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New Kentucky plant to offer ‘transformational’ change for Carbonxt investors: Management

Mon 01 Aug 22, 3:14pm (AEST)
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Key Points

  • Quarterly customer receipts for Q3 up 50% compared to Q1 at $4.1m
  • Strong revenues precede company’s launch of new manufacturing facility in Kentucky, USA
  • Carbonxt management says Kentucky will be transformational for company, a supplier of activated carbon for use in industrial processes

Carbonxt (ASX:CG1) investors are likely keeping a close eye on their watchlists as management assures the market it will soon reach a ‘transformational’ outcome, when it brings new manufacturing assets in Kentucky online. 

Before we get into downstream refining, let’s look at the big picture: Carbonxt is making carbon-based pellets for sale to industrial customers which currently run at an average cost of US$3,725 a tonne. 

Attached to the future Kentucky facility are existing contracts for 2,400 tonnes. At 100% capacity, the company expects to see revenues of $100m. 

Already somewhat transformational is the company’s latest revenue update of $4.1m, up 50% on Q1 revenues. A further $800,000 remains pending, payable to Carbonxt, from industrial customers buying its industrial carbon pellets. 

Industrial carbon what? 

The cleantech company is currently pivoting towards the manufacture of activated carbon pellets (ACPs) and powdered activated carbon (PAC). 

In short, both products are used in industrial processes given their ability to remove certain pollutants and toxins, typically within gas-based industrial refining practices.

The pellets are used as a filtration screen to remove mercury, and can also be used to purify air and waste water. Mercury removal is what Carbonxt has its eyes on—the process is needed for coal-fired power plants. 

And right now, the world is burning a lot more coal than it was three years ago. 

Kentucky profits when?

Carbonxt recently highlighted its decision to launch a capital raise for a production facility in Kentucky, on a JV basis. It will partner with US counterpart KCP on a 50/50 basis, all things in order. 

To help speed all this up, Carbonxt is seeking to raise $6.6m via a 1-for-4 non-renounceable issue. It has also executed term sheets to raise $5m from institutional investors in Australia, as well as a boost to an existing loan facility from PURE Asset Management. 

Investors ought to note the Kentucky facility is already under construction, and while it’s possible a future snag could emerge, it appears fairly guaranteed the Kentucky plant will go ahead. 

An announcement is expected in the coming weeks—keen investors will just need to wait, given the company’s trades are currently halted. 

The company's share price has been knocked around by sell-off season, but the Kentucky project has all the right elements to push the share price above its April position in the mid-20c range.
The company's share price has been knocked around by sell-off season, but the Kentucky project has all the right elements to push the share price above its April position in the mid-20c range.
Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Carbonxt was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.

 

Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication. Email Jon at [email protected].

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