Well we didn’t have to wait long. MHM released their announcement shortly after my post earlier this morning. So what has MHM achieved:
1. The first contract for our US operations has been secured.
2. It is a five year contract
3. It is structured as a tolling arrangement where a fixed price per tonne is charged to the customer with MHM returning the aluminium and flux to the customer while retaining ownership of recovered aluminium oxide.
This is a pretty solid outcome in my opinion. There had been some concern that US companies were concerned about signing a tolling arrangement where they effectively assumed the risk associated with the project. That concern has now been put to bed.
The other interesting point highlighted in the first paragraph is this statement “MHM’s first US salt slag and black dross processing facility.” This confirms that we will also be processing black dross. This is a complimentary product identified by John Pough and further strengths our expansion plants.
The announcement did however throw up a few issues which I think will keep it from surpassing $1 in the short term. These include:
1. The company and details of the contract must remain confidential and MHM must refrain from revealing the counterpart or contract terms. This is due to the fact that the companies we are dealing with also landfill salt slag and if their ability to recycle material at a cost effective rate becomes public that could put undue pressure on their current operations.
2. MHM cannot reveal the tonnages to be processed under the contract, however they did confirm that there is likely to be a number of contracts signed by various parties and the first US plant will process between 200,000 and 250,000 tonnes per annum.
3. The supply contract is subject to a satisfactory visit by the US aluminium company to MHM’s Australian operations in the near future.
4. The contract contains clauses that permit the contract counterparty to cancel the contract should information as to its identity become public prior to commencement of MHM’s US operations.
There was also a second 3B Announcement which shows the US Aluminium company has purchased 300,000 options at 10cents each with an exercise price of $1.
I guess the next announcement related to the first US contract would be out around mid-late November, that is about time they come to visit our full capacity plant in Geelong.
ReplyDeletejust to add that I think the first contract isn't with SSC, as we all know SSC and MHM signed joint feasibility agreement in 2009, so no point to not to disclosure their name publicly, imo.
ReplyDeletewhat's your thoughts?
@erichmj it certainly could be busy over the next 2 months.
ReplyDelete1. US site location confirmed
2. Grants and concessions released
3. Confirmation of site visit
4. Additional US contracts
5. Time frame/feasibility on US plant
@erichmj I agree with your comment that it would be strange for SSC to request non-disclosure now if they are the party to the agreement. Especially seeing as we have announced their interest previously.
ReplyDeleteHowever, If todays party is another Al Co and the agreement is for say 100k p.a. And SSC provides us with 90k p.a. (as per previous anns) then that would almost be enough for the lower end of the plant estimate (200 - 250k).
Therefore I don't think SSC is on board yet for this plant otherwise we would certainly know about it. Maybe MHM have decided to open Plant 1 in a different location and Plant 2 will be better suited/located closed to SSC's ops.
@erichmj Just wondering if you would be interested in doing a "guest post" on my blog using your charts. I always find them informative and I am sure the other (small number of) people who read my blog will to. Let me know what you think
ReplyDelete