company update

2 May 2003
VIROTEC UPDATE TO SHAREHOLDERS
The Directors provide the following update on some recent activities of Virotec
International Ltd (ASX/AIM: VTI). This update is to inform shareholders and the
market of the significant progress made commercially in each of Virotec’s main
divisions and in other corporate areas.
ViroMine Division
This Division predominantly services the mining industry, providing solutions to acid
mine/rock drainage and waste rock dump remediation. The following progress has
been achieved within the Division:-
Agua Forte – Portugal
Virotec has successfully completed its work on the Agua Forte mine remediation
project in Portugal with its strategic partner Terra Plus. The project was
commissioned by EXMIN (Companhia de Industria e Servicos Minieiros e Ambientais
SA) and Virotec, Terra Plus and EXMIN are now considering further remediation
projects in Portugal.
U.S. EPA (Region 8)
As previously advised the initial trials at the Gilt Edge Mine in South Dakota
conducted by the U.S. EPA (Region 8) have been completed and a case study is
now available on the project from Virotec’s website. Due to the satisfactory results
achieved, Virotec will participate in further trials to be conducted on site. Results of
these trials will be provided to the market when it is available from the U.S. EPA.
Geoenvirotec – Korea
Virotec has shipped the first container load of 22 tonnes of Acid B Extra™ to its
Korean strategic partner Geoenvirotec Co. Ltd. for use in an acid rock drainage
project being conducted by its client, Korea Highway Corporation. Dr. Jeongyul Suh,
CEO of Geoenvirotec, has reported, “After a successful visit to Virotec's commercial
laboratory in Lismore and mine remediation centre in Drake by officials of Korea
Highway Corporation and other Korean delegates, we have secured the first of
several contracts for the treatment of acid rock drainage and waste rock dump
remediation in South Korea. The officials were particularly impressed with Virotec’s
new active mineral treatment system, and together we see many more application
possibilities in different industries for such a system.”

Savage River - Tasmania
Virotec and its project partner, Pitt and Sherry consulting engineers, have been
contracted by the Department of Primary Industries, Water and Environment
(DPIWE) in Tasmania and have successfully conducted initial trials of the ViroMine
Technology on acid mine drainage at the Savage River mine site. This initial testing
is anticipated to be the first stage in the remediation of the Savage River site.
ViroFlow Division
This Division provides wastewater and sludge management services to a variety of
industries, providing solutions to deal with wastewater contaminated with heavy
metals and phosphorous. The following progress has been achieved within the
Division:-
Tanneries
Virotec has completed a one-month funded wastewater treatment demonstration
using its ViroFlow™ Technology at Australia’s largest sheepskin tannery located in
Queensland. Wastewater generated from the tanning process had high levels of
chromium, suspended solids, BOD and sulphates. The existing wastewater
treatment system was inadequate and required substantial improvement in order to
reduce the levels of pollutants in the discharge water to acceptable limits to comply
with Regulatory guidelines. Virotec’s ViroChrome™ reagent was used to treat
wastewater from the tannery and successfully reduced the levels of contaminants in
the wastewater, in particular chromium and sulphates, to well below the regulatory
discharge limit. A noticeable reduction in odour has also been reported by tannery
staff and local government officials.
Following the outstanding success of the demonstration, Virotec has signed a twoyear
license to supply ViroFlow™ Technology to the tannery. In addition, Virotec
expects to begin later in 2003 remediation trials on existing tannery sludge stockpiles
which have accumulated for 25 years at the same tannery.
Whilst this license is not significant in dollar terms, it is significant in demonstrating
market acceptance and the commercial viability of Virotec’s innovative technologies
in this large global market.
Virotec has also agreed to demonstrate the ViroFlow™ Technology at another two
tanneries, one in central Queensland and one in New South Wales, commencing in
May 2003. These demonstrations will be fully funded and once completed will
provide Virotec with complete case studies on different size tanneries that will
facilitate the appointment of the appropriate strategic partners and the marketing of
the Technology overseas.
Paper Mill
Virotec has been awarded a contract for the remediation of mercury contaminated
wastewater at a Tasmanian paper mill. Whilst the size of the project is small, it
demonstrates the ability of the Technology to remediate mercury contaminated
industrial wastewater which was stored for more than 10 years without any viable
solution. The usage of the ViroFlow solution has been approved by DPIWE in Tasmania. There are significant markets for this solution, particularly in Europe,
which the company is presently exploring.
ViroSewage Division
This Division predominantly services the sewage industry, providing solutions for the
removal of phosphorous and heavy metals, the reduction of Biochemical Oxygen
Demand (BOD), and Total Suspended Solids (TSS), and the control of odour in
sewage effluent, and for the management of bio-solids. The following progress has
been achieved within the Division:-
Kilcoy STP Trial Completed
Virotec successfully completed a full-scale trial of ViroSewage™ Technology at the
Kilcoy Shire Council sewage treatment plant (STP), in Queensland, Australia, in
February 2003, Independent analysis demonstrated that ViroSewage™ is an
effective means of decreasing phosphorous, odour, (BOD), and (TSS) in sewage
effluent, improving colour, turbidity, and clarity in treated effluent, and increasing
hydraulic throughput.
Cecil Forbes, the chief engineer of Kilcoy’s STP has said “The implementation of
ViroSewage™ Technology has resulted in significant improvements in removal of
phosphorous, nitrogen, suspended solids and biochemical oxygen demand.
Additionally, the clarity of the treated water has been consistently high, and is a vast
improvement over our previous system. We have found there has been substantial
odour reduction from the typical odour generation points, such as the primary clarifier
and digester.
“ViroSewage™ Technology has also enabled us to look at re-use options for the biosolids.
The bio-solids produced are currently sent to landfill and we are now
investigating re-use of this valuable resource.”
Appointment of Business Development Manager
Virotec has appointed Mr Frank Gnanam as International Business Development
Manager for the ViroSewage™ Division.
Mr. Gnanam, MBA B Tech Chem Engg CPE CE MIEAust MIChemE, is an
experienced Business Developer who, between 1995–2002, had responsibility for the
marketing, sales and business development activities for Australia, New Zealand and
the Asia Pacific whilst employed by BP Solar Australia (renewable energy) and Sulo
Australia (solid waste management). Prior to this period Mr Gnanam has
predominantly worked in specialist water and wastewater treatment companies,
notably as Plant Manager with Sydney Water (1991–1994), managing the operations,
maintenance and asset management of Sydney Water’s second largest STP. As a
result, in addition to his experience in business development, Mr. Gnanam is well
versed with equipment and technology used in the wastewater treatment industry.
Mr Gnanam is charged with developing a cash flow positive business from the
ViroSewage™ Technology, initially in Australia with a view to the international market
in due course.

ViroSoil Division
This Division predominantly services agricultural, industry and property developers,
providing solutions for dealing with acid and heavy metals mobilisation generated
from Acid Sulphate Soils, as well as fertiliser and soil remediation services. The
following progress has been achieved within the Division:-
Aquaculture
The commercial demonstration of the treatment of Acid Sulphate Soils (ASS) at a
prawn farm owned by Tomei Australia Pty Ltd has concluded. Results achieved
demonstrate that the ViroSoil™ Technology has the ability to lower pond pH and
reduce heavy metals in pond sand, both major stressors on prawn life and growth.
Independent toxicology studies performed also reveal that there was no metal uptake
in monodon prawns in the two ponds to which the ViroBind™ reagent was applied.
The crop has been harvested in April 2003 with the yields from the ponds treated
with the ViroBind™ reagent being the highest ever recorded for the ponds.
Mr Thorbjorn Lyster of Tomei Australia noted that:
“The soil and water analytical results taken from within the prawn ponds confirmed
the efficacy of Virotec’s treatment. Visual inspection and toxicology analyses
showed that the prawns were as healthy as any on the farm during the later stages of
the crop. Due to market factors, these ponds were amongst the last prawns to be
harvested from the farm however they appear to have survived well and were able to
grow to a larger than anticipated size.
We are still finishing up the harvesting process and have not yet been able
to complete our results, however it is clear at this stage that the results for at least
one of the treated ponds (Pond #12) is the best we have seen for this pond in the 8
years of its existence.
This pond is expected to yield at a rate of around 4 times than that of the next
best harvest ever from that pond, and in the order of 100 times better than the usual
production level in this pond. For the first time since its construction this badly
affected pond has produced at a commercially viable level. At this stage it appears
that the yields from both treated ponds are better than we would generally expect
from these ponds when compared with our highest yielding ponds for the same
prawn species.”
Following this successful application, Virotec plans to actively market the ViroSoil™
Technology to the aquaculture market, initially in Australia and then internationally.
Alumina Services and Production Division
This Division predominantly services the Alumina Refinery industry by marketing the
Basecon™ Technology, a treatment for the residue generated by refineries and is
responsible for the production of Virotec’s product range. The following progress has
been achieved within the Division:-

MAL – Hungary
Virotec has entered into a Memorandum of Understanding (“MOU”) with MAL
Hungarian Aluminium Producing and Trading Co. Ltd. in Hungary to evaluate the
introduction of the Basecon™ technology. The stated objective of the MOU is to
assist the refinery to cease the production of caustic red mud waste. The evaluation
process will be funded by the refinery and Virotec will have exclusive use of the
treated material for its future production of its Bauxsol™ range of products.
Eurallumina Production
Virotec has streamlined its production process at the Eurallumina plant in Sardinia
(Italy) and is now able to produce a range of its products more efficiently. As a result,
products are now being despatched from Eurallumina throughout Europe and
Australasia.
Corporate and Other Matters
In addition to the commercial progress noted above, Virotec continues to negotiate a
number of agreements and alliances that will assist in advancing the Company into
new sectors and regions.
License for the HydroDec Technology
The Commonwealth Scientific and Industrial Research Organisation (“CSIRO”) has
granted to Virotec an exclusive licence to commercialise the HydroDec Technology.
The licence has an initial term of 13 years which may be extended subject to Virotec
meeting minimum performance criteria.
The HydroTec Technology was developed and patented by CSIRO with the
assistance of industry partners. The HydroDec Technology is a technology for the
refurbishment of dielectric fluids (in particular used transformer oil), and/or the
dechlorination of chlorinated hydrocarbons specifically and the dehalogination of
polyhalogenated hydrocarbons more generally. The Technology is unique in its
ability to fully refurbish spent dielectric oils and at the same time completely remove
PCB contamination. It is virtually a zero emission process that allows for greater
than 99% recycling of spent dielectric oil to new dielectric oil.
This addition complements the existing suite of Virotec’s technologies as it is an
effective treatment of organic contaminants that are unable to be treated by the
Bauxsol™ Technology. In line with Virotec’s strategic plan, it will seek a suitable
partner to assist in the marketing of this technology.
Research and Development Agreement with Sugar Research Limited
In March 2003, Virotec signed a Research and Development Agreement with the
Sugar Research Institute (SRI). This Agreement allows SRI, based in Mackay,
Queensland, to jointly conduct research into a number of areas which may have
commercial value to the sugarcane processing, refining and other sectors of the
sugar industry. The signing of this agreement follows successful research conducted
by the SRI using a variety of Bauxsol™ blends to demineralise and decolour clarified
juice and refinery liquor. This is a further example of the platform nature of the
Bauxsol™ Technology.

Agreement with South Eastern Link Pty Ltd
In April 2003 Virotec signed a marketing agreement with South Eastern Link to
market the products and services of Virotec in Indonesia.
Attendance at Conferences
To assist Virotec in achieving even greater international recognition for its
Technologies, the Company has become more actively involved in delivering papers
and presentations at key conferences. Of particular note are:
· Professor David McConchie will speak at the CIM Mining Conference
Exhibition to be held in Montreal, Canada in May 2003. A paper titled “The
use of Bauxsol™ technology in mine site management and remediation” will
be presented. Professor McConchie also delivered a paper titled “The use of
industrial mineral additives to enhance the performance of Bauxsol-based
environmental remediation reagents “to the Australian Industrial Minerals
Conference in March 2003.
· Virotec’s European representatives Dr. William Prast and Paul Gazzard were
invited to speak at a conference on dam safety held by the Finnish
Environment Institute SYKE, in April in Helsinki. The conference included
more than 20 presentations by Finnish representatives from national and local
government, as well as from large Finnish industrial corporations. Virotec
International was the only non-Finnish company to be asked to speak at the
meeting. It was an opportunity to present the significant achievements
recorded in Portugal, and to identify opportunities for similar project
assignments in Finland and other Nordic countries.
· Dr. Lee Fergusson presented papers on Virotec’s municipal and industrial
wastewater treatment sludge management applications to the largest
chemical treatment conference in South-East Asia, “ChemTech 2003”, held in
Mumbai, India in January 2003, and to a peak industry conference “TechCon
2003” held in Mumbai during the same month.
· Virotec has previously presented papers at the 6th International Alumina
Quality Workshop and the 5th International Acid Sulphate Soils Conference,
both in late 2002.
Website Upgrade
Virotec has recently made significant changes to its website, which can be found at
www.virotec.com such that it now includes additional information regarding its
technologies, reagents, research and development, and commercialisation activities.