Is Clean TeQ Holdings Limited the next clean energy star?

Shares in Clean TeQ Holdings Limited (ASX: CLQ) climbed 1.75% higher to $1.16 on Wednesday, following the release of the company’s activities report for the March quarter.

Clean TeQ owns the yet to be developed Sunrise multi-metal project – a large high-grade deposit of nickel and cobalt in New South Wales – and a proprietary technology to efficiently transform these metals for the lithium battery sector.

The company is co-chaired by mining tycoon Robert Friedland and Zhaobai Jiang, chairman and founder of Chinese conglomerate Shanghai Pengxin.

What was in the update?

In order to accelerate the project’s development and commence production one year earlier than previously expected, Clean TeQ just raised $150 million at $1.15 a share through a heavily oversubscribed institutional placement. Funds will finance engineering and construction work and the identification of higher-grade cobalt areas.

The placement saw American mutual fund Fidelity Investments acquire a 6% stake in the company, becoming the third main shareholder after Robert Friedland and Shanghai Pengxin, each with an interest of nearly 14%.

The Sunrise project is also one of the world’s largest deposits of scandium, and during the quarter Clean TeQ formed a partnership with Chinese aluminium giant Chinalco and Chongqing University to develop and commercialise scandium-aluminium alloys: new lightweight materials for a more energy-efficient transport industry.

The NSW government granted Clean TeQ the mining lease for Sunrise in February, but a few steps are still to be taken before commencing production. The company is still in the process of completing a definitive feasibility study, which was extended to June 2018 in order to evaluate a proposal from a major engineering contractor for the construction of the Sunrise processing plant. The board is expected to make its final investment decision by the end of the year, after which Clean TeQ will commence construction.

Foolish takeaway

As the single owner of the Sunrise project, Clean TeQ seems very well placed to ride a boom in demand for materials in the lithium battery and transport markets. Today’s update signals that the company is seeking to accelerate preparatory work in order to supply these materials as soon as possible.

Despite the many steps yet to be completed before the company actually starts mining and generates positive operating cash flows, I think Clean TeQ is an interesting option for betting on a clean energy revolution of transport.

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Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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