- Environmental Clean Technologies (ECT) has ‘returned to normal’ and has recommenced the Coldry upgrade project
- In late March, Environmental had to wind down its operations due to COVID-19 restrictions, causing the company to activate its business continuity plan to save cash
- The company dropped 50 per cent of its business activities during the lockdown to achieve its targeted cash savings
- Now, Environmental said it is able to continue with its main priority, which is the Coldry upgrade project
- However, the budget for the project upgrade has increased by approximately $1.2 million due to the lockdown
- Coldry is a unique coal drying and water recovery technology
- The upgrade project is comprised of two parts; the capacity improvements to the Coldry plant, and the addition of new plant and equipment to produce high-value char
- Phase one of the upgrade is expected to be completed by April 2021, and will then be followed by phase two
- On the market this afternoon, Environmental is up 50 per cent and is selling shares at 0.2 cents each
Environmental Clean Technologies (ECT) has ‘returned to normal’ and has recommenced the Coldry upgrade project.
In late March, Environmental had to wind down its operations due to COVID-19 restrictions, causing the company to activate its business continuity plan (BCP).
The BCP was put in place to save cash and allow time to better understand the pandemic.
“The company has been acting prudently over this 13-week period, firstly to ensure that the health and safety of staff is prioritised, and secondly to preserve cash for the commencement of the all-important Coldry upgrade project,” Chairman Glenn Fozard said.
“COVID-19 has driven business to understand the requirements of the ‘new normal,’ both socially and economically,” he added.
COVID-19 impact
Glenn has described the past few months as “incredibly challenging.” The company dropped 50 per cent of its business activities during the lockdown to achieve its targeted cash savings.
Now, Environmental said it has been able to continue with its main priority which is the Coldry upgrade project.
“The BCP period has necessitated additional analysis of the risks and challenges presented by the pandemic, leading to the refinement of the project execution plan and budget for the Coldry upgrade project,” the company said.
Even though the company avoided significant operational costs, this has not been without impacting the project and operations.
Impacts include reduced staff hours, leases renegotiated, around $360,000 in costs spent on statutory compliance and fixed costs, and $250,000 in capex costs were increased.
Overall, the budget for the project upgrade has increased by approximately $1.2 million. This will be paid by project and equipment finance, government grants, tax initiatives and reduced or deferred capital expenditure.
Coldry upgrade project
Coldry is a unique coal drying and water recovery technology.
Last year, the company adopted a strategy to become cashflow positive, under a three-tiered approach involving organic growth, acquisitions and corporate restructuring.
Tier one was focussed on upgrading the Coldry High-Volume Test Facility (HVTF), which is located west of Melbourne. The facility is supporting the expansion of solid fuel sales and the company’s entry to the char market
Now, the Coldry project is being upgraded in two phases.
Phase one is the Coldry process scale-up, while phase two is the Char plant installation and integration.
“Put simply, the upgrade project is comprised of capacity improvements to the Coldry plant and the addition of new plant and equipment to produce high-value char,” Glenn explained.
“These activities focus on monetising our existing assets to deliver up to $2.5 million a year of operating cashflow from target revenues of approximately $6 million,” he added.
Environmental said it put the two-phase management in place as it will help improve the risk management for a “first-of-a-kind” technology like Coldry.
“In this spirit, we understand the potential for key technical risks inherent to developing first of a kind and bespoke plant and equipment. This approach enables us to methodically identify and work to eliminate those process scale-up challenges on the way through,” Glenn said.
“It makes sense to proceed with the investment in the char plant once we’ve achieved successful Coldry scale-up, and in doing so, add greater focus to each phase’s critical success factors, ensuring a greater chance of success overall,” he added.
Phase one of the upgrade is expected to be completed by April 2021, and will soon be followed by the phase two Char plant construction and commissioning.
Rights issue
Environmental has updated shareholders on the shortfall shares and options issue that occurred in May.
The company entered into an arrangement with Iain McEwin to act as a service provider in relation to the Coldry upgrade project. Under this agreement, Environmental’s subsidiary, ECT Finance, has provided a loan to Iain, who will make an application for all remaining shares in the rights issue.
On the market this afternoon, Environmental is up 50 per cent and is selling shares at 0.2 cents each at 1:40pm AEST.