Today (i.e., 10 January 2019), leading research and development company, Nanollose Limited (ASX: NC6), announced that it has secured a development facility for scale-up of microbial cellulose production. To increase its commercial-scale fibre production, the company has executed a binding ‘Development Facility Agreement’ with Indonesia’s leading producer of coconut food products, PT Supra Natami Utama (PT SNU). Following this news, the share price of the company witnessed an intraday rise of 5 percent as on 10 January 2019.
Under the agreement, Nanollose will gain access to PT SNU’s development facility which is located in Australia. As per the announcement, the facility will allow Nanollose to implement its latest microbial cellulose fermentation and processing technologies in the production of microbial cellulose. Further, the company will be able to test various additional waste streams and generate critical data essential for designing an industrial scale factory in the future.
Due to this agreement, it is expected that Nanollose’s microbial cellulose production will increase to around 1 ton/month by mid-2019 and it will further increase to 5 tons/month by the end of 2019. The increase in the microbial cellulose production will allow the company to provide small commercial quantities of NullarborTM fibre to selected clothing brands to start its introduction into their collections and product offerings.
According to Nanollose ‘s Managing Director Mr. Alfie Germano, the execution of this binding agreement is a major step forward for Nanollose to start the scaling and commercial path of the primary part of the Nanollose chain, which in turn aids potential collaborations with super users.
Currently, the company is having a 250kg developmental supply of microbial cellulose, and this agreement will allow the company to increase scale towards several tons per month during 2019. This agreement will uplift the company’s ability to produce small commercial amounts of Nullarbor fibre which will be used to secure future manufacturing partners and engage high-end clothing brands.
As per the terms of the agreement, Nanollose will pay PT SNU a monthly fee for using the facility and a team of around 15 staff to operate it. The Company’s total commitment for the 12-month term of the agreement is expected to be approximately $200k. As per the terms of the agreement, any of the party can terminate the agreement without cause upon giving 90 days’ notice. Under the agreement, Nanollose is having a right to own any intellectual property generated during the project and own all the microbial cellulose produced.
Over the last six months, the share price of the company decreased by 35.48 percent as on 8 January 2019. NC6’s shares traded at $0.105 with a market capitalization of circa $7.5 million as on 10 January 2019 (AEST 4:00 PM).
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