ESI --- the truth is out!

I backed my research for once and i was right.

Its hard work this market and false report's by journo's dont help investors at all.

One bit of advise to the not so experienced investors which i learnt the hard way...re.....ONE<<
Research your investment as much as you can.

Dont be afraid to call the company and CEO's to find out information on any problems you have.

Dont take too much notice of these forums for advise, some guys here are an exception. ( you will know who these guys are through hours of reading and watching stocks)

And in the end, back yourself if you feel you have done as much research as you can and you understand the investment you have made.

Here's the open briefing on ESI.............................


Open Briefing ESI CEO on ENERSLUDGE Technology

ENVIRONMENTAL SOLUTIONS INTERNATIONAL LI 2002-05-15 ASX-SIGNAL-G

HOMEX - Perth

+++++++++++++++++++++++++
corporatefile.com.au

Environmental Solutions International Limited's share price fell
nearly 10 percent yesterday following a press report raising concerns
about the ENERSLUDGE(TM) treatment plant in WA. What has been the
performance of the Perth based ENERSLUDGE(TM) plant? Is the
technology failing to perform?

CEO DENIS GLENNON

The technology is robust and very flexible. ESI has proved the
process in Western Australia. Disappointingly there were some
misconceptions and inaccuracies in yesterday's press report.
Understandably, the unfortunate headline and some of the comments
unsettled the market. I trust the following will clarify matters.

The Subiaco Waste Water Treatment plant is one of Perth's 3 main
sewage processing facilities. The plant's catchment area is the CBD
and west of the city. The plant currently produces approximately 600
tonnes per day of wet sludge for disposal and further processing and
this is forecast to rise to 800 tonnes per day by 2040.

In 1996, the existing facilities at Subiaco for processing of this
wet sludge needed upgrading and, following an extensive review of
options including thorough evaluations by independent consultants, a
contract was let to the ESI/ Clough JV to build a new sludge
processing facility. Included as part of the contract was ESI's
patented oil-from-sludge technology.

The plant now constructed consists of a number of components and
provides the Water Corporation with a variety of possible operating
modes to process over one quarter of Perth's sludge such as:

Dewatering of the sludge to a 'wet cake' for lime stabilisation prior
to disposal off-site in emergencies, maintenance shutdown periods,
etc.

Dewatering and drying of all the sludge to dry pellets for use on
site as a fuel, or disposal off-site. The large amounts of thermal
energy required to dry the sludge can either be supplied from fossil
fuels or recovered from the process itself - the latter is the current
mode of operation.

Dewatering, drying, energy recover and conversion of all the sludge
to oil and other products.

The wet sludge dewatering and drying equipment were commissioned in
May 1998 and have been processing all the wet sludge produced by the
operations of the Subiaco wastewater treatment plant since then. The
hot gas generator used for energy recovery was commissioned in
December 2000 and has performed to target since that time.

The dried sludge-to-oil conversion equipment was commissioned in
April 2001 and was operated by ESI/Clough Joint Venture for 9 months
during which time it demonstrated it has the capacity to process all
of the dried solids from the upstream plant. All of the oil produced
to date (over 300 tonnes) has been used off-site to generate steam at
industrial facilities without problems.

The whole plant (dewatering plant, the dryer, hot gas generator and
conversion plant) was constructed and commissioning in phases, and
has met all contractual performance tests.

The new facility has thus provided the Water Corporation with more
cost effective, environmentally friendly and flexible treatment
options for wet sludge than existed before the plant was constructed.

Approximately 100 tonnes of wet sludge cake per day, is no longer
trucked through Perth, or over long distances to be disposed to
landfill. It can be either dried and beneficially reused as
fertiliser supplement (with all the energy for drying provided by the
process itself) or converted into oil.

When the plant is operated in conversion mode, only 4 tonnes per day
of by-product leaves the site (1 tonne of ash and 3 tonnes of oil),
ie a 25-fold reduction in both sludge volume and truck movements.

At present, the dried sludge-to-oil conversion equipment is not being
operated. It is more economical to operate the plant in the energy
recovery (ie autogenous drying) mode and to beneficially use the
dried sludge on land, than convert it to oil for off-site use.

Whilst this option is the most economic for the time being for Perth
sludge, it is fair to say that in Europe and North America, the
economics are significantly different. In Europe and North America,
dried-sludge to oil and off-site use of oil or generation of
electricity on site would be the preferred operating mode by far.

When the contract was originally let by the Water Corporation, it was
intended that the oil produced from the conversion equipment would be
used as a supplementary fuel for the stand-by diesel engines on-site
driving the upstream wastewater treatment plant air blowers. Water
Corporation subsequently decided not to adopt this option and hence
ESI and the Water Corporation are now pursuing the installation of a
separate oil-to-electricity unit on site. When this is installed, it
will change the economics of how the plant is run and the
sludge-to-oil conversion equipment which, represented less than 10
per cent of the original contract value of the overall plant, should
be the preferred mode of operation.

ESI-Clough and the Water Corporation are also reviewing the design,
operations and maintenance parameters of this "world-first" prototype
plant. ESI continues to have access to the plant for marketing
purposes offshore and the gathering of valuable operational data.

corporatefile.com.au

Does the current operation of the Perth plant in autogenous drying
mode have any negative financial impact on ESI?

CEO DENIS GLENNON

None whatsoever on ESI or on the ESI/Clough joint venture.

corporatefile.com.au

Does ESI continue to have a reasonably strong cash position and what
is the outlook for the June 2002 profit?

CEO DENIS GLENNON

Our cash position remains very strong and the profit result will be
in line with our expectations. Our cash reserves and growth are being
managed prudently. We continue to generate strong cash flows from the
water and wastewater treatment market and we're making good progress
with our efforts to commercialise the ENERSLUDGE(TM) technology in
international markets.

corporatefile.com.au

ESI recently reported (February 27) discussions with some European
groups regarding licensing the ENERSLUDGE(TM) technology. What is the
status of these discussions and could they lead to the
commercialisation of the ENERSLUDGE(TM) technology in Europe?

CEO DENIS GLENNON

I am now confident ESI will sign its first licence agreement for a
territory in Europe, with a very significant player in the water
industry, before 30 June 2002.

ESI has been involved in technical and commercial due diligence
discussions with this European based, worldwide water company since
August 2001. The due diligence has involved a substantial amount of
information transfer (technical and economic) from ESI, visits to the
Western Australian plant and reciprocal visits to Europe.

The most recent discussions in Europe (in late April 2002) have
concluded that ESI's ENERSLUDGE(TM) technology is capable of
providing a sustainable thermal solution for sludge treatment in many
countries in Europe, and, that it is commercially competitive in
markets where land based disposal options are banned or diminishing.

This outcome represents a significant step forward, and ESI has moved
much closer to establishing the necessary first "flagship" commercial
scale plant in Europe.

Also, ESI is in negotiations with another large
engineering/construction/infra-structure group regarding a licence
agreement for the UK and Irish markets. These negotiations are less
advanced than the former.

corporatefile.com.au

What would be ESI's participation in European ENERSLUDGE(TM)
projects?

CEO DENIS GLENNON

ESI's participation in European ENERSLUDGE(TM) plants will be the
supply of technology packages through licensees into projects.
Typically these technology packages will include the intellectual
property related components, ie conversion reactors, condensing,
oil-water separators, process control system, and in some instances
other equipment. ESI will of course, provide all of the process
design for the initial plants.

corporatefile.com.au

What advantages do you hope to gain through licensee and partner
companies?

CEO DENIS GLENNON

ESI's strategy is to market the ENERSLUDGE(TM) technology through
licensees/partner companies. This strategy allows ESI to partner with
selected local companies that are already strong players in the
water/ wastewater/sludge markets in the territories covered by the
individual licensees.

The major marketing costs in each territory will be met by licensees
as will the majority of tendering costs for specific projects. The
advantages to ESI include more immediate sales, cost effective access
to market intelligence, knowledge on local environmental regulatory
requirements, detailed engineering expertise to meet country specific
standards, procurement know-how in new markets, construction
expertise, presence of larger corporate balance sheets when bidding
projects, to mention a few.

The other advantages are the payment by licensees of upfront licence
fees to ESI, plus royalties from ENERSLUDGE(TM) plants built by
licensees and ESI in each territory.

corporatefile.com.au

Late last year you expressed some disappointment with the pace of
progress in commercialising the ENERSLUDGE(TM) technology in Japan.
What plans do you have to hasten progress in Japan?

CEO DENIS GLENNON

ESI entered into an exclusive licence arrangement with Mitsubishi
Electric Corporation for the territory of Japan. Progress by
Mitsubishi has been slower than I would have liked in commercialising
the technology. I visited Mitsubishi some weeks ago and now better
understand why this is the case.

To hasten progress in Japan, ESI has reached agreement with
Mitsubishi to amend its licence to a non-exclusive one. ESI will
continue to have access to Mitsubishi's technology improvements on a
worldwide royalty fee basis.

Furthermore ESI has briefed, and, subject to final agreement on scope
of contract, will engage a Japanese entity experienced in arranging
licensing arrangements between Japanese and foreign companies to work
with ESI to select other licensees for the technology. This time
ESI's focus will be on selecting Japanese companies that are
currently active in the water and sludge business in Japan and not
necessarily on large trading houses such as Mitsubishi. This work
will take about 3 months to complete.

corporatefile.com.au

What progress has been made in marketing ENERSLUDGE(TM) in the USA?

CEO DENIS GLENNON

Because of our focus in Europe, progress in the USA has been confined
to identifying suitable potential licensees. The initial
identification of potential partners has been completed and we have
provided initial packages of information on the technology to them.
The European experience of securing good licensees indicates it takes
6 to 9 months to complete the necessary technical and commercial due
diligence, hence we will see the appointment of US licensees only
after 30 June this year.

corporatefile.com.au

In February 2001, ESI was awarded a contract to provide three water
treatment plants for the Douglas Shire Council in Far North
Queensland. The contract value was about $12 million. What progress
has been made on this project?

CEO DENIS GLENNON

Construction of the 3 plants is proceeding very satisfactorily and we
anticipate completion of construction of the first plant in August
2002. The reservoir at the largest plant in Mossman is essentially
complete. The plant building is under construction and will be
completed in about 6 weeks. Mechanical installation at all plants is
progressing to schedule and to budget. These being ESI first membrane
plants, construction of all are proceeding remarkably well.

corporatefile.com.au

How do you envisage ESI developing? Can you continue to grow revenue
in the water/wastewater treatment market while also trying to
commercialise the ENERSLUDGE(TM) technology? What is the priority?

CEO DENIS GLENNON

I believe we can continue to generate good revenue from the water/
wastewater market. We staffed up the water group this year and
already new potable water contracts have been won in Australia. I
expect we should be in a position to announce at least one additional
contract before 30 June 2002. The relatively new process control
group continues to generate revenue and this should increase. ESI has
agreed to the execution of an Integrated Systems Provider Agreement
with Siemens Ltd, more details of which I expect to announce next
month.

To date, ESI's cash flow has been generated by our continued success
in the water/wastewater market. This revenue has allowed the company
to remain net debt free and fund the commercialisation of
ENERSLUDGE(TM). At this stage I don't see this scenario changing.

corporatefile.com.au

Thank you Denis.

For previous ESI Open Briefings visit www.corporatefile.com.au

For further information on ESI visit www.environ.com.au