FYI | Nov 13 2019
This story features ENVIRONMENTAL CLEAN TECHNOLOGIES LIMITED. For more info SHARE ANALYSIS: ECT
Environmental Clean Technologies is moving beyond the initial Indian disappointment.
By Pitt Street Research
ECT has been built on a ‘clean coal’ technology
The company’s leading technology, called ‘Coldry’, allows the transformation of low-grade brown coal into a product with qualities closer to high-grade black coal.
A related technology called Matmor allows primary iron to be made using lignite instead of coking coal. Environmental Clean Technologies ((ECT)) has recently started to move into the waste-to-energy space with a technology called CDP-WTE.
Currently addressing later- stage cash flows
ECT from 2015 to 2019 collaborated with two Indian semi-state-owned companies on developing Coldry and Matmor plants in India, however this collaboration failed to yield commercial results before ECT withdrew.
ECT is currently executing on an alternate value creation strategy it outlined in September 2019 which involves expanding and upgrading the Bacchus Marsh Coldry facility for end-products beyond coal in addition to the company’s move into the waste-to-energy sector. This may include other acquisitions currently being discussed internally.
We think the move towards later-stage commercialisation of cleantech opportunities will be welcomed by new and old shareholders. There also remains the potential for ECT to obtain new public or private sector backing to develop Matmor plants in India.
Now a player in the waste-to-energy space
Recently ECT has moved to into the waste-to-energy space, where there is potentially a shorter lead-time to commercialisation and higher finished product margins.
In June 2019 the company announced that it had acquired a waste-to-energy technology. The technology, called CDP-WTE, has the potential to provide a low-cost way to process wood, end of life plastics and other wastes into diesel fuel, particularly when the feedstock is combined with fuel produced from the Coldry technology.
ECT has also recently diversified its exposure to the solid fuel market with the inclusion of recycled and waste wood products.
The current rights issue potentially funds for the company to cash flow break even
ECT’s rights issue, announced in October 2019, will raise a minimum $2.75m and up to $7.45m. 1.55 new shares at 0.1 cent per share will be offered for everyone 1 share held.
For every three shares taken up ECT will issue a three-year option exercisable at 0.3 cents. This raising can potentially fund the company to cash flow break even, should the September 2019 strategy be successfully executed.
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