AMMTEC Ltd ASX sells interest in Missoula based Purity Systems Inc (PSI) for US$25 million

AMMTEC Anounces that it has entered into a binding agreement for the sale of its 68.5% interest in Missoula, Montana resin based manufacturer Purity Systems Inc (PSI) for US$25 million.

The sale, which is conditional on legal and commercial due diligenece and pre-emptive rights being waived by PSI minority shareholders, will be conducted by 30th September 2008.

Ammtec took control of PSI when it acquired an additional 43.5% of the company from the founders in August 2007. Since then PSI has focused on further development of the resins and refinement of production methods to reduce production costs.

Commenting on the deal, Ammtec’s Managing Director Rod Smith confirmed that “Ammtec still firmly believes in the PSI resin technology, but considerable effort and working capital is still required as PSI continues development of the resins and focuses on marketing the product. Whereas the resin business is aligned to some extent to Ammtec and metallurgical testing isrequired to sure up the ion exchange processes, it is not core to our operations. PSI will need resources and funding to further commercialise the resin technology and this would have been detrimental to our EPS”.

Ammtec paid $4.3million for PSI, which was the carrying value at 30 June 2008. PSI incurred a loss of almost $600,000, Ammtec’s share being $400,000 for the FY08 and the recently released guidance for FY09 allowed for further consolidated losses of $1.5million for FY09.

Smith adds "even though resin technology is very well established in other sectors, its use in metallurgical processing is very new and therefore may require considerable financial commitment over an extended period to fully realise its commercial potential".

The newly appointed general manager of PSI, David Briggs and technical director Bruce Arnall will continue with PSI as part of the deal. The purchaser intends to continue with the development of PSI resins for the recovery of heavy metals from solution and will use Ammtec to provide metallurgical testwork to its development projects on normal commercial terms.

See the investor centre (ASX Anouncements) for further information or please contact:

Rod Smith, Managing Director
Phone (08) 9344 2416
Email: [email protected]

Sharyn Long, Company Secretary/CFO
Direct Phone (08) 9481 4420
Email: [email protected]

http://www.ammtec.com.au/news_article.php?nid=40

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