Environmental Clean Technologies Limited (ASX:ESI) (ECT or Company) provides the following status update on our India Business Development strategy, in addition to capital management activities.
India Business Development update
As outlined in previous announcements, the Company is pursuing a two-pronged strategy in India to advance its Coldry demonstration objective:
- India manufacturing strategy
- India project development
This approach is gaining significant traction in support of our commercialisation strategy. The following graphic illustrates the outcomes from our India activities to date.
With dramatic decreases in CAPEX per unit of capacity (capital intensity), as well as significant potential for EBITDA* per tonne of finished product – a balance of multiple influences – Coldry’s value proposition to Lignite owners and end users is significantly improved.
Higher EBITDA per tonne in combination with the decreased capital costs provide for attractive project returns.
ECT’s Managing Director Ashley Moore stated, “We feel confident that, with the momentum we are now generating with our India Manufacturing Strategy and Coldry project development efforts, we will have our first project underway before the end of 2014.”
India Manufacturing Strategy – Strategic Partnership
In our announcement on 3 March 2014 the Company outlined the selection process for the Engineering & Equipment providers (EPC Contractors) and it’s status. We are pleased to advise the evaluations have now concluded, producing outstanding results.
The Company will shortly commence commercial negotiations with the successful vendors to establish the future ‘ECT India’ equipment and construction development partnerships and advance the recently commenced detailed Feasibility Study for Neyveli Lignite Corporation (NLC) mentioned below. Further commentary on the successful participants may influence those discussions and so information will be limited to the following:
- Responses during the evaluation stage were of a very high calibre
- Capital cost, and the desired levels of accuracy of the estimates support rapid project development
- ECT sees high potential for the further development of Coldry via an integrated Power + Pre-Drying offering through collaboration with the EPC partners
- The Board are strongly encouraged by the results of the program so far
It is intended that ECT India be a subsidiary company of ECT. It will contain the corporate structures and partnerships to deliver Coldry plant & equipment and Coldry projects, at low Capex, to India and globally.
Neyveli Lignite Corporation (NLC)
The current project development focus is on the opportunity with India’s semi-government owned NLC.
The proposed project entails the development of a commercial-scale Coldry demonstration plant at NLC’s mine and power station site in Tamil Nadu, in southeast India.
The Company is extremely pleased with the current progress, having recently been given the green light by NLC to commence the Feasibility Study outlining the demonstration project and potential for commercial expansion, for presentation to them in several weeks. Following the Feasibility Study, logical next steps include decisions on suitable agreement structures and corporate and financing arrangements prior to the project progressing.
To place the above in context, ECT was first introduced to NLC in 2012, completing initial evaluation of lignite samples confirming its suitability for Coldry processing. The Company provided early-stage reports to NLC during that year, which laid the groundwork for subsequent activity, including a visit to ECT’s facilities by senior NLC staff members in Q4 2012.
In January 2013 NLC initiated a general tender / expression of interest (EOI) on a range of research and development fronts, one of which was titled “Dewatering of Lignite”. ECT submitted a proposal, which was evaluated and assessed as sufficient to proceed through further rounds of development and discussion. This culminated in a request by NLC for the Company to further refine its cost estimates, which initiated the Company’s India Manufacturing strategy.
Private Lignite Resource Owners
In addition to our progressing engagement with NLC, the Company has a series of active discussions with private sector lignite resource owners & power companies in India. These discussions are on-going and subject to confidentiality obligations, so the counterparties will not be identified until an appropriate stage of development is reached. However, progress is underway, with site visits together with our Manufacturing partners and advisors to undertake technical, logistics, application and other analyses in support of project development, planned for the near future.
The Company’s aim is to develop a pipeline of potential projects in India, following demonstration.
Matmor Opportunity Development
Running parallel to the above Coldry activities in India, the Company commenced discussions with significant mineral development parties interested in exploring the potential opportunity around our Matmor iron making technology.
It’s worth restating that the Matmor technology is dependant on Coldry scale-up for its front-end material processing, and as such its development will necessarily follow Coldry demonstration. In preparation for Matmor scale up, the Company has been engaged in ongoing fundamental testing and analysis of various metallic oxide media in combination with a range of lignite and sub-bituminous coals, with promising results.
ECT will shortly receive samples of iron ore and suitable lignite, drawn from India, for evaluation in Matmor technology.
The Company’s aim is to attract a joint venture partner in India to commercialise Matmor.
Capital Management Update
New Options Issue
The company has previously advised that it intends to seek shareholder approval for a new issue of listed Options, originally approved at the Company’s most recent AGM. To that end, ECT had also flagged its intent to call a General Meeting of shareholders to consider that issue program in the month of April. The Notice of Meeting is being prepared, and is expected to be ready to issue to shareholders in coming weeks, with the likely earliest possible meeting date in the month of May. The company will provide an update on this as early as possible.
For further information contact: Ashley Moore – Managing Director – [email protected]
* EBITDA – Earnings before interest, tax, depreciation and amortization.