From The Advocate

Smelter interest intensifies

30 Dec, 2011 01:00 AM

INVESTOR interest in a major Tasmanian silicon smelter - possibly at Port Latta - appears to be growing.

Kingston-based MHM Metals last week told the ASX it was continuing to "engage numerous expressions of interest" for developing a silicon smelter in Tasmania.

"Work continues on site selection, power supply agreements and the supply of sufficient timber for production of charcoal needed for the process.

"Should this smelter materialise, it will be a very large undertaking for MHM and considerable progress is being made concerning investigation of financial and corporate structures that maximise shareholder benefits.

"MHM is actively engaged with corporate advisers in this regard."

Executive director Simon Wells yesterday declined to say if Port Latta was in the mix.

He said MHM was doing due diligence on more than one site.

It is not yet clear how many jobs such a smelter would create, or what the project cost would be.

"The most important priority for the company, when considering a possible project site, is the cost of delivered electricity."

Circular Head Mayor Daryl Quilliam said Port Latta would be a fantastic site for such a project and the State Government had done much work readying Port Latta for heavy industrial use.

The State Government's "jobs detective", Brenton Best, said: "I'll certainly be keeping a close eye on this exciting prospect, including the possibility of any processing, transport or value- adding opportunities across Braddon.

"While it sounds like quite early days, I'd welcome the opportunity to discuss those opportunities with MHM and hear the company's ideas about how the government can help to support its goals.

"We know Port Latta, in particular, is an important jewel in the crown for Tasmanian mining, offering excellent processing and transport opportunities."

In November, MHM managing director Frank Rogers said the company was continuing to develop its silica division, with emphasis on getting supply contracts to "underwrite" the Tasmanian development.

"Additionally, considerable effort has been devoted to securing silica reserves, in addition to those held by the company on the West Coast of Tasmania."

Link

December MHM COMPANY UPDATE

MHM COMPANY UPDATE

ASX Release – 22 December 2011

• Steady-state operations in Geelong, with salt slag recycling plant  operating to specification and AL80 plant in final commissioning phase
• 24-hour operations to commence in January
• Significant progress for completion of AL80 customs paperwork, delays unrelated to product performance
• US site announced in Russellville, KY with settlement scheduled for late Jan 2012
• Existing building to assist with project development costs and timeframes
• Considerable government grants and incentives to assist with project development
• Additional contract negotiations ongoing
• Financial modelling to be provided in due course
• Project finance favouring non-dilutionary mechanisms with roadshow planned to increase investor awareness and provide on-market support



AUSTRALIAN ALUMINIUM OPERATIONS UPDATE


Geelong salt slag recycling operations are performing to specification, with 
steady-state operations underway.  Alreco will operate on a two-shift until after 
the Christmas period, with three-shift 24-hour processing due to commence in 
January 2012.  The stockpile of partly-processed salt slag is expected to take 
three months to  reduce, and upon completion the processing of Alcoa’s 
160,000 tonne salt slag landfill will commence. 


MHM has made significant progress in the finalisation of customs paperwork 
relating to export of AL80, Alreco’s aluminium oxide product.  The delays are a 
bureaucratic matter and completely unrelated to the desire of the end user to 
purchase the product.  Impex Metals, Alreco’s contract partner for export of the 
material, had been assuming responsibility for managing finalisation of customs documentation.  However, 
Alreco has now assumed responsibility for this and has invested considerable resources to expedite the 
process.  The company remains highly confident of resolving the issue.  It should also be noted that Alreco 
has alternate avenues for selling the AL80 product, however the company remains mindful of maximising 
long term economic returns rather than short-term interests of sending the first shipment of product.  
Management remains committed to an expeditious resolution of this issue.



US ALUMINIUM OPERATIONS UPDATE


Site Selection


As recently announced, US subsidiary MHM Metals Corporation has negotiated to acquire a 115-acre 
landholding in Russellville, Kentucky. The site contains a number of existing buildings that should decrease 
the time and expense of plant construction.  The site is zoned correctly for its intended purpose.  
MHM will operate the site, and the entire US aluminium business under the name Alreco, as  occurs in 
Australia.  MHM has a pending US trademark for the Alreco name and the Alreco logo.
After assessing over 30 sites throughout the middle Tennessee and southern Kentucky region, the Russellville 
site is the preferred location for plant construction.  Factors that contributed to this include:



Identification of in excess of 350,000 tonnes per annum of salt slag and black dross within an 
economic radius of the plant site


• Large acreage providing Alreco the opportunity to grow and assimilate planned future technology developments
• Government support and incentives, not only financial but also the pro-business environment in Logan County
• A highly skilled local workforce and availability of workers
• Availability of rail, with a high-quality rail operator
• Availability of ample electricity supplies to the property for initial and future requirements


While MHM had initially favoured a site in southern Tennessee close to  two large salt slag producers, 
management made the strategic decision to locate further north.  The Russellville location remains an 
economic distance from these two secondary aluminium companies, but makes the facility less dependent on 
volumes produced by these two companies by introducing additional salt slag and black dross producers 
further north.  This strengthens MHM’s negotiating position for future contracts, with Alreco’s facility less 
reliant on any volume fluctuations from the two large producers on account of a changing business 
environment.  As most US secondary aluminium producers operate on short-term contracts, the supply of 
salt slag over the long term can fluctuate and as such it is in Alreco’s best interests to locate further north to 
access additional producers to lower supply volume risk over the long term.  


Government Grants and Incentives


The Kentucky Economic Development Finance Authority has approved Alreco for tax incentives of up to 
$825,000 through the Kentucky Business Investment program.  The performance-based incentive allows 
Alreco to keep a portion of its investment over the term of the agreement through corporate income tax 
credits and wage assessments by meeting job and investment targets.
The City of Russellville, Logan County and the Logan County Industrial Development Authority have approved 
a further $250,000 infrastructure grant to Alreco.  These funds will be paid against expenses incurred for 
development of site infrastructure including a rail spur, electrical transmission, water and gas lines and site 
preparation works up to the agreed $250,000 cap.


Contract Negotiations


Contract negotiations continue to progress in the United States, as MHM Metals Corp works to add additional 
processing volume to the three supply contracts already signed.  It is anticipated that the company will 
continue to secure contracts over the course of the plant construction and commissioning.  A number of 
companies have expressed keen interest in supporting MHM’s initiative however due to the nature of their 
operations do not wish to commit contracts until the plant is operational.  Given a cost competitive 
alternative to landfill, MHM can see no reason why any company would not choose the more environmentally 
responsible alternative of salt slag and black dross recycling.


US Income Projections


MHM will provide financial projections for the US operations in due course.  While internal financial models 
have been generated, these cannot be provided as they may lead to revealing the underlying contract 
counterparties.  Any identification of the contractual counterparties introduces short-term operational risks 
for these counterparties.  Financial forecasts will be disclosed following additional supply contracts.
Salt slag landfills / stockpiles


MHM continues to assess landfilled/stockpiled salt slag that may present opportunities for recycling, with 
ongoing discussions to assess viability.


Project Finance


Management continues to assess project-financing alternatives and believes a number of options will be 
available.  As always, management will have utmost regard for minimisation of shareholder dilution as we 
work to maximise Earnings Per Share and in turn the share price.  The timeframe for completion of project 
financing will follow finalisation of plant design, costing and scheduling which is expected to conclude over 
coming months.

Investor Roadshow


Management anticipates undertaking an Australian and international investor roadshow early in 2012 to 
inform and engage new investors with the MHM story and continue to support the share price wherever 
possible.  A number of broking houses are expressing an interest in publishing research on MHM, which is 
also expected to be highly beneficial for the company.




SILICA DIVISION UPDATE


MHM continues to make positive progress for the silica division, with an emphasis on obtaining supply 
contracts to underwrite the development of a Tasmanian silicon smelter.   Additionally, considerable effort 
has been devoted to securing silica reserves that may help fast-track production and offtake and lower costs 
of production.


MHM continues to engage numerous expressions of interest for development of a silicon smelter in 
Tasmania.  Work continues on site selection, power supply agreements and the supply of sufficient timber for 
production of charcoal needed for the process.


Should this smelter materialise it will be a very large undertaking for MHM, and considerable progress is 
being made concerning investigation of financial and corporate structures that maximise shareholder 
benefits.  MHM is actively engaged with corporate advisers in this regard.


EXPLORATION UPDATE


The Board of Directors has made a strategic decision to discontinue any further exploration activity, and is 
actively seeking divestment opportunities for exploration projects. This is a key decision for MHM, signifying 
an absolute move out of mineral exploration.  This does not include the silica assets, which continue to be 
retained but do not require any significant exploration or development at the present time.  Future resource 
development for silica will be contracted out, and as detailed above management is undertaking analysis of 
the best corporate and financial structure for the silica division.  


The board has given notice to the geological staff of the decision to cease all further exploration activity, and 
commenced a notice period for cessation of employment.  The decision to discontinue all further activity in 
this regard will save MHM approximately $300,000 per annum in salary payments alone.  Management 
expresses sincere gratitude to the geological team and wishes them all the best for their future endeavours.

sky business - ben mead interview

MHM US Site Selection and Incentives

MHM FIRST US SITE IN KENTUCKY WITH PROJECT INCENTIVES
ASX Release – 13 December 2011

· Preferred site is 115-acre industrial landholding in Russellville, Kentucky
· Existing buildings on site and property zoning to benefit timeframes and lower costs
· MHM has identified over 350,000 tonnes per annum of salt slag and black dross within an economic radius. Rail availability may further extend this economic distance 
· Plant further north than originally anticipated to increase number of potential customers
· Kentucky Business Investment Program preliminary approval for US$825,000 performance-based incentive
· Local government pledge of US$250,000 for infrastructure-related expenses
· Further benefits possible via Tennessee Valley Authority, both from Valley Investment Initiative and possible low interest financing through the Economic Development Funds facility
· Details of site location and incentives confirmed today in ceremony/media conference with Alreco, Ofce of the Governor of Kentucky, Mayor of Russellville and the Logan County Judge Executive



MHM Metals Limited (ASX:MHM) confirms the proposed property acquisition for construction of Alreco’s first 
US salt slag and black dross recycling facility including details of government grants and financial incentives.
The brownfields industrial site comprises 115 acres in Russellville, Kentucky and contains a number of 
existing buildings that is expected to decrease the time and expense of plant construction.  The site is zoned 
correctly for its intended purpose.  
After assessing over 30 sites throughout the middle Tennessee and southern Kentucky region, the Russellville 
site has become the preferred location for plant construction.  Factors that contributed to this include:
· Identification of in excess of 350,000 tonnes per annum of salt slag and black dross within an 
economic radius of the plant site
· The large acreage provides Alreco the opportunity to grow and assimilate planned future technology 
developments
· Government support and incentives, not only financial but also the pro-business environment in 
Logan County
· A highly skilled local workforce and availability of workers

· Availability of rail, with a high-quality rail operator
· Availability of ample electricity supplies to the property for initial and future requirements
While MHM had initially favoured a site in southern Tennessee close to two large salt slag producers, 
management made the strategic decision to locate further north.  The Russellville location remains an 
economic distance from these two secondary aluminium companies, but makes the facility less dependent on 
volumes produced by these two companies by introducing additional salt slag and black dross producers 
further north.  This strengthens MHM’s negotiating position for future contracts, with Alreco’s facility less 
reliant on any volume fluctuations from the two large producers on account of a changing business 
environment.  As most US secondary aluminium producers operate on short-term contracts, the supply of 
salt slag over the long term can fluctuate and as such it is in Alreco’s best interests to locate further north to 
access additional producers to lower supply volume risk over the long term.  
The Kentucky Economic Development Finance Authority has preliminarily approved Alreco for tax incentives 
of up to $825,000 through the Kentucky Business Investment program.  The performance-based incentive 
allows Alreco to keep a portion of its investment over the term of the agreement through corporate income 
tax credits and wage assessments by meeting job and investment targets.
The City of Russellville, Logan County and the Logan County Industrial Development Authority have approved 
a further $250,000 infrastructure grant to Alreco.  These funds will be paid against expenses incurred for 
development of site infrastructure including a rail spur, electrical transmission, water and gas lines and site 
preparation works up to the agreed $250,000 cap.
The details of the incentives were announced earlier today at a ceremony and media conference held by 
Alreco, the Ofce of the Governor of Kentucky, the Mayor of Russellville and the Logan County Judge 
Executive.  Simon Wells, executive director of MHM was in attendance and a copy of his speech follows:
Good Afternoon: Governor Beshear, Judge Chick, Mayor Stratton, distinguished guests, ladies and 
gentlemen.  It is a great pleasure to stand here before you today as we mark this significant 
development for the City of Russellville, Logan County, the Commonwealth of Kentucky and an event 
also of significance for the US aluminum industry.  
The introduction of Alreco’s aluminum by-product processing technology will be one of the most 
important developments for the US aluminum industry for decades.  Alreco’s new facility, which we 
plan to commence building in Russellville as soon as possible, will be the first US plant of its kind 
providing ‘closed-loop’ processing of aluminum salt slag and black dross, two industry by-products 
that have traditionally been disposed in landfills.
In short, what this means is that we turn a waste stream into valuable commodities with virtually no 
waste in our process.
The environmental and economic benefits of Alreco’s world-first technology will have a profoundly 
positive impact. You should expect that a large part of the US aluminum industry will be closely 
watching Alreco’s Russellville operations. This facility will be important to the entire aluminum 
industry and a jobs generator in the Commonwealth of Kentucky.
In these challenging economic times we must still strive to grow and do things better.  Better 
efciency, resourcefulness, making more with what we have.  This is central to Alreco’s approach to 
business. We have the solution to a long-standing industry problem of disposing salt slag and black 
dross in landfills. We will stop this waste and instead recover valuable commodities.
This has been the Holy Grail for the aluminum industry for decades. We are not only talking big about 
achieving this, but can point to our first plant south of Melbourne in Australia that is proving it. 
Alreco processes 100% of the salt slag produced by Australia’s aluminum industry with nothing going 
to landfill. One of our happy customers in Australia is Alcoa, the world’s largest aluminum producer.
We believe we can do the same in the United States and vastly improve industry practice. This is not 
being coerced by government regulation but being driven by industry initiative.
Alreco’s technology separates the salt cake and black dross into its individual components of 
aluminum metal, aluminum oxide, and a salt and potassium chloride blend.   All of these 
commodities have value and there are no residues or by-products that require disposal.  These

products can be used by industry saving resources, reducing energy consumption and improving the 
sustainability of the aluminum industry.
To date, Alreco has signed three supply contracts with aluminum companies that embrace our 
technology and share this vision for an end to landfill of salt cake and black dross.  There are a 
number of other companies that are also showing a keen interest with what we’re about to do at this 
site in Russellville.  
When all is said and done, I expect this facility will recycle up to 25% of the salt slag and black dross 
produced in the United States.  Alreco may build additional plants in the US in due course, as we 
aspire to a 100% target market, but this first plant here in Kentucky will be critical – this will be a US 
first, this will be the first plant in the world after our plant in Australia to prove the technology. This 
plant will be our showpiece.  This facility will set the benchmark, and show the rest of the industry 
that there is a better way. 
The other part of this operation is to not only process waste streams but also to progressively 
process landfilled salt cake and black dross to recover commodities that were previously disposed in 
landfills.  This will result in more environmental benefits, including substantially improving some 
sites that are experiencing problems with landfilled material. In Australia, Alcoa has permitted Alreco 
to reclaim a 350 million lb salt cake landfill.  The landfill will be processed over 5 years, and when 
we’re finished the site will be restored to pasture.  In the US, Alreco is assessing existing landfills in 
the region to endeavour to yield similar economic and environmental benefits.
While Alreco brings the technology, the community of Logan County and the Commonwealth of 
Kentucky are part of this enterprise with their people, skills and support industries that we will 
greatly rely on.  We look forward to a long and fruitful cooperation with the community, and the local 
and state governing bodies.
As you can no doubt sense, we are very optimistic about what we will achieve at this site. We believe 
this will be a ‘win-win-win’.  Alreco will provide aluminum producers access to a technology and 
processing that will greatly please their regulatory and community stakeholders.  The process is 
environmentally beneficial and cost competitive compared to landfill, and the community also 
prospers through the creation of direct and indirect jobs and investment.  With an anticipated 30 new 
jobs initially, there is good potential for both scale-up of operations and additional technologies that 
Alreco’s parent company has under development. 
Our executive team is based in Australia but will be regular visitors to Russellville.  Our VP of 
Operations, John Pugh will no doubt become known to you all around town as this is where he lives.  
John is from East Tennessee, so you may have trouble understanding his accent so we apologise for 
that in advance...  For further information please visit our website www.alrecousa.com.  We are 
extremely pleased with our choice in Russellville, Kentucky and look forward to working with you all.
MHM is working with engineering and environmental consultants to confirm a conservative timeframe for 
plant construction and commissioning.  The details of the analysis will be provided to the market as soon as 
available.  The anticipated processing capacity of the Russellville facility remains 200,000-250,000 tonnes 
per annum and potentially higher in due course.  The company expects to ramp up to capacity over time, with 
the installed capacity met as additional contracts are signed. MHM has budgeted US$25 million for 
construction, and expects to create at least 30 new jobs.


Link

---

From the press


Logan County plant’s technology a first for U.S. 


RUSSELLVILLE — An Australian company expects that its planned Logan County facility will reclaim about 25 percent of U.S. aluminum manufacturing waste that’s now going to landfills.

Simon Wells, executive director of MHM Metals, which will do business under the name Alreco, said production at the old ITW building on Ky. 79 should begin by the end of the first quarter of 2013.


This will be the first U.S. plant using technology proven in Australia that breaks down the waste products of aluminum manufacturing - aluminum saltcake and dross - and returns it to usable products, Wells said.


“We even expect to begin reclaiming some of those materials that have already gone to landfills,” he said.


Wells, Gov. Steve Beshear and a host of officials made the announcement Monday to a room filled with about 175 people.


Quoting an old Pointer Sisters tune, Russellville Mayor Mark Stratton said: “I’m so excited and I just can’t hide it; I’m about to lose control and I think I like it.”


Stratton and others at the announcement had good reason to be excited.


Alreco is the first new company to locate in Logan County in many years, and the 150,000-square-foot building, accompanied by more than 100 acres that Alreco is purchasing, has been vacant since 1991.


At least initially, the company will hire 30 people.


John Pugh, who will be the local plant manager, said hiring of a local management team will begin in about three months, about the same time construction is expected to begin.


“We are still working through some environmental (studies) of the property but don’t expect anything that will be a problem,” Wells said.


Production employees will be hired in early 2013, Pugh said.


The company will invest $25 million in the facility, but Wells hinted that it could consider bringing other processes to the site later.


He also predicts that the Logan County facility will draw attention from the aluminum industry as a whole and Logan County could potentially see spin-off or support industries locate here as a result.


Beshear said the announcement was so important that he wanted to spend the last day of his first term marking the occasion. Beshear was sworn in to a second term as governor during a private ceremony at midnight and was scheduled to repeat the oath publicly this afternoon.


There were many people in the crowd excited that the property will see new life, but probably none more than Ricky Thurston, who along with four others purchased the property about six years ago from ITW.


“We’ve had a couple of companies interested in the property but none followed through,” he said.


Thurston, who didn’t disclose his purchase price, said the deal ended up being a good investment for them.


State paperwork filed to get tax incentives lists the purchase price as $850,000. The company qualified for state and local wage assessment incentives for $825,000 over 10 years.


Former Logan Circuit Court Judge Bill Fuqua was at the announcement. Fuqua was on the county’s industrial board decades ago when it recruited ITW, a fastener company, to the county.


Fuqua said he hated to see the company vacate that building and several years later leave the county altogether. But he’s happy that the old building will once again be a productive part of Logan County’s industrial base.

US rolls out welcome mat for MHM Metals

IF you are offering to invest millions of dollars and provide some jobs in the US at the moment, the Americans are happy to roll out the red carpet.

Which is why Aussie company MHM Metals managed to get a standing ovation from Kentucky Governor Steve Beshear and a brace of officials this week after announcing it will buy a $25 million aluminium slag reprocessing facility in Russellville.

Even nicer than the applause was a little more than $US1 million in incentive grants with the potential for more to come as NHM starts work on a 250,000 tonne a year facility to process aluminium slag (known in the US as saltcake) and black dross.

At the moment, all of that waste material from aluminium processing goes to landfill but NHM's process, which is now working on a smaller scale in Geelong, can reprocess the waste into valuable aluminium, salt, potash and aluminium oxides.

Executive director Ben Mead said the new plant was close to no fewer than 36 aluminium processors, three of which have already signed agreements with MHM to process their waste.

Next to a railway line and on 46 hectares, the facility will have the capacity to treat around 25 per cent of all the waste produced in the US and will be cost-competitive with landfill dumping.

"There is a very pro-business environment in the US at the moment, particularly when you will provide jobs," said Ben.

"And closing the waste cycle on aluminium has always been sought by the industry, so companies like Alcoa have been tremendous supporters."

Initially, MHM was pushing a tolling model for the industry, under which the value of the products recycled in the process would be credited against processing costs.

However, a tipping model, in which MHM takes the risk of what percentages of metal and other products are in the slag, has also been popular because it is directly comparable to using landfill.

While MHM is confident in the superior efficiency of its processing and the need to adopt it as landfill becomes more difficult and expensive, it is a highly competitive business, which is why MHM has not disclosed the names or tonnages of its clients so that landfill operators can't work out which clients they are in danger of losing.

Apparently an abrupt waste lockout or significantly higher tipping fees are just one of the counter-weapons that might be used to discourage a change of business practices.

MHM shares were down more than 9 per cent yesterday on news that it will be investing some cash but it remains a speculative buy.

The company has plenty of challenges ahead but significant rewards if it can crack the US market and then move on to Canada and beyond.

November Top40