Investor News

Shareholder Q&A

We recently held a Q&A on the stock market forum, Hot Copper.

Below is a transcription of the questions and answers.

Questions have been edited for readability.

Question 1:

1.1 India Project:

This point was previously made by @onlymoney on this forum in May 2018 (ref:

It was stated:

Another reason ECT may have stepped back to 49% ownership is due to the Foreign Direct Investment rules (FDI). This is the maximum amount of Foreign equity allowed in a coal/lignite PSU.

Can you please elaborate if the above influenced the decision to reduce our stake to 49% and if it didn’t, what was the main reason we reduced our stake in the project to 49%?

1.2 India Project:

From the update released to market September 11, 2017:

In his first act as the CMD of ECT India, Mr Moore has commenced the selection process for an additional resident Director, as well as staff to support the increased operational tempo. These appointments are expected to occur over the coming months.”.

Can you please provide an update on the appointment of an additional resident director of ECT India and the appointment of additional staff? It’s currently October 2018 so did you mean “12 months or more” when you stated “coming months? Please provide some clarity around your statement from September 2017.

1.3 Revenue Model:

It was stated that this would be provided to the market in July. It is now October, are you planning to release the revenue model in the near future? Without this information how do you believe prospective investors can put a value on the business and India project?


  1. Ownership structure: A number of reasons drove the 49:51 split. One of those was the FDI rules for a PSU. A significant influence in ECT agreeing to this change was the partners' agreement to fund the costs of the project to 150 Cr. Once we have completed the RCA we can elaborate on the details behind this decision.
  2. Resident Director: Santosh Agrawal has been appointed as the resident director in Dec 2017. Additional staff have been selected and we are awaiting finalisation of the RCA before we finalise employment contracts.
  3. Revenue model: the revenue model update was intended to be released just prior to the conclusion of the detailed agreement (RCA). This remains the intent. The delays of RCA signing have subsequently led to corresponding delays in the release of the revenue model.

Question 2:

MPA, MOU, TPA. Now we are a looking at an RCA?

Who is driving the changes to the agreement titles and why can’t ECT seem to lock down the name?


The changes are driven by the evolving and progressive nature of discussions with our partners in the context of this being a first-of-a-kind agreement, partnership and project for them. Feedback from various stakeholders and advisers also influence how various elements are referred to. Importantly, the substance and intent remain the same as originally communicated, regardless of a change in ‘label’.

We do note and recognise that this may seem confusing for shareholders and so we will do our best to connect the previously used labels with any new label.

Question 3:

Is the company in the position to claim R&D tax incentive given it's selling Coldry product and the Indian partners are financing the India project?

I believe the maximum rebate is $500k.

Do you claim for 3 different technologies; Coldry, Matmor, Hydromor. Is that correct?


  1. Yes, ECT continues to conduct eligible R&D activity. The R&D Tax Incentive guidelines provide for the sale of incidental output from R&D activity so long as the funds received are netted off against the eligible expenses (the feedstock rule).
  2. There is currently no maximum, however, a change to legislation is being proposed that caps the R&D cash refund to $4ma. At time of writing this, this proposed change hasn’t been approved.
  3. R&D activities related to Coldry, Matmor/Hydromor and COHgen are all eligible.

Question 4:

Assuming construction commences are there agreed timeframes for completion or can we expect this phase to be a drawn out for years as well?

Assuming the result of the R&D phase is compelling, will the commercial phase require a repeat timeframe similar to the present process to upgrade to the next output target or could we expect a less arduous path forward?


Following financial close, a project overview will be provided, including stages and targeted timelines.

Following successful R&D outcomes, planning for the commercial phase can be refined and timeframes outlined.

Our forthcoming update on the revenue model will provide broad guidance on targeted timelines.

Question 5:

Assuming that the demo stage is successful, will ECT have to contribute 49% of the cost of the commercial phase? Or will NLCIL & NMDC be funding it 50%/50%?


ECT is not required to fund any of the subsequent commercial phase and the JV is not the vehicle for housing commercial assets.

Question 7:

Can you please provide some more details on the Form DIR-12-11102018 signed 11/10/18?

Change in Directors?


This relates to a statutory filing of Glenn Fozard's ID proof for his Indian directorship.

Question 8:

Hi, will this (Research Collaboration Agreement) be signed in November or we should expect more delay?


Based on the information at hand, NLCIL will hold their board meeting in early November and have confirmed their intent to include the approval of the RCA.

Question 9:

I read that a few years ago a man came to an AGM you held, and he represented the Monash company. He came to give confidence that he would deposit 5 million dollars to ECT and he gave ECT a promise on paper. But he never gave that money to ECT.

If nothing is signed by the sunset date and nothing is signed before the AGM I assume the India delegates are going to come to the AGM to spread confidence that they will fulfil their agreement with ECT eventually.

What assurances are in place that if the India delegates do share confidence to shareholders that there will not be a repeat of the Monash failure?


We expect that the partners will attend the AGM once the RCA is approved and signed.

NLCIL and NMDC are publicly listed companies with publicly available information on their financial capacity. There is no comparison to any of the proposed partners of the past.

Question 10:

Given the $1.3 million contract previously announced, are you still entitled to an R&D rebate?


Yes. The eligibility criteria relate primarily to the activity related to the expenditure.

ECT also has a lot of accumulated losses which would need to be offset first before we lost the cash refund component of R&D tax incentive program.

Question 11:

11.1 New Boiler: You previously stated;

"Feasibility study started for demonstration biomass boiler at the High Volume Test Facility (HVTF) at Bacchus Marsh."

Will this boiler replace what's currently at Bacchus March? If so, what would its output be regarding how much volume the plant could sustain?

Can ECT get a grant for this new innovation to reduce our R&D spending cap?

How much money will this save per tonne of product?


We are looking at all grant options that may apply; however, the cost is part of our eligible R&D activity under the R&D tax incentive program. The saving to be gained from this boiler system will be defined by the feasibility study, yet to be completed.

11.2 Legal Review of RCA:

"Over the past 2 weeks, ECT Chairman, Glenn Fozard, together with CMD ECT India, Mr Ashley Moore, and Chief Operating Officer, Jim Blackburn have been in India to attend meetings with NLC India Limited (NLCIL), NMDC Limited (NMDC) and Indian Government representatives and to oversee the conclusion of the final compliance and legal review of the Research Collaboration Agreement"

So, has it concluded or not?

Are there any more reviews needed to be completed now that the RCA review has been completed?

Will we know if the RCA updates have been agreed upon prior to the Board meeting?


  1. Submitted to NLCIL.
  2. NLCIL have not added any further requirements ahead of the Board meeting in early November. If there are any material changes to the RCA, they will be communicated.

11.3 Project promotion: Regarding the promotion activities, has ECT been approached by funds or Instos seeking investment?

Answer: Any discussions of this nature would likely be confidential until their conclusion after which it would be announced to the market.

11.4 ELF: Is it possible for ECT Finance to set up an Escrow facility for those current shareholders willing to offload 5million plus shares for these new investors at an agreed price - thus reducing the unnecessary volume spikes?

Answer: The ASX market and not ECTF would be the mechanism to allow your hypothetical event to occur.

11.5 Victorian contract: Reading the 9th Aug. supply contact in Victoria it states:

"5-year supply contract for Coldry solid fuel to support delivery of process steam via an existing solid fuel boiler system",  "Lead-in analysis indicates we may be able to deliver potential savings of 15% per annum for our client"

I read the 9th Aug announcement as a straight Coldry supply to solid fuel boiler. Was this announcement always about mixing Coldry with biomass? If not, will this increase the savings for the client?

Answer: The system is intended to run on 100% Coldry but can also continue to take solid fuel biomass.

11.6 Activated carbon market: Also can we hear more about this activated carbon market that was mentioned a while ago?

Answer: Your question is not specific enough and I'm afraid we don’t have enough time to outline a response during this Q&A session.

Question 12:

On a typical design and construct project, the budget for drawings is between 5% to 20% ($1.8 million to $7.2 million) of the total project. I would expect that the costs for a first of kind project the design would be closer to the upper end of the spectrum.

My question is; has any progress been made on the issued for construction drawings under the disciplines: Structural, Mechanical, Piping, Electrical and Instrumentation. If there are no drawings, meaningful work cannot commence until their acceptance by the Joint Venture (JV).

In earlier announcements mention was made of an electrical sub-station, is the sub-station within the scope of the ECT Project? I'd imagine if the sub-station is not ready the ECT plants won't be operating so, therefore, ECT would take a keen interest in the substations construction.

Has the construction company nominated persons who are acceptable to the JV for the position of Project Manager?


  1. The detailed drawings are part of the project and therefore require the parties to reach financial close prior to commencement.
  2. The substation is part of the project.
  3. Following financial close, a detailed overview of the project will be provided, including stages and targeted timelines.

Question 13:

Is the aim of the new plant still to prove Coldry commercial? Are you able to give us the rough output for the new plant if it is just making coal pellets without iron?

Will the revenue model and timeline be released before the AGM?

Has there been any new interest from our recent presentations?


  1. Our Coldry R&D plan, as approved under the advance finding, allows for the small-scale demonstration (~60ktpa) in India, followed by a large-scale demonstration (~170ktpa) in Australia. This provides maximum flexibility to the Company in assessing the appropriate commercialisation pathway.
  2. The revenue model will be released before the AGM.
  3. Several parties sought further information following our recent presentation in Dubai.