The Phoslock Environmental Technologies Ltd (ASX: PET) share price has surged by 21% today after the water treatment company reported new contracts and project extensions. New project sites have been confirmed in Washington State and New Jersey, and a Brazilian contract has been extended.
What does Phoslock do?
Phoslock specialises in engineering solutions and water treatment products to remediate polluted lakes, rivers, and canals. The company produces a product that removes phosphates and other contaminates from water bodies, and is also safe to use in drinking water reservoirs. Removing excess phosphorus from water inhibits the growth of harmful algal blooms that can have detrimental impacts on aquatic and human life.
What did Phoslock announce?
Phoslock announced that it has been contracted to treat the 240 hectare Kitsap Lake in Washington State and Lake Hopatcong in New Jersey. If Phoslock's technology is deemed successful and cost-effective at Lake Hopatcong, this could set the precedent for large-scale prevention of harmful algal blooms in other lakes through New Jersey and the United States.
The company highlights that the contracts represent an important opportunity for Phoslock's technology to be demonstrated in new regions and could result in further business in the US, where water quality issues are receiving more government and public attention.
In Brazil, Phoslock's contract to treat Lake Pampulha, an important recreational and cultural area, has been renewed for another year. In Rio De Janeiro, an initial application of Phoslock to a major drinking water reservoir of the city has been successful and will be followed up with further treatments in the second half of 2020. The company reports that in the second half of 2020, additional treatments are scheduled for drinking water reservoirs in northern and southern Brazil.
In Europe, Phoslock will be applied to a small alpine lake in the Dolomites in Italy and to a lowland lake in the Netherlands in the final quarter of calendar 2020. Phoslock continues to operate across China with 3 ongoing projects in Yunnan province and continued maintenance work on South Beijing canals.
What is the outlook for Phoslock?
Phislock is seeking to diversify the revenue base of its business. The ability to secure contracts in new regions and new markets is a key pillar of this strategy. The company also remains strongly committed to growing its business in China where its technology is increasingly accepted as best in class for water remediation. Despite travel restrictions, additional resources invested in growth outside China is being reflected in a stronger pipeline of new contracts.
The Phoslock share price is up by 21.43% in today's trade to sit at $0.34, but still remains more than 50% down since the beginning of 2020.
