Published On: August 2nd, 2023
Fig. 1 Carbonxt Group Limited Inc. Logo
Carbonxt and Kentucky Carbon Processing JV Plant Gains Momentum
Carbonxt Group Limited (ASX: CG1) (“Carbonxt” or “the Company”) has recently published its report for the June 2023 Quarter, offering valuable insights into the critical areas of activity during this period. The Company showcases significant progress and positive developments in various aspects. Some notable highlights include successfully executing legal documentation for the Joint Venture (JV) with Kentucky Carbon Processing, LLC (KCP) to establish a state-of-the-art activated carbon plant in Kentucky, USA. This strategic move enables Carbonxt to offer activated carbon products with a 50% ownership stake in a 10,000-ton-per-annum plant producing high-quality activated carbon products, with further expansion anticipated for minimal additional capital expenditure.
The development of the KCP marks a transition from the existing Inez Power facility to an activated carbon plant, reducing development risk, lowering costs, increasing capacity and ensuring better scheduling of future cash flows for Carbonxt Group Ltd.
This JV also enables Carbonxt to enter the wastewater treatment sector for Activated Carbon products, like powdered activated carbon (PAC), significantly increasing the Company’s estimated addressable market by approximately USD 900 million. Noteworthy cost management efforts led to a significant 24% decrease in product manufacturing and operating costs compared to the previous quarter. This decrease was primarily due to implementing planned efficiency actions at the Arden Hills and Black Birch facilities.
Regarding the Joint Venture with KCP, Carbonxt commenced construction for the Kentucky plant during the quarter, and sales are scheduled to begin in 1H24. This strategic partnership provides them with a 50% share in future income streams and an annual production increase of +10,000 tons, with room for further expansion of another 10,000 tons at a meagre cost.
Activated Carbon Pellet (ACP) revenue experienced a temporary 37% decrease on a quarter-on-quarter basis due to seasonality from Carbonxt’s largest customer. However, the customer is still forecasting similar annual demand, giving the Company confidence in a steady performance.
Carbonxt’s underlying solid operating cash flow reflects prudent inventory management, and they anticipate recouping the primary ACP customer’s inventory buildup in the September quarter. Their pending new activated carbon plant in Kentucky remains on track. It is expected to unlock numerous commercial opportunities and expand into new customer segments and applications in the 2024 Fiscal Year.
With significant progress in the Joint Venture, efficient cost management and promising growth prospects in key markets, Carbonxt Group is well-positioned to capitalise on its strengths and continue delivering positive outcomes in the cleantech industry. Managing Director Warren Murphy expresses enthusiasm for the Kentucky manufacturing facility’s execution and construction progress, ensuring a comprehensive update in the September quarter. The AC Pellets sale forecast remains unchanged despite deferred deliveries in June. The Kentucky plant provides direct access to a significant US addressable market opportunity for PFAS solutions, where Carbonxt is uniquely positioned to capitalise on the growing demand for clean technologies.
Company Background
Carbonxt Group Limited (ASX: CG1), a pioneering environmental technology company, identified the potential in the mercury removal market from coal-fired power stations in 2006. Since then, their unwavering dedication has yielded impressive results. In 2010 they subjected their non-brominated, oxidising formula to rigorous lab testing, leading to full-scale field tests by 2012. This breakthrough drove remarkable growth as they secured activated carbon manufacturing partnerships in 2013.
Their expertise expanded to encompass various applications as they collaborated with cement plants, industrial boilers, incinerators and potable water facilities. Their commitment to innovation ensures the delivery of superior oxidising, non-corrosive activated carbons, maintaining maximum efficiency and sustainability. Carbonxt Group’s devotion to reducing environmental impact shines through their meticulous sourcing of raw material byproducts for creating eco-friendly activated carbon. As they continue their pioneering journey, their numbers speak volumes about their dedication and impact.
About Mr Warren Murphy, Managing Director of Carbonxt Group
Fig.2 Mr Warren Murphy, Managing Director of Carbonxt Group Limited (CG1)
Accumulating a remarkable career in various sectors, MANAGING DIRECTOR Mr WARREN MURPHY has achieved significant milestones in the financial industry. His professional background includes valuable contributions to esteemed energy organisations such as Australian Infrastructure and Project Finance Group, Alinta Limited, and Sydney Gas Limited. MANAGING DIRECTOR WARREN MURPHY’S adept guidance and leadership have played a pivotal role in driving Carbonxt’s continuous growth and success. His extensive involvement in global projects highlights his invaluable impact on the Company and the wider industry. Thanks to his diligent oversight, CARBONXT GROUP LTD (CG1) is well-prepared to sustain its trajectory of growth and innovation well into the future.
Investor’s Outlook: Strengthened Financials and Diversified Revenue
- Carbonxt achieved a significant development milestone with the execution of legal documentation for the Joint Venture with Kentucky Carbon Processing, LLC (KCP) for a state-of-the-art activated carbon plant in Kentucky, USA. This move positions CG1 to hold a 50% stake in a 10,000 tons per annum plant producing high-quality activated carbon products, with potential for further expansion.
- The Joint Venture opens doors to the wastewater treatment sector for Activated Carbon products, expanding Carbonxt Group LTD’s estimated addressable market by approximately USD 900 million.
- Carbonxt Stock is trading at AUD 0.061, with a 52-week high/low of AUD 0.140/AUD 0.046. The Company is well-positioned for growth due to the rising demand for powdered activated carbon (PAC), making it an attractive opportunity for potential investors.
- The Company reported AUD 2.4 million in quarterly customer receipts while successfully implementing efficiency measures that resulted in a 24% reduction in product manufacturing and operating costs compared to the previous quarter. The value of unsold inventory increased to AUD 1.9m, reflecting strategic preparation for meeting forecasted demand.
- Carbonxt Group LTD’s partnership with Kentucky Carbon Processing unlocks a significant US market opportunity for removing per- and poly-fluoroalkyl substances (PFAS) from drinking water. The PFAS market is projected to experience substantial growth over the coming decade.
- The Company’s prudent financial management, led by Managing Director Warren Murphy, is evident through the underlying Operating Cash Flow of AUD 964k and the well-managed net cash outflows from investing activities, primarily driven by a USD 6.9 Million investment in the Kentucky Joint Venture.
- As the Company capitalises on the Joint Venture and leverages its expertise in mercury control, investors can expect sustained growth and value creation.
Carbonxt Group LTD (ASX: CG1) Attracts Investor Interest
Carbonxt Group LTD, a high-growth cleantech company, has become a game-changer in emissions reduction with their patented activated carbon products, including AC Pellets, effectively tackling toxic pollutants in industrial gas and wastewater treatment streams. Notably, they crafted an exceptional oxidising, non-brominated, non-corrosive pellet product. Excitingly, a new manufacturing plant in Kentucky, USA, is set to launch in 2023, furthering its reach.
The Company caters to power plants, cement plants, wastewater treatment operations and industrial boilers, providing practical solutions. With an extensive and loyal customer base under long-term contracts, including an impressive 8-year extension, Carbonxt Group LTD (ASX: CG1) showcases its financial stability. As the only US-based Activated Carbon Pellet manufacturer, they have a competitive edge, presenting potential growth and profit prospects for investors.
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