Cobalt, scandium, water, it's shopping time

Opinion: water purification is a good business to be in

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Cleaning polluted water is one of Clean TeQ's specialities, but is still waiting for a partner with deep pockets to exploit one of world's highest-grade scandium deposits.

Cleaning polluted water is one of Clean TeQ's specialities, but is still waiting for a partner with deep pockets to exploit one of world's highest-grade scandium deposits.

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Clean Teq has some of the best technology to clean polluted water.

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When the Punter went into full defensive mode and sold about half his portfolio in the middle of June, one of the most painful decisions was to include Clean TeQ Holdings (ASX code CLQ) on his chopping list.

Selling them at 19c a share meant locking in a 50 per cent loss, which always hurts. Since then the shares have fallen another 30 per cent, which is some consolation.

Clean TeQ has two main businesses - cleaning polluted water and mining and metals extraction.

Revenue from the water business fell in the six months to the end of December, bringing the half-yearly loss after tax to $10.3 million.

Its massive Sunrise project in NSW is one of the largest cobalt deposits outside Africa, and one of the largest, and highest-grade deposits of scandium ever discovered.

But so far it has failed to find a partner and has had to delay a final decision on Sunrise.

At the end of December it had about $57m in the bank, but by the end of May that was down to $42.2m. Directors' fees have been cut by about 40 per cent.

Key management personnel, including chief executive Sam Riggall, have taken a 20 per cent cut in total fixed remuneration, and no one in the company will be getting a pay rise in the next 12 months.

Perhaps it is not surprising the shares are only worth a third of what they were 11 months ago.

Nevertheless the Punter has put them back on his shopping list, and placed an order for 15,000 CLQ at 12c, just below the market.

In a world short of clean water, water purification is a good business to be in.

Clean TeQ appears to have, and be improving, some of the best technology in the area.

Cobalt and scandium are expensive "new technology" metals. He still feels that a big slide in the stock market is on the cards, but he notes that at the time of writing, buyers for CLQ shares in the 12c to 14.5c range outnumber sellers by nearly four to one.

  • The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
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