Collerina Cobalt Limited (ASX:CLL) Managing Director, Rimas Kairaitis discusses the company's High Purity Alumina (HPA) focus, unique processing technology and progress with its pre-feasibility study.
Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me today from Collerina Cobalt (ASX:CLL) is managing director, Rimas Kairaitas. Rimas, welcome to FNN.
Rimas Kairaitas: Thanks very much, Rachael.
Rachael Jones: First up, Rimas, could you start by giving us an introduction to your company?
Rimas Kairaitas: Collerina Cobalt (ASX:CLL) is an ASX listed company with market capitalisation of around AUD$60 million. We started life as a nickel/cobalt developer and producer, and we've now evolved into a high purity alumina company, and we're looking to bring on a high purity alumina production project sometime in the next couple of years using some very clever and innovative technology.
Rachael Jones: Thanks, Rimas. Now before we talk about your projects, can we take a look at the high purity alumina and its applications?
Rimas Kairaitas: Happy to. High purity alumina is not well known, but it's a very important technological material. Its main use at the moment is in light-emitting diode (LED) lighting, where about half the HPA market is currently LED lighting. The exciting and the growth area really of high purity alumina is in the use of lithium-ion batteries. It's very much connected to the growth in electronic vehicles and the electrification of infrastructure globally, and that market looks to grow dramatically and the demand for high purity alumina is looking to grow with it.
Rachael Jones: Thanks Rimas. Now let's talk about your HPA First project. Can you tell me about that starting with how it came about?
Rimas Kairaitas: I can. HPA First actually came from the development of our nickel/cobalt project. We were looking to produce nickel/cobalt and high purity alumina from our project in Central New South Wales and we recognised an opportunity to bring the HPA production first and early out of that project using a different feed stock, and what we've done is we've recognised that opportunity and we're currently delivering our feasibility study on that opportunity, and what that'll allow us to do is to, as the name suggests, get into high purity alumina production first and retain the option of nickel/cobalt production later on.
Rachael Jones: How does your technology have an advantage over other HPA processes or applications?
Rimas Kairaitas: Great question. The existing HPA market is essentially produced from aluminum metal and because the requirements for purity are so stringent for HPA and to realise the value of HPA, existing producers essentially regrade aluminum metal and oxidize it into high purity alumina. Alternatively, there's also a small sector of the market that's producing high purity alumina from a kaolin clay and there are a number of proponents in the market also looking to produce HPA from kaolin clay.
Our process is completely different. It's a different universe effectively. We're looking to produce using a solvent extraction process. The advantage we believe of solvent extraction is that it's a known technology. It contains no acid leach component. It contains no pressure vessels so it's atmospheric, where chemistry, it's a very low risk and relatively low cost process for high purity alumina. We think that's absolutely our competitive advantage.
Rachael Jones: Not forgetting the nickel/cobalt and scandium. What can you tell me about this?
Rimas Kairaitas: We haven't forgotten about nickel/cobalt and scandium, but at the moment, we believe that the pricing in the market place is ready for HPA and we have this wonderful flexibility to bring HPA production early and then take an option on the nickel/cobalt production down the track.
Rachael Jones: Now to the finances and share price, can you give me a snapshot of the company's finances?
Rimas Kairaitas: Sure. The share price is trading around 13 cents at the moment as we speak. I think as the market gets to understand the high purity alumina sector and the opportunity that we present to that market, that will grow. The company's well funded at the moment. We've completed a rights issue in August, 2018. We have about AUD$3 million in the bank, which will see us well through not just the completion of the current pre-phase work that we're doing, but we expect that to also see us through the funding of the pilot plant, which is the next sort of technology verification step and all the way through to completion of the affinity feasibility study.
Rachael Jones: Excellent. Can you provide more detail about the share price?
Rimas Kairaitas: It's grown fairly strongly since about mid 2017 and I think to a large degree that was a re-rating in the sort of broader cobalt sector rather than what's specific to HPA and the business that we're now proposing to focus on. I think as the market gets to understand that properly as again the opportunities that the HPA sector presents to the investors and understanding the sector fully, we believe that Collerina kind of must become the preferred HPA stock for investors looking for exposure in that sector.
Rachael Jones: Last question now, Rimas, where would you like to see the company in 12 months' time?
Rimas Kairaitas: I'd like to see the company substantially re-rated and revalued as the market fully understands our business case and the opportunity that our technology presents to that business case. We're currently capped around AUD$60 million. I think ultimately this company is a multiple hundred million dollar company as the market understands the business properly and the opportunity. We understand there are a series of de-risking steps we have to take between that and that final valuation, but we're committed to doing it and we're funded to do it, and we think it'll happen in time.
Rachael Jones: Rimas Kairaitas, thanks for the update.
Rimas Kairaitas: Great, Rachael. Thanks very much.