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Why the Clean TeQ share price is jumping higher today

share price rocket

The Clean TeQ Holdings Limited (ASX: CLQ) share price is defying the broader market weakness as it rallied 6.7% to 40 cents during lunch time trade.

The CLQ share price jump comes on the back of the metals recovery and water treatment technology developer’s June quarter update while the All Ordinaries (Index:^AORD) (ASX:XAO) index dipped 0.2% after hitting an all-time high yesterday.

Management reported that the front-end engineering and design (FEED) of the Clean TeQ Sunrise project is progressing to plan and is approximately 43% completed.

FEEDing the optimism

It also said that one of Macquarie Group Ltd’s (ASX: MQG) divisions have been appointed to secure a partner to help fund the project after Clean TeQ received a number of enquiries – including potential partners from the electric vehicle supply chain industry.

The Sunrise project is a nickel, cobalt and scandium project in New South Wales that uses Clean TeQ’s proprietary ion-exchange processing technology. The company believes the plant will position it to provide significant quantities of low-cost scandium for production of the next generation of lightweight aluminium alloys for key transportation markets.

Clean TeQ’s technology can also be used to cost effectively treat water and it’s building a number of treatment plants in Australia, Oman, the Democratic Republic of Congo and China.

Water treatment opportunities

It’s working on the Fosterville Gold Mine in Victoria where it is engaged to design, supply and commission a two million litre-per-day Clean TeQ DeSALx mine water treatment plant and has completed a waste water treatment plant in Oman, which is done in partnership with Multotec Process Equipment. The commissioning of the plant is expected in the third quarter.

The company reported that it had $78.9 million in the bank at the end of the June quarter after it received a cash payment of $14.6 million under the Research and Development (R&D) Tax Incentive for FY18.

Small cap shooting stars

As exciting as Clean TeQ’s technology may sound, no one will think of the company as a hot tech stock as its share price has collapsed 43% over the past year despite today’s bounce.

That’s disappointing given that the All Ords and the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index are both 9% higher and small cap tech stocks have been leading the charge with the Netlinkz Ltd (ASX: NET) share price, Iodm Ltd (ASX: IOD), PainChek Ltd (ASX: PCK) share price and Tinybeans Group Ltd (ASX: TNY) share prices increasing by several folds over the period.  

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Returns as of 6th October 2020

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. Connect with him on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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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