CLEAN INVEST AFRICA PLC
("CIA" or the "Company")
Trading Update and Financial Reporting
CIA announces that, further to the guidance provided by Aquis on 31 March 2020, due to logistical issues arising from Covid-19 restrictions the Company has been granted an extension of one month for the publication of its annual Report and Accounts for the year ended 31 December 2019, and the Company has requested a further two months extension, with the intention to publish the Report and Accounts by 30 September 2020.
CIA will today be announcing and publishing on its website its unaudited financial results for the year ended 31st December 2019.
The Company will highlight any material difference 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 few months have been extremely challenging Coaltech 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.
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 impacted by Covid-19. Management took measures early on to mitigate the consequences of the pandemic including complying with the mandatory regulations imposed across its operations. These measures included closure of the Bulpan production facility and imposing travel embargos due to the restrictions imposed by the relevant authorities. These measures have had a significant impact on the timing of the development of the various commercial and business development activities expected to have advanced in the first half of 2020 and thus our plans have been pushed out by approximately 6 months. In addition whilst the business took measures to reduce costs and in particular 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. CIA is also currently renegotiating its outstanding convertible loan to certain Directors and expects a satisfactory outcome in the near term.
Extensive and solid pipeline of opportunities
Notwithstanding the recent negative impacts discussed above, the Company and Coaltech are facing into the remainder of 2020 with renewed 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 had slowed to a very much reduced pace due largely to Covid-19. Between June and so far in July only one customer received a sample of pellets due to the various limitations still in force then.
Examples of active commercial opportunities
However the Coaltech pipeline for coal fines is substantial and robust and continually developing. Examples of the primary commercial opportunities for coal, currently in process, include:
Power generator client 1: Initial pellets produced and delivered to client early June 2020. Revised testing schedule with target date for a further 20Kg sample and then a 1,000Kg sample in August and September 2020. The final outcome of this testing programme if successful is the development of a circa 30,000 tonnes/month dedicated plant. Investment would be in the range of $10m-$12m.
Power generator client 2: 6,000Kg sample production anticipated 3rd week of July. The final outcome of this testing programme if successful is the development of a further circa 30,000 tons/month dedicated plant. Investment would be in the range of $10m-$12m.
Coal Clients 1 &2: pellets produced end June and 1st week July respectively, one client is executing internal testing, waiting for results, although initial indications are quite positive, the second client is organizing post covid logistics. The final outcome of these two testing programmes if successful is the development in each case of a 10,000 tonnes/month dedicated plant at a coal mine. Investment would be in the range of $6m-$7m per client.
Central Asia client: coal fines received in June, material was initially too coarse and required crushing which has taken place 2nd week of July, pellets production scheduled for 3rd week of July then the pellets will be sent for independent analysis in South Africa and eventually sent to Central Asia. The final outcome of this testing programme if successful is the development of several 30,000 tonnes/month dedicated plants for their mines across the region. Investment would be in the range of $10m-$12m for each such plant.
Local Client RSA: coal fines sample received 1st week of July, pellets production scheduled for 4th week of July. This local industrial user seeks, subject to the outcome of this testing programmes and commercial negotiations, the development of a 5,000 tonnes/month dedicated plant. Investment would be in the range of $3m-$4m.
Southern African colliery. A large mine with millions of coal fines at their mine, have already signed an indicative MOU with Coaltech and further commercial discussions are underway. Delivery of material for testing currently delayed due to Covid-19. The final outcome of this testing programme if successful is the development of a circa 30,000 tonnes/month dedicated plant at the colliery location. Investment would be in the range of $10m-$12m.
The above are illustrative of the demands on the Bulpan production facility and the potential opportunities, all of which are of course subject to commercial negotiations. The long sales cycle is typical in this industry and is reflected in the long-term relationships that result if negotiations are successful. Further opportunities at various stages of development are under discussion across multiple continents. The above opportunities all relate to coal fines processing.
Further business development is underway to expand beyond coal and 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 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 and whilst still early stage, are very substantial indeed and they continue to support the Company financially.”
The Directors of the Company accept responsibility for the content of this announcement.
Clean Invest Africa PLC
Filippo Fantechi - Chief Executive Officer/Executive Director
Telephone: +973 3 9696273
Peterhouse Capital Limited
Telephone: +44 20 7469 0930