today's tour

Right...here goes. I've just managed to get some time to report on the tour today. The tour was in 3 groups of 12 or so, an hour apart, with each tour getting a half hour or so afterwards to ask questions. Kos specifically mentioned Hotcopper and was therefore coy about any additional information over and above that which has been announced publicly, which I totally respect. He mentioned that much of the information written here is false (if we didn't know that already!) and that he has been misquoted more than once. He also mentioned the recent activity of day traders, but didn't give an opinion one way or the other on that subject.

First of all, the plant. The tour was conducted by Adam, who I believe is the Production Manager, a younger guy, who struck me as extremely entusiastic and competent. The plant itself is in a converted facility, and it does strike me that it is truly a pilot. The process itself is deceptively simple, I got the feedback that the IP applies to the whole process. Many of the elements such as the extruder and the conditioning conveyor are relatively simple units which are found in many industries. The main R&D seems to have been invested in the Pack Bed Dryer and Water Recovery systems where they have invested a lot of time.

The process is pretty simple to understand. The most valuable part of the visit for me was the chance to talk to the guys in the team, and this is where I am really impressed and excited.

Kos has recently been in Vietnam, and I it appears that there is another delegation from there due to visit Melbourne very soon. Their main interest is been driven by the demand from China for Vietnamese black coal. They project a shortfall in their own production in the coming years and are keen to protect coal as a source of income. They are keen to lock in ECT as a way of protecting this, but they have more recently become interested in ECT as a company that can help them with their domestic consumption/electricity generation. They are actively amending feasibility studies for planned black coal power plants in Vietnam so they can consider what role Coldry can play.

I get the impression that they are focusing on the construction of the plant in victoria, not in Vietnam - Adam was clear that Victorian coal has significant benefits in terms of its residual ash content. They pointed out clear advantages for the local power stations of having ECT on site, not least the ability for them to source 4 degree water from ECT as a by-product, which will give them significant advantages to using temperate water now, which in the summer time, reduces their efficiency significantly.

This seems to be the main focus area for ECT for the coming months. China and Indonesia still seem a fair way off as target markets, but they do have plans to appoint local agents in the near future who will operate on a commission basis going forward. They also mentioned the Ukraine as a medium-term focus. When they talked about expansion in other countries, they have a clear focus on selling the IP and earning income from royalties, they will not be in the business of building plants with their own capital and selling the actual pellets. They have advanced plans to build the Coldry plants in pre-fabricated kits and will be able to ship them in containers to any part of the world. They had samples of coal from all over the world in the plant.

Kos talked about recruting the best people from the coal industry over the coming years, and that the vast majority of new roles will be Sales roles over the coming years.

McDonell Dowell may manage the tenders for the manufacture of these kits. On that, they are keen to include as many top tier consultants as possible and have been very deliberate about including world-class outfits such as Arup.

When you see the finished product, it's easy to see one advantage over black coal exports which I have never thought of. The finished product is really small. They talked about current black coal exports which are often shipped in rock-size portions, which creates a lot of inefficency in terms of transportation and capacity. Coldry is more like pebbles and gravel, which means you can transport much more volume in the same space. They also gave us some Coldry samples to take home, with the challenge to put it in a glass of water to see how transportable it would be - Kos said it would absorb about as much water as a Lego brick!

We saw the Matomor plant also, the commercial feasibility study should be out in the next 6 months or so. They seem excited by the involvement of Hatch, but this appears to be a secondary focus for them. The extension gained from the Cajella group will give them plenty of time to progress this over the medium term.

They apologised for the quality of their website and will have a new one up and running by mid-late September.

Overall, this is still a small business. But the excitement and competence among the people working for the business is very very reassuring. The Vietnam deal is ridgy didge and will be a company maker. I have more to say, and am happy to take any questions - have to head out so I can't type any more.