Environmental Clean Tech Share Price Up on News of Bond Strategy
At time of writing, the share price of Environmental Clean Technologies Ltd [ASX:ECT] is up 9.09%, trading at 1.2 cents per share.
All in all it has been a good 12 months for the stock, with significant volatility:
The latest news out of the company is that it has finalised its project bond proposal, so that it can deliver on its obligations under the Research Collaboration Agreement for its India project.
Project bond provides flexibility for Environmental Clean Tech
The company is on the cusp of advancing its two primary technologies, called Coldry and Matmor, via the ‘largest ever research and development (R&D) collaboration between Australia and India.’
Coldry is a low-cost method to dewater brown coal and transform it into a Black Coal Equivalent (BCE) in the form of pellets. Coldry pellets have equal or superior energy value to many black coals and produce lower CO2 emissions than raw lignite.
Matmor on the other hand, is a process that allows the user to recover iron from waste streams such as millscale and nickel tailings.
According to the announcement, the bond is surety for Environmental Clean Tech’s delivery of services in conjunction with its project partners NLC India Limited and NMDC Limited.
As per the announcement:
‘NLC India Limited (NLCIL) and NMDC Limited (NMDC) will each contribute half of the capital cost, being ~AUD30 million (~AUD15 million each), plus 51% of the operating cost, being ~AUD2.55 million (~AUD1.275 million each). In addition to the intellectual property, ECT is required to provide a bond to the value of 10% of the project, being ~AUD3.5 million, and contribute 49% of the project-specific operational funding, being ~AUD2.45 million, in addition to leadership of the project engineering and management.’
The bond is thus a means of ensuring the project will go ahead through to the commissioning phase without the need to raise capital.
ECT Chairman, Glenn Fozard underlines how: ‘We believe this flexible, equity-backed guarantee, strikes the ideal balance for our shareholders and project partners. We will be talking to our project partners as we proceed towards the commencement of the capital phase, to agree upon the appropriate security mix and how this can be managed across the different stages of the project.’
What’s next for Environmental Clean Tech?
The company has provided a useful guide as to how it will proceed to signing and financial close:
With intellectual property that holds promise for reducing both CO2 emissions and improving the efficiency of industrial processes, the future could be bright for Environmental Clean Tech.
Coal accounts for around 56% of India’s electricity capacity.
It also has ambitions to become a major steel manufacturer.
For Money Morning