Pure Alumina Limited’s (ASX: PUA) shares went up by 84.615% during the intraday trade on Thursday. On the same day, the company had announced regarding the continued growth in sales of Polar Sapphire 5N HPA.
The company is currently in the process of acquiring Polar Sapphire, a Canadian HPA producer. During the March quarter the company signed a binding agreement to acquire Polar Sapphire Limited from private equity interests for C$25.75 million.
With the growing demand of HPA in the market, the highly successful production run of Polar Sapphire is very encouraging news for the company. Polar Sapphire has been operating its pilot plant at full capacity to deliver almost 10 tonnes of 99.999% (5N) high purity alumina (HPA) in the last 2 weeks, proving its proprietary technology. The quality of Polar Sapphire’s HPA produced at its Toronto pilot plant together with its attention to customer service has resulted in growing commercial sales of it 5N HPA.
Although many companies are keeping a close eye on the attractive fundamentals of HPA, only Pure Alumina, through its proposed acquisition of Polar Sapphire, has access to a HPA pilot plant making commercial HPA sales.
Pure Alumina’s proposed acquisition of Polar Sapphire and capital raise will enable the company to expand the Polar Sapphire’s production facility to 1,000 tonnes per annum of HPA within 12 months. Due to the growing demand of HPA in the market, it is expected that HPA capacity will quickly reach to an initial HPA target of 5,000 tpa within 3 years. Once constructed and operational, the potential free cashflow generated from a commercial scale Polar HPA facility is very strong.
Polar Sapphire has already passed stringent qualification processes for its HPA. Various synthetic sapphire producers have received positive feedback that Polar Sapphire HPA produces synthetic sapphire with lesser flaws in the crystal lattice and more transparent sapphire, enabling sapphire producers to generate higher yields of payable sapphire per kg of HPA and target premium white LED lighting segments. Polar Sapphire's production process is having low capital requirements and its estimated cost of constructing a 1,000 tonnes per annum HPA plant is around A$12 million. The modular nature of Polar Sapphire's process requires around only 6 months to build each 1,000tpa of output which means Polar’s production can be rapidly expanded to meet forecast growth in HPA demand.
For 2019 March quarter, the company reported net cashflow from operating activities of A$30,000. As at 31 March 2019, the company cash and cash equivalent of A$288,000.
The stock traded at a price of $0.048, up by 84.615% during the day’s trade with a market capitalisation of ~$4.45 Million as on 9 May 2019. The counter opened the day at $0.026 and reached the day’s high of $0.066 and touched a day’s low of $0.026 with a daily volume of ~6,296,443. It had a 52-week high price of $0.096 and touched 52 weeks low of $0.026, with an average volume of ~533,551.
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