What's with the Carbonxt (ASX:CG1) share price today?

The Carbonxt Group Ltd (ASX: CG1) share price has been up and down today after the company announced a major commercial agreement.

| More on:
A woman lying face down on the couch, indicating a flat ASX share price.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Carbonxt Group Ltd (ASX: CG1) share price is right back where it started today. After falling in morning trade then touching an intraday high of 25 cents mid afternoon, the Carbonxt share price has now returned to its opening price of 23 cents.

This comes after the Australia-based company announced a commercial agreement with United States manufacturer, Kentucky Coal Processing.

Carbonxt develops and markets activated carbon (AC) products. These pellets capture mercury and sulphur in a gas or liquid phase from coal fired power station emissions. Used within industrial settings, Carbonxt's products aim to reduce the harmful air pollutants in the environment.

What's the deal?

According to today's release, Carbonxt will expand its manufacturing capacity to produce AC pellets on an industrial scale through the deal with Kentucky Coal Processing.

The company advised that an investment group will construct a specialty AC plant to expand its current capability. It's expected that the facility will be fully operational sometime before the second quarter of FY22.

Carbonxt said the partnership with Kentucky will enable it to purchase the AC pellets at a cost rate basis. Any sales margins that are made will be split between both companies. Carbonxt noted this structure eliminates the need for third-party materials, thereby lowering its overall production costs.

In addition, the company said that while the expansion plans are underway, it will focus efforts on its existing operations at the Arden Hills facility.

Carbonxt revealed that AC pellets sell at around US$2,500 to US$3,500 per tonne, depending on the industrial application and specification. The new plant will have a target of 11,000 tonnes per year, giving potential revenue of US$38.5 million.

The initial term of the agreement is valid for 3 years with options to extended further from both parties. Carbonxt will be responsible for sales and maintaining customer relationships.

Words from the managing director

Carbonxt managing director Warren Murphy welcomed the agreement, saying:

We are delighted to be able to double our capacity and eliminate financial bottlenecks, as well as reducing inventory levels and freeing up further cash that have held back the growth of our industrial pellet business.

This partnership will enable Carbonxt to focus on technology and marketing. The alliance also frees up capacity at the Arden Hills pellet facility and allows that facility to focus on fewer products with higher efficiencies with our current tolling relationship. We look forward to a long and successful relationship.

About the Carbonxt share price

After dropping steeply from its 50 cent peaks in January to hit a 52-week low of 12 cents in March, the Carbonxt share price has been on a mini roller-coaster ride.

At the current share price, Carbonxt has a market capitalisation of around $32 million.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Two smiling work colleagues discuss an investment or business plan at their office.
Broker Notes

Which beaten down ASX 200 share did Goldman Sachs just upgrade to a buy rating?

The broker has become more bullish on this stock following last week's update.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Best Shares

The best ASX shares to invest $1,000 in right now

Analysts think that putting your money into these stocks could be a smart move.

Read more »

green etf represented by letters E,T and F sitting on green grass
Share Market News

4 ASX ETFs to buy for FY25 and beyond

Could these ETFs be top options for investors looking for long term picks?

Read more »

A smiling woman sips coffee at a cafe ready to learn about ASX investing concepts.
Opinions

How I'd invest $10,000 in ASX shares right now

I’m bullish about the prospects of these stocks.

Read more »

A fortune teller looks into a crystal ball in an office surrounded by business people.
Share Market News

What's the outlook for shares vs. property in FY25?

Generally speaking, there is optimism among the experts for both shares and property in FY25.

Read more »

Happy shareholders clap and smile as they listen to a company earnings report.
Best Shares

Top ASX shares to buy before earnings season

It's almost time to take a look at the books!

Read more »

sad party goer sitting alone after celebration
Share Market News

Here are the top 10 ASX 200 shares today

The ASX 200 had a horrible end to its trading week this Friday.

Read more »

A young female investor sits in her home office looking at her ipad and smiling as she sees the QBE share price rising
Broker Notes

3 ASX shares brokers tip for significant outperformance in FY 2025

Leading brokers expect some significant outperformance from these three ASX shares.

Read more »