Alpha HPA green lights stage-two refinery

Alpha HPA (ASX:A4N) is moving ahead with the second stage of a high-purity alumina refinery in Gladstone, Queensland, on the back of positive Definitive Feasibility Study results and locking in $520 million in debt and equity project financing. 

The company says it will immediately start project execution for the full-scale, stage-two facility having already advanced a number of key elements, with first production slated for the first half of the 2027 financial year. 

HPA is a key component used in the production of LED lighting, synthetic sapphire, semiconductors, and lithium-ion batteries.

The DFS outcomes place stage-two annual production for the HPA First Project at 10,430 tonnes, with an optimised product mix. 

This is expected to generate revenue of $359-$509 million and earnings before interest taxes depreciation and amortisation of $255-$403 million each year at cash costs of $9.58 per kilogram. 

Capital expenditure is estimated to be $553 million, including a $79 million contingency. 

To fund stage two, Alpha HPA has secured credit approval for $320 million in project debt and an $80 million cost overrun facility from the Australian government’s Northern Australia Infrastructure Facility and Export Finance Australia.

The company has also received government grants of $66.7 million and is undertaking a fully underwritten $120 million institutional placement and non-underwritten share purchase plan (SPP).

The placement is being done at $0.90 per share, which is a 10% discount to the closing price of $1.00 on 17 May. Alpha HPA says it has already received commitments from several of its existing major shareholders including Orica (ASX:ORI).

Bell Potter Securities and Macquarie Capital (Australia) are joint lead managers and underwriters of the placement.

Meanwhile, the SPP will allow eligible shareholders to buy up to $30,000 worth of additional shares at the lower of the placement price or a 2% discount to the five-day volume weighted average price of shares traded up to, and including, the closing date of the SPP.  

Alpha HPA has also received unsolicited approaches for the provision of alternative and non-dilutive financing arrangements from several parties, including advanced proposals for any additional stage-two expenditure requirements. 

The positive final investment decision follows more than four years of product marketing to over 200 end-users, construction, commissioning and over 16 months of operation of stage one, and a comprehensive re-design and re-engineering of the stage-two facility.

The design and engineering changes were aimed at capturing process refinements, and expanding the product range capability as well as key customer requirements.

Managing Director Rimas Kairaitis says construction of the 10-hectare, full-scale facility will start in mid-2024.  

It will be built on the existing HPA First Project site at Yarwun, near Gladstone, where the stage-one facility is already in small-scale production of high purity alumina and aluminium materials products.

“Stage two will encompass full-scale production of up to 10,000 tonnes of high-purity aluminium materials per year creating 120 ongoing local jobs on top of 300 jobs during construction,” Kairaitis says.

Write to Angela East at Mining.com.au 

Images: Alpha HPA
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Written By Angela East
Managing Editor Angela East is an experienced business journalist and editor with over 15 years spent covering the resources and construction sectors and more recently working as a communications specialist handling media relations for junior resources companies.