The Clean TeQ Holdings Limited (ASX: CLQ) share price has fallen 8% today on announcement of its quarterly activities and cash flow report.
Clean TeQ uses its proprietary continuous ion exchange technology for metals recovery and industrial water treatment. It has touted its flagship project, Clean TeQ Sunrise, as ‘one of the highest grade and largest nickel and cobalt deposits outside of Africa and one of the largest and highest grade scandium deposits in the world’.
Why the market reacted negatively
1. Delay in first production
The company announced that it is working on an updated overall project delivery schedule and that it is expected that there will be delays in the dates of the Final Investment Decision (FID) and first production. While the company had previously expected a FID in ‘early 2019′, there was no mention of ‘early’ in its quarterly report today.
2. Significant cash burn
In its cash flow statement, the company posted net negative cash flow of almost $17 million in the December quarter. This has likely got some investors worried, or at least wondering if this cash has been put to good use. The current cash balance stands at $117 million.
3. Project financing doubts
Clean TeQ is yet to secure financing for its Sunrise Project. This is another potential concern for investors, although Clean TeQ is still ‘confident of delivering a project financing solution prior to a FID in 2019’.
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Returns as of 6th October 2020
Motley Fool contributor Cale Kalinowski 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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