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Phoslock Environmental Technologies Limited (ASX: PET) is a global environmental company with headquarters in Sydney. It specialises in engineering solutions and water treatment products. The company aims to remediate impaired water bodies and drinking water reservoirs.
The company owns the patent for PHOSLOCK, which is a unique water treatment product. It binds excess phosphorus in the water column and sediments permanently. As a result, growth of Harmful Algal Blooms is inhibited, leading to harmful effects for both aquatic and human life. The product is manufactured in China in Changxing factory. This factory has obtained three important certifications in the recent past from TUV Rhineland- the ISO 900, ISO 14000 and OSHA 18000.
The company released its Production & Raw Material Procurement Update on 30th May 2019. The company is on its way to increase its production rate of Phoslock to 12,000 tons per annum in order to meet with the present and expected demand.
It is also increasing its on-site wastewater processing and would be installing extra equipment in the next two months. As reported, the company had zero wastewater discharge, all of which was recycled at the Changxing factory. The anticipated cost of this extra wastewater equipment was less than A$1 million, which would be funded from the current cash flow.
Besides this, the company recommended increased monthly volumes from its bentonite and lanthanum chloride suppliers. In China, PET is a regular buyer of lanthanum chloride and has an age-old supply chain as well. The market for less pure lanthanum is huge and trades at a notable discount to the higher purity 99.9% lanthanum metal. PET, at present, has more than four months inventory of lanthanum chloride at its Changxing factory.
Even with the global issues related to US / China trade negotiations, to rare earth prices and supply, the company is optimistic to face no hassle in relation to the supply of lanthanum chloride to meet with its future production outlooks.
PET is securing more warehousing facilities at the Changxing industrial park in order to store greater volumes of lanthanum chloride, bentonite and the final Phoslock product.
The companyâs supplies apart from Phoslock include Zeolites and Bacteria.
On 23rd May 2019, the company announced results from the trial application to an extremely polluted lake in South West China. The outcome was a 75% drop of phosphorus, in the first four days of the application. Presently, an order of approximately $1 million of Phoslock is being applied towards the cause to a section of the lake.
Extensive treatment on a Chinese lake (Source: Companyâs report)
The below table highlights PETâs Cash flow highlights for the quarter ended 31st March 2019:
| Cash Flows | Amount (A$â000) |
| Net cash from operating activities | 6,053 |
| Net cash used in investing activities | 38 |
| Net cash from financing activities | 1,404 |
| Cash and cash equivalents at the quarterâs end | 12,413 |
| Estimated cash outflows for next quarter | 4,590 |
Share Price Information:
On 31st May 2019, the stock closed at A$0.750, down by 5.063% from its previous close.
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