Environmental Clean Technologies Limited (ECT) (ASX:ESI) announces today that the Joint Venture Agreement (JVA) dated 1 April 2011 between ECT and Tincom Australia Pty Ltd (Tincom) has been terminated. The JVA was the formal agreement to establish a joint venture (JV) between ECT on the one hand, and Tincom and its Vietnamese parent company Thang Long Investment and Commercial Joint Stock Company (Thang Long) on the other hand, which was foreshadowed in announcements made by ECT since information concerning the proposal was first made public on 18 November 2008. The objective of the JV was to establish a 2MTPA Coldry manufacturing plant at Loy Yang, Victoria.
The JVA terminated today. Two of the conditions precedent (provision of further funding and a formal opinion on the Thang Long Parent Company Guarantee) were not fulfilled. In addition, a provision of the JVA requiring the entering into a Design for Tender agreement with consulting engineers Arup by 30 April 2011 (extended to 30 May 2011) was not satisfied. The associated Coldry Technology Licence Agreement between ECT Coldry Pty Ltd and the JV company, Victoria Coldry Pty Ltd, has also lapsed in accordance with its terms because the conditions precedent under the JVA have not been satisfied.
The Directors of ECT have decided it is not in the best interests of ECT and its shareholders to further extend the time for satisfaction of these fundamental conditions of the JVA. Acting ECT Chairman John Hutchinson said today that ECT’s focus would now shift to other opportunities for the commercialisation of the Coldry technology. “While Tincom have demonstrated their confidence in the marketability of Coldry, the Directors of ECT no longer have confidence in Tincom’s ability to deliver funding or the technical requirements for the Loy Yang Project. ECT had the option to further extend the time for satisfaction of conditions under the Joint Venture Agreement but has decided not to do so. It is now over 2 years since we commenced discussions with Tincom (early 2009), and progress towards establishment of the project has been unacceptably slow. By contrast, other opportunities being progressed by ECT in parallel show promise of much more rapid implementation. For example, as announced on 25 May, China Datang Overseas Investment, one of China’s largest power companies, have entered into an agreement to test burn Coldry in one of their power stations, and this testing, which we expect to yield concrete evidence of the viability of Coldry, will commence in September. Datang and a number of other global scale power companies have expressed interest in the project, and ECT expects to engage financial advisers to manage project development during June 2011. While it is unfortunate that the joint venture with Thang Long has been terminated, we are excited by these other opportunities and believe pursuing them will ultimately enhance shareholder value more than the Tincom proposal. The Directors nevertheless thank Tincom for their efforts during the last two years.”
Chief Executive Kos Galtos said, “While it is disappointing that the JVA has terminated, the opportunities for establishment of a commercial scale project using the Coldry technology are stronger now than they have ever been before. During the period of engagement with Tincom, ECT continued actively to work on the commercialisation of Coldry, and many aspects of the project were progressed, especially design and construction requirements. The end of the JV frees up ECT to explore a number of other promising commercial opportunities, directly with large Asian coal buyers with a history of investment in mine and transport development that have emerged in the last two years.”
“It is our intention to move forward with our Victorian Coldry Project at Loy Yang by directly engaging Arup to produce the Design for Tender, and for McConnell Dowell to price the construction of a commercial scale Coldry facility.”
For Further Information Contact:
Kos Galtos – Chief Executive +61 3 9909 7684 or [email protected]