Clean TeQ Holdings’ Share Price Declined After Announcing Joint Venture with Ionic Industries

  • Sep 24, 2018 AEST
  • Team Kalkine
Clean TeQ Holdings’ Share Price Declined After Announcing Joint Venture with Ionic Industries

Clean TeQ Holdings Limited (ASX:CLQ) is a provider of metals recovery and industrial water treatment services. The company’s share prices declined by 4 percent on 24 September 2018 after the company’s announcement about the Joint venture with Ionic Industries Pty Ltd.

Clean TeQ and Ionic Industries have been working together for more than 18 months till date and together they have successfully invented a process to manufacture high purity graphene oxide which can be used in a membrane support for creating a highly efficient graphene nanofiltration membrane (GO-Membrane).

After the encouraging progress towards development of a graphene-oxide based water filtration membrane, the company is planning to join hands with Ionic industries for Joint venture for further developing and commercializing this opportunity. Graphene and graphene oxide are the world’s strongest, thinnest and most conductive materials discovered till date and they are having a huge potential for industrial water filtration applications. Due to difficulty in manufacturing processes and high production costs the commercialization of these metals has been severely limited.

The membranes are having many benefits over existing commercially available membrane technologies which include increased flow, lesser energy costs, and improved water recovery. The spiral membrane market is estimated at $5.10 billion in 2018 and is expected to grow to $8.20 billion by next five years. High operating costs for the end user is the major constraint to growth. The development of a cost-effective GO-Membrane could displace a large part of the existing reverse nanofiltration and osmosis membrane technologies and it could also create opportunities for new water filtration applications.

The joint venture is going to be structured as a newly incorporated joint venture (JV Co) which will be owned 75% by Clean TeQ and the rest 25% by Ionic Industries. Ionic Industries is planning to grant a sub-license of its GO technologies to JV Co in the area of water purification. To progress development and commercialization of the technology both the companies are planning to fund pro-rata expenditure in JV Co. JV Co will be focused on achieving commercial scale production of graphene oxide and GO-Membranes and producing water purification modules targeted at wholesale and retail customers.

For the year end 30 June 2018, the company earned a revenue of $5.97 million which was $1.6 million a year ago. Majority of the revenue is derived from interest income and contracts with customers. The revenue from the contract with Fasterville Gold Mine represents around $2.2 million. The loss after income tax of the company increased from $12.9 million in FY 2017 to $16 million in FY 2018. On 30 August 2018, the company announced that it has selected Metallurgical Corporation of China Ltd (MCC) as a key project delivery partner for Clean TeQ Sunrise which will Leverage MCC’s strong experience in the design, construction and operation of lateritic nickel/cobalt mining, processing and refining operations and decreasing the financial and project execution risk to Clean TeQ via the transfer of risk via the EPC contracting arrangements and will also provide opportunities for low cost procurement and pre-assembly through MCC’s extensive network of suppliers.

CLQ’s share traded at $0.475 with a market capitalization of $368.98 million as on 24 September 2018 (AEST 2:50 PM).

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