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Pure Alumina Limited (ASX:PUA), formerly known as Hill End Gold Limited, is involved in the production of high purity alumina (HPA). The company is currently developing its Yendon HPA project to capitalize on growing HPA demand, and it is aiming to start the commercial production of Yendon high purity alumina as quickly as practicable.
Further, the company is in the process of acquiring unlisted Canadian company, Polar Sapphire which is a producer of 3N to 6N high purity alumina, used to make LEDs and its products are also used in powder form to make ceramic separators for lithium-ion batteries. Pure Alumina Limited has already signed a non-binding term sheet to negotiate the terms of acquisition with Polar Sapphire.Â
Although Pure Alumina has not released any price sensitive information today (7 February 2019), the share price of the company initially surged over 23% and then was seen up by 11.76% (1:45 PM AEST). This may be coming at the back of investorsâ confidence on the groupâs capabilities.
As per the Pure Aluminaâs recent quarterly report, the proposed acquisition of Polar Sapphire would see Pure Alumina produce top quality HPA in 2019 with very low capital costs.
According to the company, the HPA demand is increasing rapidly due to its use in LED lighting and demand is set to escalate from 2019 as lithium batteries for electric vehicles roll out. After completing the acquisition of Polar Sapphire, Pure Aluminaâs strategy includes a target to build a 1,000 tonnes per annum (tpa) HPA plant in 2019 then expand the same to have 5,000 tpa HPA production within three years to capture projected HPA growth. Integration of Pure Aluminaâs kaolin process would be developed to reduce production costs.
Recently, Polar Sapphire received a new automated press for the production of high-density alumina pellets. The press is going to be commissioned in February, and it is expected that it will increase the capacity by producing 70 kilograms of high purity alumina pellets per hour (500 t/yr) and the press will also allow Polar to make custom pellet sizes for its customers. Polar Sapphire is planning to build a new factory in 2019 to further increase production capacity. The non-binding agreement with Pure Alumina Ltd is going to facilitate that expansion.
During January 2019, Pure Alumina received an R&D tax incentive payment of around $488,000 in connection with the tax year ended 30 June 2018 to maintain an acceptable cash position. For the December quarter, Pure Alumina reported net cash used in operating activities of A$649k and cash and cash equivalent of $258 K.
In FY 2018, Pure Alumina reported the net loss after tax of $9.317 million with basic and diluted loss per share of 7.4 cents and 5.5 cents respectively. At the end of FY 2018, the company had current assets of $11.255 million and total current liabilities of $1.721 million.
In the past six months, the share price of the company decreased by 43.33 percent as on 6 February 2019. PUAâs shares traded at $0.038 with a market capitalization of circa $5.82 million as on 7 February 2019 (AEST 1:45 PM).
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