Clean Invest Africa Plc - Trading Update and Financial Reporting

PR Newswire

London, August 12

Clean Invest Africa Plc

("CIA" or the "Company")

Trading Update and Financial Reporting

Financial Reporting

CIA announces that, further to the guidance provided by Aquis on 31 March 2020, due to logistical issues arising from continuing Covid-19 restrictions particularly in South Africa where the Company’s subsidiary Coaltech is based, it has been granted a further extension of two months for the publication of its annual Report and Accounts for the year ended 31 December 2020 with the intention to publish the Report and Accounts by 30 September 2021. CIA will also be announcing and publishing on its website in September its unaudited financial results for the year ended 31st December 2020

The Company will highlight any material differences required to be reported that may occur between the unaudited and audited accounts, when the audited Report and Accounts are announced.

CIA trading update

CIA is also pleased to provide this trading update in relation to CASA and Coaltech, (together referred to below as “Coaltech”). Whilst the past year and more have been extremely challenging, Coaltech, as previously advised, is looking forward to the next period with significant optimism due to the substantial and strong pipeline and in addition a developing opportunity to expand beyond coal into higher value natural resources and potentially into the battery market. The Company can summarise that the impact of Covid-19 on Coaltech has effectively been an 18-month period of limited commercial progress with extensive ongoing unavoidable costs, but that the future prospects for its business model remain extremely lucrative and expandable if captured.

Bulpan Production facility

As announced on 26th March 2020 and 21st May 2020, Coaltech’s production facility, like most other similar businesses in South Africa has been severely impacted by Covid-19. This severe impact has continued through to now. Management took measures early on to mitigate as far as practicable the consequences of the pandemic including complying with the mandatory regulations imposed across its operations.  These measures have continued and whilst the business took measures to reduce costs and in particular where possible any variable overhead, it continued throughout to carry its fixed overhead burden.

Net creditor days has been extended beyond its normal anticipated ratio and management continues to closely manage impacted creditors, but overall, creditors, which are largely trade and routine, have and continue to be very supportive.

Extensive and solid pipeline of opportunities remains.

Notwithstanding the recent negative impacts discussed above, the Company and Coaltech are facing into the remainder of 2021 with caution and, into 2022, with reinvigorated optimism and with an extensive and solid pipeline of opportunities. It is worth reiterating that the strategy of Coaltech is to secure long term, large scale customer relationships with whom it would develop one or more full scale plants and with long term offtake arrangements. Securing one such customer would be transformative, with any such project likely to have a project value well in excess of $10 million and involve the processing of large scale fines or tailings, typically over 1 million tonnes.

The early stages of these commercial discussions typically also involve Coaltech running test batches. These batches are often initially small, for example 10’s of kilos and then increase to sample production size batches of, for example, 10’s of tonnes. Once batches are completed the outputs are exhaustively tested by Coaltech and by the potential client. This process is a considerable proportion of the Coaltech overhead and consumes the majority of the available production of the Bulpan production facility. 

The Coaltech test production programme on the various ongoing client development opportunities has slowed to a very much reduced pace due largely to Covid-19.

Ongoing active commercial opportunities

However, the Coaltech pipeline for coal fines is substantial and robust and continually developing. As are the opportunities in higher value resources.

Coaltech, through its various subsidiaries, is currently involved with the following activities:

• South Africa - Ilmenite project at Richards Bay; 10,000 tons trial project. Circa 30-35% of the project completed and proceeding at approximately 50-60 tons per day. Subject to successful completion of 10,000 tons trial, (which is priced at breakeven) Coaltech shall begin in-depth discussion about developing a 5,000 tons/month plant at Richards Bay. After very substantial delays, these discussions should commence by year end.
• South Africa - Chrome project (client confidential) Currently finalizing a memorandum of understanding prior to testing and trial for processing of 20,000 tons of chrome at a breakeven price. If successful, a dedicated plant would be required and Coaltech would then start discussions with this client about the possibility to set-up a JV for a large scale chrome only plant. 
• South Africa - Coal fines cleanup project (client confidential). Proposal is to commence a 3-5,000 tons/month project for the realization and sale of coal pellets on the local market, within the context of an environmentally focused corporate social responsibility programme by the client. A financial model should be presented to the client in the autumn. 
• India - Thermal Coal project (Jindal Steel, India). Together with its Indian partner Exagogi, Coaltech has begun a gasification test work of minus 10mm coal fines coal fines materials but unfortunately this has been put on temporary hold due to the COVID situation in India. Should the project materialize it would require a large scale plant converting the minus 10mm coal to minus 25 plus 10mm coal pellets for feeding the steel plant gasifiers. This technology will also immediately be applied to a second steel plant owned by the same client.
• India - Ore project (Tata Steel, India). Together with its Indian partner Exagogi, the testing phase of a project that should convert large quantity (20 to 50%) of minus 150-micron ultra-fines that causes transportation issues in that the ore often gets stuck in the train wagons during transportation into micro pellets of 1 to 5mm. Should this project materialize it would require a large scale ore pelletizing plant in India.
• Coaltech, through its ISS International JV is continuing work on the design of a "Mini Mobile plant", which will allow it to exponentially increase the capacity of commercial activities moving the technology to the mines of the various potential customers and enabling production on site of a much more significant quantity of pellets than is currently possible with trial material shipped to the plant in South Africa (50-60 tons vs 500-600 kg). This material will allow the customer to fully evaluate the technology and make a quicker decision on the desirability of building one to more plants for their production units. This project work is ongoing and subject to overall cashflow and resources.
• Australia –Coaltech has signed a cooperation agreement with a consultant, globally recognized as one of the most prominent experts in coal, and other minerals such as iron ore. The agreement is to develop a commercial strategy:
  • to approach Australian department of Mines, a well resourced government department, to build a Coaltech pilot plant in Australia and showcase its technology to all potential mine owners and Australian government and environmental authorities. 
  • to connect with a fund developed by the German government to address environment issues and social corporate responsibility associated with closure of coal mines in Germany. Their mission statement is “we bear responsibility for financing the perpetual obligations that the German hard coal mining industry has left behind, and we are generating the funds that are needed to fulfil these obligations. In addition, we promote projects in the areas of education, science and culture in order to support the transformation of the former mining regions” and this fits very well within Coaltech’s technology scope of work
  • to develop cooperation with a start-up that has made a significant break-through in long-duration battery production using iron pellets. Iron ore is one of the other minerals Coaltech is focused on in its R&D activities in South Africa. Whilst resources are limited this type of collaboration could develop into a whole new line of business in the burgeoning battery sector.

• China - Coaltech is in continuous dialogue with two large Chinese private mines, discussing the possible integration of our technology within their existing operation. This work is fully funded by Coaltech’s partner, both a long term supporter of Coaltech, and shareholder in its Coaltech Far East JV, based in Singapore.
• Italy - Coaltech has ongoing initial interaction with the Italian Ministry of Ecological Transition, responsible for all activities associated with its post coalmining environmental program, funded by its significant Recovery Fund program recently finalized between Italy with the EU. Funds are expected to become available this calendar year and Coaltech shall actively seek a role.
• Various - Coaltech has agreed testing programmes for customers in Uzbekistan, Siberia, Poland and Colombia. In some cases the required raw material coal fines are at the Bulpan production facility in South Africa, however these projects are on hold pending both an improved Covid-19 situation and cashflow.

The above is illustrative of the potential for Coaltech to commercially exploit its technology. The long and sometimes costly sales cycle is typical in this industry and is reflected in the long-term relationships that result if negotiations are successful. Successfully expanding beyond coal into other higher value and more desirable natural resources is a significant opportunity. The potential to participate in the battery industry may also, if realized, be transformational.

Fundraising

The Company engaged in discussion and negotiation with a prospective investor, a business with significant interests in the commodities market, oil and gas and renewable energy projects, marine and logistics sector, with a large network of relationships in the industry. A term sheet was signed in April 2021, execution documents have been exchanged and are currently being reviewed by legal advisors and the Company expects closing within a few weeks.

The Company is also in negotiations with the above mentioned investor in relation to the creation of a joint venture, with a company where the investor has a significant interest with HOA already on place and co-operation between with Coaltech already started. A further announcement will be made in due course.

Filippo Fantechi, Chief Executive Officer of Clean Invest Africa, commented:

“We are confident, notwithstanding the much longer than expected lead times, that CASA and Coaltech can turn some of the existing opportunities into commercial contracts and expand further in South Africa and globally. We have a very strong pipeline of commercial initiative and a good management team that has proven to be very resilient navigating the huge and lengthy challenges posed by the Covid-19 pandemic. I am pleased to share with our investors the significant potential of the Coaltech business. CIA’s Directors continue to believe that the Group’s opportunities, including the potential to expand beyond coal are very substantial indeed.”

The Directors of the Company accept responsibility for the content of this announcement.

ENQUIRIES :

Clean Invest Africa plc

Filippo Fantechi  (Executive Director)  +973 3969 6273

Shaikh Mohamed Abdulla Khalifa AlKhalifa (Non-Executive Chairman) +973 3969 2299

Peterhouse Capital Limited    

Corporate Adviser +44 20 7469 0930

Guy Miller/Mark Anwyl