Pitt Street Research has published a new research note on Environmental Clean Technologies Ltd (ASX: ECT), which it says has the potential to more than double in value.
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High-tech clean technology under development
ECT is developing flash joule heating technology, which can be used to destroy so-called forever chemicals, or PFAS.
The company's technology is called Rapid Electrothermal Mineralisation (REM).
In its recent annual report, the company said this regarding the technology:
Known as 'forever chemicals', PFAS are long-lasting and hazardous– posing a health risk to all living organisms. REM applies a powerful, short electric pulse to soil mixed with a conductive material– rapidly heating it to 1,000°C within seconds. This extreme, but controlled, heat breaks the strong carbon-fluorine bonds in PFAS. This process destroys PFAS and converts them into harmless calcium fluoride (CaF2) from calcium naturally present in soil. Laboratory studies have shown over 96% defluorination efficiency and 99.98% removal of perfluorooctanoic acid (PFOA), one of the most persistent and harmful PFAS pollutants. Unlike conventional methods that merely remove or transfer contaminants, REM delivers near-complete destruction without secondary aqueous waste, while enhancing soil quality, and is both cost and energy efficient.
ECT has also recently announced a $12 million capital raise to fund the acquisition of Xenica, which holds production rights to compounds known as MXenes and a license to sell them into military end-markets.
Pitt Street Research said re the acquisition:
The investment case now centres on premium MXene sales into US and Australian defence markets, where these lightweight, conductive materials could be used for EMI shielding, radar absorption and infrared-signature reduction in defence aerospace platforms. We believe these applications could support premium pricing and develop into a high-margin business if ECT successfully scales production and qualifies its material with defence customers.
Pitt Street said high-end MXenes command about US$400 per gram and can exceed the electrical performance of copper, graphene, and graphite.
The broker added:
ECT's capital and production strategy is to partner with Metallium (ASX: MTM) to access its modular FJH reactors, providing a potentially capital-light and faster pathway to MXene production without building manufacturing infrastructure from scratch. Revenues from this speciality materials business are intended to be reinvested into ECT to help fund its long-term PFAS destruction platform, which remains the centrepiece of the investment thesis. In this way, the MXene business could support ECT's growth while reducing its reliance on external capital raises.
Shares looking cheap
Pitt Street has a valuation on ECT shares of between 28 cents and 36 cents, compared to a share price of 11.5 cents at the time of writing.
ECT is valued at $51.6 million.
