,” Mr McFarlane explained.
“Exceptionally low estimated capital and operating costs means, once the initial 1,000tpa plant is established, strong forecast cash flows are expected to largely fund future expansions,” he added.
Over the last 12 months, analysts such as CRU International senior consultant Toby Green have been touting HPA as a huge growth story.
Driving this growth are LED lighting, smart phones and lithium-ion batteries which all require the mineral for its unique properties.
The HPA market is expected to rise each year by about 20% over the next few years.
With a current HPA market of around 30,000tpa, these industries are expected to require 92,000tpa by 2025.
Today’s news sent Pure Alumina’s share price sky rocketing 153% to reach a $0.066 high in intraday trade, before settling at $0.048 – up almost 85%.