Highlights

29 April 2022: Environmental Clean Technologies Limited (ASX: ECT) (ECT or Company) is pleased to provide the following update and Appendix 4C for the quarter ending 31 March 2022.

Bacchus Marsh COLDry Demonstration Plant (“Bacchus Marsh Project”) 

The Company announced a significant step forward with the commissioning program for Phase 1 of the Bacchus Marsh COLDry Demonstration Project.

The engineering team has identified significant potential process efficiency gains which centres on a new, five-pass conditioning system. If confirmed, the efficiency gain would produce substantial CAPEX and OPEX savings across Phase 1 and Phase 2 of the Bacchus Marsh Project and flow-on benefits for the planned Latrobe Valley project.

Project partner discussions progressed over the quarter, culminating in the GrapheneX JV announced subsequent to the end of the quarter. The company continues discussions with other partners and will update the market as and when they become certain.

Group Chief Engineer Ashley Moore commented:

“The engineering, research and project management teams have developed a deep understanding of low-temperature drying and substrate plasticisation and densification, with the Bacchus Marsh Project representing the culmination of that knowledge and experience in action. Phase 1 of the Bacchus Marsh Project has seen significant advancements to the milling, mixing, extruding and, most notably, the conditioning of the pellets, which targets performance improvements of 3-10x better than the previous pilot-scale design.”

Chairman, Jason Marinko, commented:

“I am pleased to see the Bacchus Marsh project progress to a key milestone this quarter, as planned. This is despite confronting significant industry-wide labour shortages, supply chain delays and COVID related impacts on the workforce. The Board of ECT is proud of the team’s commitment to this achievement and how the demonstrable progress is leading to greater engagement and opportunities with commercial partners.”

Latrobe Valley Net Zero Emission Hydrogen Refinery (“Latrobe Valley Project”)

On 22 February 2022, the Company announced the property purchase settlement adjacent to the Yallourn power station and mine complex.

The site has been acquired to host the deployment of the Company’s proposed headline Latrobe Valley Net Zero Emission hydrogen refinery project, which aims to deliver:

The Company signed a binding purchase agreement with the vendor in late November 2021, with cash and share payments completing the settlement of the land acquisition. Covering an area of 4.2Ha, the acquisition enables the Company to progress its full feasibility study for the Latrobe Valley Project. In addition, the property is strategically located adjacent to the T15/16 upgrade program that is being co-developed by ECT and the owner of the Yallourn mine and power station, Energy Australia.

The Company engaged engineering firm GHD to commence the approvals planning process, covering EPA works approvals and licensing and local government planning application requirements. Additionally, GHD has undertaken process modelling activities in preparation for engineering development works. This work package has been completed, and actions as a result are underway.

Update on Status of Grant Application

The Company previously submitted an application under the Federal Governments Clean Hydrogen Industrial Hubs program in support of its Headline Project, with the outcome initially expected to be announced during March 2022. The results will now be announced sometime after the 21 May Federal Election.

The Company continues to investigate opportunities to access government support and industry partnerships.

Subsequent to the End of the Period

During April, ECT announced the signing of a binding Joint Venture Agreement (JVA) with GrapheneX. This agreement supports the rollout of Phase 2 of ECT’s Bacchus Marsh Project to deliver a world-first demonstration of the Company’s proposed commercial-scale net-zero hydrogen and electricity production. To support the rollout of Phase 2, ECT also announced the completion of a $5m capital raising to fund its commitment to the JVA and provide additional working capital.

Corporate & Finance 

During the December 2021 quarter, the Company established a $1.968M low-interest R&D loan with Invest Victoria, with $1.18M drawn in December. The remaining balance on this facility of $788K was drawdown during the March 2022 quarter.

Following the Company’s decision to divest the Wood247 pilot retail business and focus on its Bacchus Marsh and Latrobe Valley Projects, the sale of Wood247 occurred in April 2022.

Further to the acceptance of the Company’s first HydroMOR patent application in the jurisdiction of Russia, notification has been received confirming the acceptance of the patent in the European Union. Subsequent to the period, the Company received confirmation that the HydroMOR patent had been issued in Russia.

The HydroMOR process offers an alternative to conventional CO2-intensive blast furnace steelmaking, enabling the use of lower-cost, abundant lignite in place of higher-cost coking coal, delivering a lower emission, lower cost, metal production process. The Company remains committed to the potential industrial applications for this technology.

International Patent Application Status - HydroMOR 

Key aspects of IP protection include:

The table below outlines the status of the various international patent applications for HydroMOR.

Case Ref. CountryCase Status 
35519103 India Response to Exam Report Filed 
35526602 Australia Exam requested 
35526603 Canada Application filed 
35526604 China Response to Exam Report Filed 
35526605 European Patent Office Accepted 
35526606 Russian Federation Issued 
35526607 United States of America Examination report received 
35527133 Indonesia Response to Exam Report Filed 
35540529 Hong Kong Application filed 

ESG Reporting

ECT continues to be assessed by, and report to, the ESG framework under the World Economic Forum (“WEF”) Environment, Social and Governance (ESG Metrics).

The Company has decided to take a best-of-peer approach to ESG and, over the reporting period, has initiated or progressed key developments in support of our continued commitment to the WEF Pillars of Governance, Planet, People and Prosperity, and associated 21 core ESG metrics. The ESG Dashboard below (provided by ESG technology partner, Socialsuite) provides a snapshot of the Company’s progress from the end of the previous quarter to 31 March 2022.

Full details of the quarter’s ESG progress and achievements are detailed in the Company’s report, ESG Highlights Q3FY22, which can also be found on the Company’s ESG web page: www.ectltd.com.au/esg

Commentary to Appendix 4C

Approximately $1.7M was spent on property, plant and equipment during the quarter. Of this, $640K was the cash portion for the property settlement at Yallourn (see announcement 23 February 2022), including $95K for GST, which will be refunded in April 2022. The remaining expenditure of $1.06M (prior quarter $594K) is related to the COLDry Project. This increase is due mainly to capital expenditure on electrical works that have been undertaken now that the primary process equipment has been installed.

Product manufacturing and operating costs were reduced by $165K compared to the prior quarter. These costs are associated with the Wood247 business, which was being readied for sale (see announcement 17 January 2022). Receipts from customers are also reduced during the sale process. Sale proceeds of $66K have been received in April 2022, which are not included in the Appendix 4C.

The prior quarter included cash receipts from government grants and tax incentives of approximately $2M. This was the receipt from the ATO following the lodgement of the Company’s 2021/22 income tax return, which included the R & D tax incentive. As such, there was no corresponding receipt in the current quarter. $1.3M of these funds was used to repay the 2021/22 R & D loan facility.

The Company has a loan facility with Invest Victoria of $1.968M, of which $1.18M was drawn down during the quarter ended 31 December 2021. In the quarter ended 31 March 2022, a further $788K was drawn down, which took the facility to its limit.

During the quarter, the Company received payments totalling $650K which were the repayment of 3 Equity Lending Facilities (refer to ASX announcement 8 February 2022).

Payments of $68K to related parties of the entity include payments of directors’ fees and payments to the Company’s full-time executive director.

// END //

This announcement is authorised for release to the ASX by the Board.

For further information, please contact:

Highlights during quarter

Projects

Finance

Corporate

Highlights subsequent to quarter

Projects

Other

Quarterly Activities Overview

1. Coldry Commercial Demonstration Plant (“Coldry Project") 

Following the Board restructure in September 2021, the new Board then undertook a strategic review to capitalise on the increasing government and industry interest in net zero-emission technologies. Subsequently, at the end of the quarter in October 2021, the Company announced a renewed focus on formalising project partner relationships. As part of the review, the Board also decided to pause works on Phase Two of the Project to enable ECT to better direct capital towards the accelerated and large-scale commercialisation of its proprietary Coldry technology and maximise shareholder value in this fast-evolving sector.

Despite the impact of COVID-19 restrictions in Victoria during the quarter, ECT was able to advance construction activities at its Coldry Project in Bacchus Marsh, with construction progressing, on schedule for commissioning in Q1 CY22.

The Coldry technology is positioned to play an important role in transitioning to a net zero-emission industrial energy sector and provides technology support to associated government policy development. In addition, the pending completion of this facility will enable the Company to demonstrate its unique, low cost, zero-emission Coldry lignite drying technology at a commercial scale to potential downstream partners and support the development of the larger proposed net-zero hydrogen refinery project in Victoria’s Latrobe Valley. 

Managing Director Glenn Fozard commented: 

“The company is being supported by a dedicated group of staff at our Bacchus Marsh site whom are performing well in the face of significant COVID related headwinds. The current COVID situation, along with supply chain delays and a very tight skilled labour market are presenting serious challenges which are being more than met by our construction and project management team. It’s exciting to see our plant on track for commissioning and we look forward to demonstrating production of our first Coldry pellets from this assembly over the coming months.”

A detailed update will be posted to the Company’s website shortly.

2. Net Zero Emission Hydrogen Refinery (“Headline Project”)

As a result of the strategic review undertaken by the Board in 2021, ECT started full feasibility for a Net Zero Emission Hydrogen Project, using the Federal Government’s H2 Hub Implementation grant as the focal point.

ECT received support from potential partners and stakeholders including Victoria State Government departments, Energy Australia, Coregas, Latrobe City and Federation University, and submitted the grant application jointly with GrapheneX on the 22nd of November 2021.

ECT continued to develop the feasibility program of the Headline Project which also saw the company complete the purchase of a suitable project site at Yallourn, Victoria, in close proximity to Energy Australia’s Yallourn power station and lignite mine as well as the T15/16 outfeed lignite terminal that ECT is co-developing with Energy Australia.

Subsequent to the quarter, the company engaged engineering firm GHD to start the approvals planning process, covering EPA works approvals and licensing, as well as local government planning application requirements. Additionally, GHD will commence process modelling activities in preparation for engineering development works.

ECT will now distribute the project feasibility pack amongst potential debt providers, project and equity partners, as well as investment market professionals.

More broadly, bipartisan support from state and federal governments to develop Australia’s domestic and export hydrogen capability continues to gain momentum with a range of initiatives intended to position Australia as a future leader in hydrogen exports. ECT’s participation in the Gippsland Region Hydrogen Cluster (GRHC), as well as its membership of the Heavy Industry Low-carbon Transition Cooperative Research Centre (HILT-CRC) and the Future Energy Exports Cooperative Research Centre (FEnEx-CRC), increases industry and government awareness of the Company’s net zero-emission technologies. In addition, it has the potential to open numerous downstream opportunities for ECT.

The Company continues to investigate opportunities to access government support and industry partnerships.

Group Engineer, Ashley Moore commented: 

“Following the submission to Government of our grant proposal, we performed detailed assessment of the project against ‘National Greenhouse and Energy Reporting’ (NGER) protocols. This resulted in a net-negative CO2 emissions position, which is a great place to build from. We expect to see further improvement in the emissions profile once the benefits of AgChar on soil health, productivity and atmospheric carbon absorption are considered. ECT is very excited about this project and its potential.” 

3. Corporate & Finance 

As part of the corporate restructure undertaken in the prior quarter, ECT appointed new Joint Company Secretaries on the 13th of October 2021. Mr Arron Canicais and Mr Kian Tan of Small Cap Corporate Pty Ltd were appointed as joint Company Secretaries and replaced Mr Adam Giles, who the Company thanks for his service in this role.

In late December, the Company held their Annual General Meeting, which saw all 22 resolutions passed at greater than 95% votes in support.

During the quarter, the Company established an AU$1.968M low-interest R&D loan with InvestVictoria with AU$1.18M drawn in December. The remaining undrawn balance on this facility is AU$788,000 and is scheduled to be drawn in late February. The Company subsequently finished the quarter in a strong position of $2.13M with focus shifting from equipment purchase to equipment installation at Bacchus Marsh.

Subsequent to the quarter, the Company made the decision to divest the Wood247 pilot retail business and focus on its headline projects in Bacchus Marsh and Yallorn. The details and background for this decision are outlined in the ASX announcement released on 17 January 2022.

In late January, the Company also received notification of the granting of its first HydroMOR patent in the jurisdiction of Russia, which is due to be issued shortly. The HydroMOR process offers an alternative to conventional CO2-intensive blast furnace steelmaking, enabling the use of lower-cost, abundant lignite in place of higher-cost coking coal, delivering a lower emission, lower cost, metal production process. The Company remains excited about the potential industrial applications for this technology.

The table below outlines the status of the various international patent applications for HydroMOR.

International Patent Application Status - HydroMOR 

Case Ref.CountryCase Status
35519103 India Response to Exam Report Filed 
35526602 Australia Exam requested 
35526603 Canada Application filed 
35526604 China Response to Exam Report Filed 
35526605 European Patent Office Response to Exam Report Filed 
35526606 Russian Federation Accepted 
35526607 United States of America Examination report received 
35527133 Indonesia Response to Exam Report Filed 
35540529 Hong Kong Application filed 

4. ESG Reporting

ECT continues to be assessed by, and report to, the ESG framework under the World Economic Forum (“WEF”) Environment, Social and Governance (ESG Metrics).

The Company has decided to take a best-of-peer approach to ESG and over the reporting period has initiated the following key developments in support of our continued commitment to the WEF Pillars of Governance, Planet, People and Prosperity, and associated 21 core ESG metrics: 

  1. ECT has engaged a dedicated ESG Advisor.
  2. ECT has set a net-zero target (Scope 1 and 2 Greenhouse Gas (GHG) emissions) for ECT’s corporate offices (plus limited Scope 3 emissions to include staff land and air travel, and waste), with a target completion date of the end of the current financial year (i.e., FY22).
  3. To ensure consistency with larger potential partners, ECT is investigating early disclosure of climate risks in alignment with the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD), as it relates to both physical and transition climate risks (and opportunities). In parallel, the Company is continuing to embed key ESG risks measures (especially climate-related risks and opportunities) into the Company’s Enterprise Risk Management (“ERM”) process.

The ESG Dashboard below (provided by ESG technology partner, Socialsuite) provides a snapshot of the Company’s progress from the end of the previous quarter to 31 December 2021.

Full details of the quarter’s ESG progress and achievements are detailed in the Company’s report, ESG Highlights Q2FY22, which can also be found on the Company’s ESG web page: www.ectltd.com.au/esg

Managing Director Glenn Fozard commented: 

“Given our core business is the delivery of net-zero emissions solutions, we believe it is vital for us to maintain the highest standard practicable for our peer group. To this end, we aim to align our GHG and TCFD to ASX300 standards, as we see this as an inevitable compliance standard into the future. This also helps our larger partners better understand how ECT’s principles, values, and enterprise risk management aligns with their own, through transparent and regular disclosure.” 

“Against the market’s claims of ‘Net Zero in 2030 or 2050’, ECT lives the mantra of ‘Net Zero Now’, and as such, aims to lead our peers towards a more sustainable future in business and industry.” 

5. Commentary to Appendix 4C

Approximately $594K (prior quarter $943K) was spent on the Coldry Project during the quarter, including property, plant and equipment purchases, as the Company nears the completion of Phase 1 of the Coldry demonstration plant. This figure is down on the prior quarter as the focus turned to installing equipment already purchased in prior quarters. 

Research and development costs were significantly down on the prior quarter by $485K as the preceding quarter included the cost to secure coal supply from EnergyAustralia at the Yallourn coal mine. 

The prior quarter included cash receipts of $3M from the issue of promissory notes, the majority of which have been converted to equity following shareholder approval which was obtained at the Company’s AGM in December 2021. 

The Company received its 2020/21 income tax return refund, which included the R & D tax incentive of $1.9M. Approximately $1.3M of this was used to repay the Company’s R & D loan facility. 

The Company has a loan facility with Invest Victoria of $1.968M, of which $1.18M was drawn down in the December 2021 quarter. Undrawn loan facilities are $788K. The ability to draw down these funds is dependent on the Company demonstrating that its expected R & D incentive for the year ended 30 June 2022 will be greater than the amount drawn on the loan using a loan to value ratio of 80%. 

The Company’s cash receipts, manufacturing and advertising costs were all reduced compared to the prior quarter. The majority of these cash inflows and outflows are related to the Wood247 business. In addition, as previously announced, the Company has commenced the process of divesting from this business and as such related activities were reduced.

Payments of $98k to related parties of the entity include payments for directors’ fees to executive and non-executive directors and payments to executive directors.

Under section 8.5 of the Appendix 4C the Company reported “N/A” for the number of quarters of cashflow remaining, because of the large inflow of $1.898M from the R&D Tax Incentive refund leading to a positive net operating cash flow. Adjusting for this one-off inflow, the underlying cash burn was $860k. On that basis, there are approximately 3.5 quarters of available cash flow given the total available funding on hand of $2.92M.

// END //

This announcement is authorised for release to the ASX by the Board.

Highlights

Environmental Clean Technologies Limited (ASX: ECT) (ECT or Company) is pleased to provide the following update and Appendix 4C for the quarter ending 30 September 2021.

Activities Report

Despite the impact of COVID-19 restrictions in Victoria during the quarter, ECT was able to advance construction activities at its Bacchus Marsh and is now scheduled to complete its 25,000-tonne Coldry demonstration facility in early 2022. The Company’s Coldry technology has the potential to play an important role in achieving the transition to net zero-emission energy sector and the pending completion of this facility will enable the Company to demonstrate its unique, low cost, zero-emission Coldry lignite drying technology at a commercial scale to major downstream partners.

In July, ECT was also pleased to be invited to become an advisory committee member for the Gippsland Regional Hydrogen Cluster (“GRHC”). The GRHC was formed by the Committee for Gippsland and National Energy Resources Australia (NERA) with the stated purpose to ‘build a competitive clean hydrogen industry in Gippsland that will create jobs, secure investment, generate export income and help lower emissions.

The broad, bipartisan support from state and federal governments to develop Australia’s domestic and export hydrogen capability continues to gain momentum with a range of initiatives intended to position Australia as a future leader in hydrogen exports. ECT’s participation in the GRHC as well as its membership of the Heavy Industry Low-carbon Transition Cooperative Research Centre (HILT-CRC) and the Future Energy Exports Cooperative Research Centre (FEnEx-CRC) increases industry and government awareness of the Company’s net zero-emission technologies and has the potential to open numerous downstream opportunities for ECT.

The Company continues to investigate opportunities to access government support and industry partnerships and during the quarter launched feasibility work on a Net Zero Emission Hydrogen Refinery Project being incorporated into the Federal Government Hydrogen Hub Grant program for submission next quarter.

This quarter also saw the successful launch of ECT’s complementary Wood247 business which commenced selling its high-end eco-friendly wood briquettes in Greater Melbourne. The Board will continue to monitor its progress and review its options to create value for the Company.

Corporate Update

During the quarter, the Company undertook a Board restructure and was fortunate to appoint experienced Non-Executive directors, Mr Jason Marinko and Mr Tim Wise to the Board to increase the Board’s public company experience and assist the Company on its path to commercialisation of its net zero-emission technology.

The new Board then undertook a strategic review with the aim of capitalising on the increasing government and industry interest in net zero-emission technologies and subsequent to the end of the quarter announced a renewed focus on formalising project partner relationships. As part of the review, the Board also decided to pause works on Phase Two of the Project to enable ECT to better direct capital towards the accelerated and large-scale commercialisation of its proprietary technology suite and maximise shareholder value in this fast-evolving sector.

The Company was also pleased to have completed a Promissory Note Raising from a syndicate of sophisticated and professional investors during the quarter. Proceeds from the Promissory Note Raising are being utilised to complete the construction of the Company’s small-scale Coldry demonstration plant in Bacchus Marsh, Victoria, to enable the Company to assess complementary acquisition and business development opportunities, and for working capital purposes.

Capital Management

Approximately $943K (prior quarter $1.2M) was spent on the Project during the quarter on property plant and equipment purchases as the Company nears the completion of Phase 1 of the Coldry demonstration facility.

Research and development costs were up quarter on quarter as the Company secured coal supply and infrastructure upgrades from Energy Australia at the Yallourn coal mine following the announcement of a 5-year supply agreement in June 2021.

The Company has lodged its 2020/21 income tax return but is yet to receive the R & D tax incentive rebate. Once received, and after paying out the R & D loan facility, the Company will receive approximately $650K in net funds.

As at the date of this announcement, the Company has no undrawn loan facilities. The Company will seek to enter into a new loan agreement in due course for a facility secured by the R & D tax incentive which is expected to be comparable to the 2020/21 facility.

ESG Report

ECT has previously adopted a formal ESG reporting framework created by the World Economic Forum (“WEF”). While the Company’s suite of low emission technologies is inherently environmentally positive, the adoption of the WEF framework will assist the Company in tracking and reporting these initiatives into the future to ensure that our business remains an ‘impact investment’ for shareholders and local communities.

The ESG report below provides an update of the progress from the Company’s ‘baseline’ position to the end of the quarter ended 30 September 2021.

For further information, please contact: