Highlights

• Carbonxt (ASX:CG1) is set to boost its production capacity with a new Kentucky plant.
• CG1 joined hands with KCP for an equal ownership in the plant, which is expected to be one of the world’s most sustainable facilities of its kind.
• The company seeks to raise ~AU$6.6 million via an entitlement offer.
• The proceeds will be used to fund the new activated carbon facility currently under construction.

Carbonxt Group Limited (ASX:CG1), the only US manufacturer of industrial AC pellets, has signed a term sheet with KCP for a 50% ownership in a new Kentucky plant. KCP is an established and a well-capitalised industry player in the US market.

CG1 has a diversified manufacturing portfolio in North America with plants located in Kentucky, Minnesota and Georgia.

Also, the US-focused cleantech company is undertaking a pro-rata accelerated non-renounceable entitlement offer to raise ~AU$6.6 million. The company will be directing the funds towards the new state-of-the-art activated carbon plant located in eastern Kentucky, US.

A sneak peek into the new plant
Carbonxt believes that the new activated carbon production plant at Kentucky will stand out as one of the most sustainable plants of its kind.

Based in eastern Kentucky, the plant will boost production capacity as well as gross margins for Carbonxt. The current production capacity will increase to more than 25,000 tonnes from ~16,000 tonnes, marking an increase of 57%.

The plant is expected to bring in synergistic opportunities for Carbonxt as it is located alongside the eminent waste-to-energy provider Inez Power LLC. It will further reduce operating costs and enhance quality control.

It is expected that the production cost for incremental Kentucky volumes will be lower compared to the current capacity. This will be primarily because of low-cost renewable power source, higher quality feedstock, as well as shared services with KCP.

The Kentucky plant is expected to be operational before 30 June 2023. Once the production facility gets functional, Carbonxt expects to register a revenue of approximately AU$25 million and AU$50 million at 50% and 100% capacity, respectively.

Also, as per initial contracts, it is likely to bring in gross margins of about 55%. The company expects gross profit of around AU$13.8 million and AU$27.5 million at 50% and 100% capacity.

 Image Source: Company Announcement

Fund raising via entitlement offer
Carbonxt plans a partially underwritten pro rata entitlement offer of approximately 47.4 million new fully paid ordinary shares to raise ~AU$6.6 million (before costs) at AU$0.14 per share.

The offer price has been set at a discount of 6.7% to the closing price of the company’s ASX shares on 28 July 2022. The offer price represents a discount of 10.1% to the 10-day volume weighted average price prior to that date.

Besides fund raising, the ASX-listed firm has also inked the below term sheets:

• Convertible Note Facility to raise AU$5.0 million from two Australian institutional investors.
• Extension of the current Loan Facility provided by PURE Asset Management of AU$8.5 million.

CG1 shares were trading at AU$0.130 midday on 02 August 2022, with market capitalisation of AU$28.42 million.