Clean TeQ Overview

Clean TeQ (ASX:CLQ/TSX:CLQ) is a world leader in metals recovery and water treatment technology. They have proprietary technology developed over 20 years. Peter Voight founded the company in 1990. They are developing a world class supply of materials for lithium-ion batteries and light-weighting aluminium.

Mining legend billionaire Robert Friedland

They started applying the technology in mining, extracting resources out of the ground better than traditional ways. This got the attention of mining legend billionaire Robert Friedland, who gave a convertible note investment of $1.8 Million in 2013.

Robert Friedland later sold his syerston mine to Clean TeQ, with a small royalty to Ivanhoe Mines (1.5%). Over 1,300 holes have been drilled, confirming what is in the ground. It has been worked on since the year 2000.

He is now one of the largest shareholders with Pengxin Mining (12.9% each) and co-chairman. CEO Sam Riggall owns 27,925,916 shares, 3.7% of the company. Skin in the game is very important.

In 2016, The Mining Journal named the 20 most influential people in mining. Rick Rule, from Sprott US, was number 3. Robert Friedland was number 4. Rick Rule describes Robert Friedland as a legend in this interview

“Why invest ‘elsewhere’ when I have the opportunity to invest alongside legends that have been serially successful.”

The Sunrise Mine

In June 2018, a Definitive Feasibility Study (DFS) was completed which confirmed that mine, now called “Sunrise” will become a globally significant supplier of critical raw materials with ore reserves lasting 40 years, which showed:

Net Present Value of nickel & cobalt sulphates

Has a Net Present Value (NPV) of US$1.4 Billion (A$1.8 Billion) from nickel and cobalt sulphates – which are forecasted to be in a supply shortage due to huge growth in Electric Vehicles and lithium-ion batteries. More information in links provided below. Elon Musk wanted to buy the product at a fixed price in 2017 (Source 2), but Robert Friedland wanted market price due to the massive demand with a supply shortage. In 2019 Clean TeQ Sunrise stands out as the most advanced development project. Over the next 12 years, Bloomberg predicts cobalt demand to triple.

Scandium is worth billions

Has 19,000 tonnes of scandium, which makes it the largest and highest grade deposit in the world. Scandium is in massive demand – it will transform aerospace and transport, but is not commercialised because there was not enough supply (currently 10-15 tonnes per annum). Clean TeQ have solved that problem by becoming a low cost producer. The Nickel, Cobalt, and Scandium story is described here. The Scandium is worth in the 10’s of Billions: 19,000 tonnes x US$1,000/kg = US$19 Billion. Clean TeQ have a 2 year development program with Chinalco to develop scandium alloys. Robert Friedland said these cars are going to be made out of scandium-aluminium alloys. Here is another source describing the benefits.

Low cost producer – a monopoly characteristic

Is a low-cost producer. A low-cost source of nickel & cobalt sulphates, and high-purity Scandium.

Capital cost

The capital cost of all this is US$1.5 Billion in 2018. This will increase when their Project Execution Plan is completed with updated figures. Robert Friedland & Sam Riggall, with the Ivanhoe Group, have raised $15 – $20 Billion over the years. The funding was never a problem, as Sam Riggall states to the Sydney Mining Club. Furthermore, Robert Friedland raised US$1 Billion for Ivanhoe Mines in 2019. They have cash runway so are playing a long game.

Lithium-ion battery recycling

At the Sydney Mining Club, Sam Riggall stated the processing plant can also recycle lithium-ion batteries. This could become another market in the future. The CSIRO have identified this problem.

Money raised and financing

Clean TeQ raised $1.8 million from Robert Friedland in 2013, $15 million from Australian Super in 2016, A$81 million from Pengxin Mining in 2017, and A$150 million at a valuation of $1.15 in 2018. The funding will come from a 50% investment with a partner (which includes nickel & cobalt sulphate product) and 50% debt from 4 banks (the lead arranger ICBC is the largest bank in the world). In March 2019 they had $100 million in cash and no debt. There are approximately 750,000,000 shares outstanding as at March 2019.

More about the battery boom

Here is a good article describing the battery boom, Electric Vehicle battery prices have rapidly declined, lithium-ion batteries should be renamed (to nickel-cobalt as these are the main materials), cobalts emerging deficit, and more about Clean TeQ. CEO Sam Riggall has said there is a global shortage of class 1 nickel sulphide deposits.

Nickel-Manganese-Cobalt (NMC) 811 batteries are popular in the industry, which are 80% nickel, 10% manganese, and 10% cobalt (source). This is a type of lithium-ion battery, and hence why the name is misleading. Tesla use Nickel-Cobalt-Aluminium (NCA) batteries, hence why Elon Musk wanted the product.

Clean TeQ Water is a billion dollar opportunity

Clean TeQ also have a game-changing water purification business. They have a few pilot projects including Fosterville, Oman, DRC and Townsville. Clean TeQ Water have created a JV company with Ionic Industries (Ionic) called “NematiQ” (75% owned by Clean TeQ, 25% by Ionic (source)). 

NematiQ

In water purification applications, graphene oxide (GO) membranes have the potential to offer distinct operational advantages  over the current  polymer nanofiltration membranes, providing a significant commercial opportunity. The development of a cost-effective GO Membrane could displace a large proportion of the existing reverse osmosis and nanofiltration membrane technologies as well as creating opportunities for new water filtration applications. This is a US$5 Billion market.

The global opportunity

Mega banks are buying up the world’s water. Seventy percent of India’s water supply is contaminated, causing an estimated 200,000 deaths a year.

Independent Valuations

In January 2018, Macquarie gave a valuation of A2.30.

In May 2018, Macquarie gave a valuation of A$1.80.

In June 2018, BMO Capital Markets gave a valuation of $2.00.

In December 2019, GMP (Canada) reduced the cobalt price from the DFS (US$30/lb) to US$20/lb and gave a valuation of C$1.15.

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About Me

My name is Mark.
I’m an Early Stage Technology Investor and help with marketing.
Founding Investor and did Marketing at CXi Software.
I’m part of an investor community called IO Private.
Mentor at Startupbootcamp Australia.