South Yarra, Australia-based, Environmental Clean Technologies Limited (ASX: ECT) is engaged in investment, research & development, and commercialisation of environment friendly energy and resource technologies including cutting-edge coal and iron-making techniques, that are capable of delivering financial and environmental benefits.
Today, on 7 June 2019, Environmental Clean Technologies updated on its India project, waste-to-energy (WTE) acquisition and also requested a continuation to the suspension of trading in its securities through to Thursday, 13 June 2019 or in the event of reaching agreement for the acquisition, to the completion date being Tuesday, 18 June 2019.
Background to the Voluntary Suspension
On 15 March 2019, Environmental Clean Technologies had requested ASX for a voluntary suspension in the trading of its securities until 1 April 2019, awaiting the receipt of the feedback from its India Project partner, National Mineral Development Corporation (NMDC). The feedback concerns the status of NDMC’s process to consider and agree to the signing of the Research Collaboration Agreement (RCA).
The India project is aimed at advancing the Company’s Coldry and Matmor technologies to demonstration and pilot scale, respectively, on the path to commercial deployment.
Consequently, on 29 March 2019, a further extension to the voluntary suspension was granted until 22 April 2019 for Environmental Clean Technologies to address the seven key objectives to ensure certainty around the process and timeframes.
An update on the progress of the outlined objectives mentioned above, was released on 18 April 2019, with further extensions granted by the ASX until 6 May 2019 and then 31 May 2019 to allow the Company to pursue confirmation of timing.
NMDC held its board meeting on 28 May 2019 at which time, the proposal to proceed with the India project was tabled for approval.
In the previous announcements, the Company outlined its 7 objectives that it was looking to achieve. In the last two weeks, objectives 6 and 7 were met, with NMDC reporting that its internal processes were met, and that the India project proposal was on the agenda for consideration at their meeting.
As at the time of this release, and as informed in the announcement on 3 June 2019, whilst the project was an agenda item at the board meeting, the Company is still awaiting the outcome of this agenda item.
Also as mentioned in the previous announcement, the most recent extension to the Memorandum of understanding (MOU) expired on 31 May 2019 and as such a further extension, signed by ECT, has been provided to NMDC and NLC India Limited (NLC) for their approval. NLC have responded to this request and are amenable to the extension pending a response on this extension from NMDC.
ECT Chairman, Glenn Fozard, and ECT India CMD, Shri P Selvakumar are both in continuous contact with NMDC to gain clarity on this subject and a formal response to both the outcome of the board meeting and the MoU extension.
Senior Adviser, Sri P Selvakumar has recently been appointed as the Chairman Managing Director (CMD) of ECT India, and lead consultant to the ECT team in India.
ECT has recapitulated that the priority in allocation of resources would be maintained towards the Company’s domestic activities as advised in the announcement of 3 June 2019, until outcome from NMDC is clearly determined. The company expects to update the market on these activities as soon as possible.
Waste-to-Energy (WTE) Acquisition
ECT has been investigating the terms of a Heads of Agreement (HoA) (as announced on 6 May 2019) that it intended to sign, for an exclusive negotiation and due diligence period to acquire a waste-to-energy (WTE) technology.
Today, ECT has informed that the HoA has been signed and the due diligence is underway, expected to be completed by 12 June 2019. Subject to satisfactory outcomes, the acquisition will be closed by 18 June 2019.
The acquisition is anticipated to provide the Company with greater exposure to higher margins, as it would deploy the value-added downstream technology at the Latrobe Valley Coldry Project, currently under feasibility check. ECT is targeting an initial plant build of 175,000 tonnes per annum (tpa), with current scaled up potential of ~300,000 tpa.
Heads of Agreement to acquire CDP Group of companies
On 16 May 2019, ECT announced that it had entered another binding HoA with liquidators McGrath Nichol, for the acquisitions of assets of the CDP Group of companies. The HoA sets out the proposed terms of transaction, subject to a four-week exclusivity period during which a formal due diligence program is being conducted, due for completion by 12 June 2019.
The acquisition is also subject to some other conditions, including of the following:
- A $10,000 rebateable payment for exclusivity during the due diligence period.
- Agreement upon and signing of all associated transaction documents including the Asset Sales Deed, by all parties.
- Full payment of the final agreed transaction sum currently estimated at AU$220,000.
As per the company, the financing of the transaction has been negotiated through a partial redraw of the existing Challenge Bricks and Roofing Pty Ltd loan.
Capital Management Update
On 28 May 2019, Environmental Clean Technologies had announced that its subsidiary, ECT Finance Limited (ECTF), had agreed to enter an AU$ 800,000 convertible loan with the proceeds of the loan to be used to repay the wholesale loan to ECT. The loan will be used to fund the Company’s operating expenses and capital works requirements over the coming months.
Some of the features of the latest loan includes of- 12-month term with interest to be paid quarterly in advance, an interest rate of 15% per annum and security to be a second ranking registered security over the ECTF’s Equity Lending Facility (ELF). In addition, the loan may be converted to equity at the lender’s request, at 1.5 cents per share or at a 20% discount to the 30-day VWAP, whichever is the lower at the date of conversion.
Recently in May 2019, ECT attended a Victorian government event in Tokyo on Friday, 10 May organised by the Japan Petroleum, Natural Gas and Metals Mineral Resources Organisation (JOGMEC).
The securities of ECT remains suspended on ASX and the ECT stock last traded at AU$ 0.013 on 12 March 2019. Its YTD return also stands positive at 30%.
(Stock Performance, Source: ASX)
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