Response to ASX Appendix 4C Query

 

Perth (Australia), Greer (South Carolina, US) – 18 February 2020: Alexium International Group Limited (ASX: AJX) has released the following Response to ASX Appendix 4C Query:

18 February 2020
Ms Anjuli Sinniah Senior Advisor
Listings Compliance (Perth)

By email: ListingsCompliancePerth@asx.com.au

Dear Ms Sinniah

Response to Appendix 4C Query

The Company’s recent successful $A22.3m capital raising restructured and strengthened the Company’s balance sheet to eliminate expensive debt and provided working capital to support strategic growth. In addition, as a result of the raise, the Company has a new cornerstone strategic investor, new long-term institutional and sophisticated investors and the resources to support faster execution to transition AJX to a high growth performance chemical company.

Further to your letter dated 13 February 2020, the Company provides the following responses to the queries raised therein.

        1. Does AJX expect that it will continue to have negative operating cash flows for the time being and, if not, why not?

AJX completed a capital raise in the month of January (in accordance with the Prospectus issued on 27 November 2019) that has added approximately U$3.7M (A$5.7M) cash in the current quarter before capital raising costs. As part of the capital raise, the Company repaid its previous debt facility and entered into a new convertible note with significantly reduced interest costs.

In addition, AJX has had consistent cash inflows from sale of products in each recent quarter’s between U$1.8m and U$2.1m.

These two inflows less the estimated cash outflows reported on the 4C will increase cash between U$2.6m and U$2.9m before capital raising costs placing our end cash balance around U$5.1m to U$5.4m by the end of the quarter before capital raising costs, interest payments and capitalized investments. It is also noted that U$1.7m of estimated cash outflows is for raw material purchases and manufacturing costs which are variable costs depending on our expected sales which is managed through a Sales and Operating Planning process.

Accordingly, the Directors are satisfied that the Company will not have negative net cash flows at the end of the current quarter.

          2. Has AJX taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

Please refer to our response to question 1 above.

          3. Does AJX expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Please refer to our response to question 1 above.

          4. Please confirm that AJX is complying with Listing Rule 3.1 and that there is no information that should be given to ASX about its financial condition under that rule that has not already been released to the market.

The Directors are satisfied that the Company is in compliance with Listing Rule 3.1 above and makes reference to the following announcements:

 • 27 November 2019 – Issue of Prospectus
  11 December 2019 – Letter to Shareholders from the Chair
 • 17 January 2020 – Repayment of GPB Debt & New Convertible Note with CCP
  31 January 2020 – Quarterly 4C

As mentioned above, the 4C form only forecasts outflows and does not give consideration for inflows. AJX has consistently completely the 4C with the most up to date information and has been consistent with its estimates.

          5. Please confirm that AJX’s responses to the questions above have been authorised and approved in accordance with its published continuous disclosure policy or otherwise by its board or an officer of AJX with delegated authority from the board to respond to ASX on disclosure matters.

AJX’s responses to the questions above have been authorised and approved by the Board of AJX. 

Yours faithfully

Maja McGuire
Company Secretary
FOR AND ON BEHALF OF Alexium International Group Ltd