Carbon-conscious energy solutions company, Environmental Clean Technologies Ltd [ASX:ECT] has finally resumed trading in its shares after issuing a voluntary suspension in trading back in mid-March.
Crucially, the update with regards to their business in India was that ECT have, ‘concluded that NMDC will not be continuing and having formally withdrawn the offer to extend the MOU, ECT and NLCIL are now able to explore partnerships with other interested parties.’
The suspension was put in place while the acquisition of CDP Group’s new waste-to-energy (WTE) technology was underway. This morning, it was announced that this acquisition was now complete.
But such a lengthy trade suspension has caused ECT to re-emerge on the ASX well in the red, trading 53.84% down from their last closing price of 1.3 cents per share, to currently sit at just 0.6 cents per share.
While ECT regularly updated shareholders during the suspension, the news out of India appears to have disappointed investors.
ECT steps into liquid fuel market
As per the update on the ASX, the WTE technology can produce diesel fuel from waste products such as waste timber, end-of-life plastics and low-rank coal. It will allow the company to link existing projects to ‘new and higher margin sectors of the energy market’.
In particular, this WTE technology has the potential to work well with ECT’s own Coldry drying technology. For instance, putting waste products through the Coldry process can improve consistency and reaction efficiency of the WTE production, and harvest free waste heat for other uses — another environmental tick.
And perhaps more importantly — from an investing standpoint, at least — this pairing will allow Coldry to be exposed to the liquid fuel market, which has a higher market value than the international coal market they are currently in.
As such, the company intends to develop a Coldry-enabled CDP-WTE diesel fuel solution as part of the Latrobe Valley project.
ECT looking to right the ship with new tech
ECT Chairman Glenn Fozard is optimistic about the acquisition, saying ‘we are looking forward to a very exciting couple of months ahead’.
The purchase has put the company back $227,501, which was financed by a partial redraw of the Challenge Bricks and Roofing loan.
But this is nothing compared to what CDP have forked out in the WTE tech, according to Fozard:
‘[They] have invested upwards of AUD $10M…and would appear that they became the victim of growing too fast for their working capital to keep up…
‘…we were able to structure a deal that allowed us to acquire all the IP without substantial cost. This way, we still get to apply the technology to the Latrobe Valley project and also own the future commercialisation benefits.’
ECT also doesn’t need to defend much historical development costs, meaning they can quickly and dynamically engage in other projects that don’t or can’t use Coldry, as well.
Should you wait this one out?
ECT has gone through three years of planning and preparation for a potential strategic program in India with its Coldry and Matmor (iron making) technologies.
As per the announcement,
‘ECT will pursue current project opportunities for Coldry and Waste-to-Energy, directly with NLCIL.’
A formal meeting, which will evaluate the possibility of these project strategies, is yet to take place, and no date has been announced.
Perhaps this hurdle is the one that investors are waiting out.
Then again, a penny stock like this one does have the potential to soar at any kind of positive market attention, so perhaps it’s worth taking a closer look at this small-cap while the ECT share price is trading so low.
For Money Morning
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