Alpha HPA (ASX:A4N) Managing Director, Rimas Kairaitis provides an update on the company's High Purity Aluminum (HPA) processing technology, pilot plant program and project economics.
Anna Napoli: Hello, I'm Anna Napoli for the Finance News Network, and joining me at our Sydney studios from Alpha HPA is Managing Director, Rimas Kairaitis. Rimas, Welcome back.
Rimas Kairaitis: Thanks very much.
Anna Napoli: Alpha HPA is focused on the chemical processing of aluminium feedstock into high purity alumina or HPA. How's the business progressing?
Rimas Kairaitis: Very well, thanks, Anna. It's been a busy 12 months for Alpha HPA. This year we've run the pilot plant and we are close to finalising the DFS, and we're keen to deliver the DFS and move on to the next stage of the business.
Anna Napoli: Thanks, Rimas. For people unfamiliar with the HPA, where does the product actually go?
Rimas Kairaitis: HPA is a specialised market. Its key current market is for the production of sapphire glass in the use of led lights, but the big growth market, and particularly the growth market that Alpha is looking to pursue, is in the use of lithium-ion batteries and in the application of coding separators inside lithium-ion battery cells. We see that market demand as enormous and effectively one-to-one linked with the take up of electronic vehicles.
Anna Napoli: Turning to your pre-feasibility study, what's the project forecast to deliver and what interest have you received?
Rimas Kairaitis: The PFS was delivered in November 18 and updated in March 2019. The metrics of the project are very strong, very compelling, and around $200 million of free cash per year, and that really put the business on the radar of a bunch of investors and funds. Obviously, that will be updated in the definitive feasibility study, but we're not looking at too much of a change from that. Essentially it's a very robust financial business underpinned by a very smart technical process.
Anna Napoli: Rimas, what can you tell us about the pilot plant and the timeline for the DFS?
Rimas Kairaitis: The pilot plant has been running effectively since July 2019, and the pilot plant is all about de-risking the process, demonstrating the process at pilot scale. It's been a very successful pilot campaign, effectively completely validated our process and delivering very high purity, greater than Four Nines purity, high purity alumina, consistently over the course of that time. The key chemical outputs of the pilot plant feed the DFS study. At the moment, we're still targeting December 2019 for the DFS delivery, and we're pushing hard to get that out on time.
Anna Napoli: Finally, Rimas, where would you like to see the company this time next year?
Rimas Kairaitis: Well, we'd like to see the company valued at even 10% or 20% of the implied valuation of the DFS. We think any company capable of delivering anywhere near $200 million cashflow per annum at a maintainable basis should at least be 10% or 20% of a eight-or-nine-times earnings multiple. So if the company is valued around $800 or $900 million, we'd be delighted.
Anna Napoli: Rimas Kairaitis, thank you for the update.
Rimas Kairaitis: A pleasure. Thanks, Anna.