Calix continues acceleration of environmental technologies

• CO₂

The LEILAC Group has a growing pipeline of projects and has potential to be lowest cost CO₂ capture technology for lime and cement. During FY22, the LEILAC2 project passed FID and is in detailed engineering phase.

Three lime projects are progressing well, with $41m in government grant funding announced (awaiting contract finalisation following change in Federal Government in May 2022) for Boral and Adbri projects in Australia. Both Adbri and Boral have committed to net zero by 2050 and both projects have commenced pre-FEED phase under project MOUs in parallel with commercial discussions regarding ongoing use after demonstration.

Between February 2022 and June 2022, another four projects came into the pipeline, while a number of projects progressed through initial design and scoping work.

• Water

Revenues in the Water segment in the US were US$9.7m in FY22, down 15% from $US11.4m in FY21, mainly as a result of the cessation of refined coal tax credits during the second half of FY22, which meant there was no more magnesium hydroxide liquid (“MHL”) sales into refined coal. Staff shortages also contributed to the difficult conditions. Despite this, sales (excluding to refined coal) were up 11% in the second half compared to the second half of FY21, and up 15% in the final quarter compared to the final quarter of FY21.

Gross margins were 33% in FY22, up from 27% in FY21, continuing the positive trend. This enabled generation of higher gross profit despite lower reported sales.

Calix’s Texas market entry continues, with a run rate of $US500k+ sales and with a growing pipeline of further opportunities. A plant location has been found and lease agreed, with procurement for a new manufacturing facility underway.

The Company’s aggressive growth plan continues, with Calix seeding the market in two new US states, target 1 to 2 new hydration plants in CY22, focus on the caustic industrial segment and odour control municipalities, complete the successful trial in drinking water and hire three new sales resources.

• Advanced Battery Materials

Calix’s unique kiln technology, capable of producing targeted nano-structured advanced materials, is being developed as a low energy, sustainable production technology for advanced battery materials. The Company’s pilot production is on track, with first electric vehicle test application due in early CY23.

The technology uses approximately six times lower energy route than conventional lithium manganese oxide (“LMO”) production, and is producing strong, active hierarchical porous onion (“HPO”) structures in the tiny crystals. Calix continues to develop and scale the process to further reduce the time and energy required for product lithiation, which will minimise the CO₂ footprint, and cost, of its cathode materials.

The early test results are promising, proving the novel HPO structure is suited to high power (fast charging/discharging) applications.

• Sustainable Processing (“SusPro”)

In the last financial year, the Company announced a co-development of a midstream lithium chemical plant with ASX listed Pilbara Minerals Limited (ASX:PLS) utilising the core Calix technology to produce a concentrated lithium salt product for lithium batteries. This application of the technology will utilise an electric powered Calix calciner, which would ultimately be connected to renewable energy sources. In a further benefit, the local production of a lithium salt would help to reduce the amount of excess waste material that is currently exported to international processing plants and help to further reduce the carbon footprint of spodumene-derived lithium.

In FY22, this opportunity was developed significantly, with the successful completion of a scoping study and an extension of the MOU to cover pilot hydrometallurgical work and more detail concerning the joint venture terms, as well as the announcement of $20m in funding from the previous Federal Government under the Manufacturing Modernisation Initiative. At this time, a project agreement is yet to be executed as the new Federal Government is undertaking a review of several grant programs, which include this project. Nonetheless, both the Company and Pilbara Minerals are pushing ahead to formalise joint venture arrangements to progress the project as quickly as possible.

During FY22, the Company also announced the development of the technology into decarbonisation of iron and steel production – the second largest hard to abate industrial CO₂ emission source after cement and lime. Calix’s Zero Emissions Steel TechnologY (“ZESTY”) process, utilising green hydrogen and renewable energy, has been rapidly progressed through modification of the Company’s electric “BATMn” reactor in Bacchus Marsh, and during Q4 FY22 successfully tested several iron ores in early pilot trials.

• Biotech

Calix’s biotech business made positive progress on all fronts in FY22, with early revenues combining with continuing commercial steps.

The Company completed the sixth consecutive year of field trials in its Crop Protection segment with a broad spectrum of anti-fungal and anti-pest efficacy. A second distributor license agreement was executed with Dutch-based ProfytoDSD (“Profyto”) after three years of trials, which added to the European coverage already commenced during FY21 via a license agreement with AFEPASA, a Spanish Crop Protection company. Profyto is looking to replace the now-banned anti-fungal Mancozeb with BOOSTER-Mag being included in its crop protection protocols for the first time this European summer.

During FY20, the Group applied for registration for BOOSTER-Mag as a crop protection product with the APVMA following over five years of independent testing and trials in Australia, and in March 2022 approval was obtained – a major milestone. The Group has also continued to work with other multi-national crop protection companies that have executed Material Transfer Agreements (“MTA’s”) and are conducting testing and due diligence, and APVMA approval is expected to help galvanise this process into commercial action.

A 26-month exposure trial was completed in Bowen, Queensland, in the Marine Coatings segment, proving material efficacy versus control. End-user trials are currently at 18 months with two coatings manufacturers and one major end-user, in cold and tropical waters. Phase 2 trials with multiple formulations are planned and will continue for a duration of 12 months.