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ASX-listed Carbonxt (ASX:CG1) has raised a total of $6 million to fund the expansion of its manufacturing capacity in order to meet a higher than anticipated demand for its activated carbon (AC) pellet product.

Carbonxt raised $3 million via an institutional placement that received strong demand from institutional investors and a further $3 million as part of an entitlement offer on a 1 for 4 basis.

The raising was completed at $0.40 a share, and will primarily be used to build additional manufacturing capacity at its Arden Hills facility in Minnesota.

“The level of demand for our activated carbon pellets has been far higher than our initial expectations”, said Carbonxt Managing Director, Warren Murphy.

“We are therefore keen to start construction of our new plant to meet this demand and take advantage of further revenue growth opportunities as the industry becomes more aware of our capabilities.”

The business launched its AC pellet product early in 2018 and has experienced higher than anticipated demand following concerns about tariffs and trade barriers with China in the United States.

The majority of activated carbon products in the US are imported from China. With US President Donald Trump’s trade tariffs making oversees products more expensive, there is a significant opportunity for local producers of activated carbon products.

Carbonxt is one of only a handful of AC pellet producers based in the US, providing it with a strong competitive advantage.

Its AC products are used in industrial applications such industrial air purification and the purification of potable water.

Demand for Carbonxt’s AC pellets and powdered activated carbon (PAC) products significantly increased in 2018. The company is now tracking slightly above its 2019 half financial year prospectus forecast of $8.2m.

Carbonxt continues to add new customers, and is receiving strong engagement from potential new customers. One new customer placed an order for $0.4 million of product that is being manufactured in the company’s Gainsville, Florida plant.

Carbonxt now also intends to develop a full-scale plant at Gainesville capable of producing an estimated 3,500 tons a year from commissioning in the 2019 June quarter.

With the additional capacity being put in place, Carbonxt will be able to ramp up its production in 2019 to meet the growing demand coming from the US.

Carbonxt is a positive growth story. Having listed on the ASX in early 2018, raising a total of $10 million, it has come back to the market for further capital to enable it to fill existing orders and meet a higher level of demand than expected.

“The continued demand from clients has led us to raise capital so we are able to meet the orders in our pipeline,” said Mr Murphy.

“The additional capital will allow us to do this and puts us in a strong position going into 2019.”


This content is produced by Star Investing in commercial partnership with Carbonxt.  This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.