PET 1.33% 38.0¢ phoslock environmental technologies limited

What happens when a $15M stock Wins a $100M Contract?

  1. 12,525 Posts.
    PHK holds worldwide exclusive rights to the sale and marketing of Phoslock, a technology developed by the CSIRO.

    In short, Phoslock binds to phosphate in water bodies, thereby starving existing algae, and preventing the proliferation of new algae.

    A lake before and after treatment with Phoslock - an extraordinary makeover:

    phk before after.PNG

    The Asian Lake Trials shown below could be to do with one of several contracts worth up to $100 million each, that PHK has now progressed to decision stage.

    There is at least one contract close to being finalised worth $100 million - otherwise PHK would have stated $2 million to $40 million, or $50 million, or whatever the highest value contract close to being finalised was.

    There are 10 "large" projects in the pipeline - minimum total value of these contracts is $118 million, according to PHK's definition of large - this assumes the other 9 projects are all at the very bottom end of the "large" range -$2 million each, so the actual total contract value is probably $200 million or more:

    phk large projects.PNG
    What happens when a $15 million stock lands a $100 million contract?

    Another $600,000 to 800,000 in revenue is forecast for the current quarter from already secured contracts.

    That is around 50% to 100% higher than the quarterly results released last week, which were very good. PHK's revenue covered all operating expenses - zero cash burn.

    Another hint that things may be about to get large for PHK is that they are significantly ramping up Phoslock production at their Chinese manufacturing facility:

    phk break even.PNG

    PHK Management

    Robert Schuitema is Managing Director of PHK - but is also known as the former Managing Director of JPMorgan Chase where he was global head of Mining & Metals.

    Robert holds 8 million PHK shares via Sail Ahead Pty Ltd.

    Laurence Freedman is Chairman of Phoslock - also known as the founder of Equitilink, which he grew into a global enterprise with over $3 billion under management.

    Equitilink was part of the syndicate that bought Channel 10, which he became a director of, took it out of receivership and transformed the Ten Network it into the most profitable in Australia.

    In 2000 he sold the Equitilink, and in 2004 sold out of the Ten Group.

    In 2001 he was awarded The Order of Australia for his service to medical research, business and investment.

    Laurence holds over 41 million PHK shares - over 17% - via Link Traders Pty Ltd.

    This guy has skin and bones in the game.

    Pam Allan, PHK Director, was a Member of the NSW Parliament for 18 years, serving as Minister of Environment and chair of a number of parliamentary committees including Salinity and Resource Management.

    China's Water Issues

    China is investing 4 trillion yuan - around A$700 billion on rural water treatment alone by 2020.

    Another A$150 billion has been earmarked for various cleanup projects nationwide,

    'That new cash injection will be vital, with rivers and lakes throughout China blighted by algae blooms caused by fertilizer run-off, bubbling chemical spills and untreated sewage discharges."

    China spent $110 billion from 2005-2010 on water infrastructure, but much of the actual water remains undrinkable.

    The Chinese Environment Ministry admitted that 43% of the locations it was monitoring contained water that was not even fit for human contact.

    When a child is swimming in these conditions, something simply must be done - and China is finally doing it:
    phk algaeboy.PNG

    Nice lake China! But Phoslock can fix this quick smart:

    phk algaefish.PNG

    Phoslock v Alum

    Phoslock's major competitor is a product called Alum, made from aluminium sulphate.

    Both products deactivate phosphate - a plant fertiliser - from water bodies. Fertiliser is great in your garden, but not so great in lakes, rivers and dams where it promotes toxic algae growth.

    Alum does kill algae, but it also kills fish. Conversely, Phoslock is suitable for use by the aquaculture industry in fish and prawn cultivation.

    Compared to Alum, which has been used for almost 35 years to treat algae blooms, Phoslock is a relatively new commercial product that is emerging as a more effective, safer, healthier alternative.

    Aluminium is released from Alum, causing toxic effects to aquatic organisms - use of aluminium based materials is now being restricted in some jurisdictions by health authorities.

    Efficiency of Alum also reduces with increasing pH.

    At pH7, phosphate binding efficiency is only 55% and at a pH8, the average pH when there is a moderate algal bloom, binding efficiency falls to 20%.

    Phoslock, in contrast, has a phosphate binding efficiency of 90%+ over a range of pH levels.

    Phoslock is a patented, natural, modified bentonite clay - an enhanced version of the clay health food stores sell to absorb toxins from the human gastro-intestinal tract.

    Which leads to Phoslocks biggest advantage - it has been approved in the USA and Canada to treat drinking water.

    Alum has not, and never will be, due to aluminium's toxicity and implications in the development of Alzheimer's disease.

    To quote PHK management - "Demand for Phoslock has never been greater".​
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