Australia-based Pure Alumina has signed a binding agreement to purchase Canadian high-purity alumina (HPA) company Polar Sapphire for approximately $19.18m.

Under the agreement, Pure Alumina will acquire 100% of Polar’s outstanding equity for A$14.5m ($10.26m) in its shares and A$12.6m ($8.91m) in cash.

The acquisition is likely to accelerate Pure Alumina’s plan to start commercial production of HPA, graded at 99.999%, later this year.

The company intends to reach a production target of 5,000 tonnes per annum (tpa) of HPA production in three years.

HPA, which is used in coating battery separators for electric vehicles and LED lighting, will initially be sold in the synthetic sapphire markets.

“Once the initial 1,000tpa plant is established, strong forecast cash flows are expected to largely fund future expansions.”

Additionally, Pure Alumina will raise A$30m ($21.38m) in capital for the development of a 1,000tpa facility to expand HPA production as part of the condition precedent to the agreement.

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By GlobalData

To be located near Toronto, Canada, the plant will feature a modular design and is expected to be commissioned by early 2020.

Polar Sapphire uses a combination of pyrometallurgy and hydrometallurgy to produce HPA.

Pure Alumina managing director Martin McFarlane said: “Exceptionally low estimated capital and operating costs means, once the initial 1,000tpa plant is established, strong forecast cash flows are expected to largely fund future expansions.

“The low funding requirements of this acquisition and the initial HPA production facility is a significant advantage when compared to other HPA projects.”

The deal is scheduled to be completed in the third quarter this year.

It is also subject to completion of due diligence, regulatory and shareholder approvals, Pure Alumina’s planned sale of its gold assets and other standard procedures.