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2.5¢ phoslock environmental technologies limited

Phoslock Presentation, page-7

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redram

148 Posts.

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19/10/18

12:18

Post #: 36186452
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Originally posted by Inchiquin: ↑

Looking over the transactions on Thursday, I got the impression that a Fund might have been buying, and perhaps this time not just an Index Fund, as seems to have been the case in late September.

Once again, you could see that pattern of of large chunks of shares being repeatedly gobbled up: for example, at 10:19:03, $30,000 worth of shares bought; again at 10:31:28 nearly $45,000 worth of shares nabbed in a single swoop; at 10:38:14 another $27,000; at 12:00:41 $20,000; at 12:21:19 $22,000 worth of shares snapped up; and so on. The pattern doesn't look as if it is the result of a large number of small investors swarming the stock.

Turing to the latest company presentation, I was a little disappointed that they seem to be sticking with that rather insipid $7 million forecast for international sales.

I understand that companies need to be careful not to over-promise and under-deliver, and I am aware that some Phoslock shareholders have complained about this in the past, but even so, from where I stand $7 million looks like a really embarrassing low-bar target.

A few months back, when I was researching the outbreaks of blue-green algae in Germany over the last summer, I remember reading one report which mentioned that the German state of Lower Saxony was making 10 million Euros (just over $16 million in Australian dollars at the current exchange rate) available to water specialists to improve the quality of lakes in the region. Keep in mind that this is from just one region, in one country, in of one of the four key ex-China markets of this company.

Perhaps another example can be found in the article on the lake in Canada that Mickem mentioned in his previous post. As with the Lower Saxony example mentioned above, it would seem that the value of this one project could exceed the entire international revenue forecast for 2018-19.

Here is the translation of the article; it appears to suggest that the work in Roxton Lake could be worth $9 million CAD (possibly this may be referring to the cost of dredging the lake, the article is a little ambiguous):

...Roxton Pond will start dealing with its geese next week. As recommended by the feasibility study for the restoration of Lake Roxton, the municipality will next week begin nightly scaring away the migratory birds whose droppings are a source of phosphate, as announced on Wednesday evening during an information session.

"Roxton Lake has cancer," says Daniel Néron, an environmental expert who developed the plan with his colleague Hugo Thibaudeau Robitaille from T2 Environnement. According to experts, the amount of phosphorus contained in the body of water is 5 to 10 times greater than that of a healthy lake.

The tests revealed that the phosphate comes mainly from the lake itself, i.e. sediments brought over the years. The annual influx of tributaries still represents 35% of the amount of phosphate evaluated at 1169 kilograms."It's very difficult to change the external contribution, if you are able to reduce by 30%, you are Heroes" are explained Hugo Thibaudeau Robitaille.

The solutions raised by T2 Environnement propose to treat the phosphate already present in the sediments of the lake, either with a Phoslock treatment similar to what was done in Bromont last year, a treatment with alum or an operation of sediment dredging, the cost of which could however be more than $ 9 million.

In all cases, the experts advise that the treatment should be accompanied by actions to reduce the external contribution.

This is the last point that the municipality of Roxton Pond decided to tackle first. As a result of chasing away the geese, the mayor Pierre Fontaine would like to reduce the goose population stopping at the water by 75%. A boat is expected to begin next week patrolling Roxton Lake by night. The goal is to change the habit of geese stopping at Lake Roxton on their annual migration.

"There should be medium-term impacts on water quality, say 5 to 10 years," says Thibaudeau Robitaille.
An amount of $ 75,000 has already been granted to the project by the City.

It is worth noting the comment from Hugo Robitaille, the environmental expert quoted above: anyone who was able to reduce the phosphate content of the lake by 30% were, in his words, 'heroes'.

Keeping this in mind, the caption on the bottom of page four of the latest Phoslock announcement, regarding the Beijing Canal treatment is interesting:

A combination of Phoslock, zeolites, bacterial products and aeration used to turn an algae infested canal into clean industrial water.

Phosphorous down 85%, and Nitrogen down 75%

With the tools the company has at its disposal today, and the spate of prominent water-contamination problems in countries such as Canada, the United States and Germany over the last six months, there really should be no reason as to why the company couldn't exceed the $7 million international revenue target set for this financial year.

Especially so when you take into account that the Australian dollar has been (so far) working in our favour this year.

Expand

Agree with all of the info you have provided.

Be careful though when you expect results from this sort of article. This sort of situation is not new. It has been the case our company's entire history and I, among many other investors, thought that due to the extent of the worldwide problem, that this stock would explode.

Even within this article there are hints that they are nowhere near making a call on addressing this problem or that when they address it they will use Phoslock. Believe it or not, they are actually considering the use of toxic and inferior alum as well. As you stated, they have allocated $75K, this is more an indicator that they are actually not ready to move. Where are the $100Ks or more actually required.

They, and the thousands of others in the same boat, may or may not move some time over the next 10 years. That's the frustration of being a long term shareholder and, no doubt, the frustration of being a board member.

Having said all of this, I am extremely excited at the company's near term prospects. But I only need to reflect on the results for the last 12 months to temper my excitement. (let alone the past 15 years) I suspect that the company may exceed next years forecast significantly, but I also expected us to beat last years forecast and we missed it.

Keep a lid on it or risk becoming disillusioned. But pray that you are wrong!!

PET Price at posting: 46.0¢ Sentiment: Buy Disclosure: Held
9 Upvote

4 Great analysis

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