Phoslock Environmental Technologies Limited (ASX:PET) reduced its September-quarter operating cash outflow to A$21,000 as sales receipts more than doubled from the previous quarter. The company has paused manufacturing in China after storage capacity was reached, while new lanthanum formulations and a first Phoslock 10 field trial move forward.
- A$21,000 September-quarter operating cash outflow, down from A$752,000 in June
- A$3.436 million cash balance at 30 September
- Quarterly sales rose to 275 tonnes, with Brazil contributing 61%
- Changxing production paused after inventory filled available storage capacity
- First 700kg Phoslock 10 bulk trial underway in China
Operating Cash Flow Falls to A$21,000
Phoslock Environmental Technologies Limited (ASX:PET) has brought its quarterly operating cash drain close to break-even, reporting a net outflow of just A$21,000 for the three months to 30 September. That compares with A$752,000 in the June quarter and A$952,000 in the same quarter last year.
The improvement came as customer receipts reached A$1.132 million, more than double the A$501,000 recorded in the previous quarter, while net operating outlays eased to A$1.153 million. The company also received a A$116,000 refund of excess US import duties paid in the prior year and A$27,000 in insurance reimbursements. Cash nevertheless fell by A$90,000 over the quarter to A$3.436 million, partly reflecting A$42,000 in foreign-exchange movements.
Sales Recover as Inventory Restricts Production
Sales volumes rose to 275 tonnes from 189 tonnes in the June quarter and 251 tonnes a year earlier. Brazil accounted for 61% of sales, followed by Australia at 24%, China at 12% and Europe at 4%.
Production totalled 457 tonnes during the quarter, taking nine-month output to 1,524 tonnes. Yet manufacturing at the Changxing facility was paused at the end of August after inventory reached available storage capacity. The company said several major European projects had also been deferred until the first quarter of 2027. Inventory stood at 1,848 tonnes at quarter-end, including 983 tonnes in China, with production expected to resume in the coming months.
The inventory build was also a feature of the company’s earlier operating trajectory, when production was increased ahead of expected European demand. PET’s latest report gives no project values or customer commitments for the deferred European work, leaving the timing of those sales conversions unresolved.
Lanthanum Products Enter Bulk Testing
Research and development has expanded the company’s new formulation range to products containing 15% and 20% lanthanum, compared with the lower concentration in its established product. PET described initial results from testing in saline, alkaline, pond and pure water as encouraging and said it had filed a patent application related to the development.
The work extends the product program previously reported as targeting higher phosphorus-binding capacity and potential 2027 commercial sales. The current announcement provides no quantitative performance results, so the commercial value of the formulations remains dependent on further testing and validation.
A first bulk trial of Phoslock 10, a product containing 10% lanthanum, is now underway at a small pond in Jintan, Changzhou, about 100 kilometres north of Changxing. PET has dosed the site with 700 kilograms and will continue water and sediment sampling over the coming months. The company is also seeking trial sites in the United States, Europe and Australia.
Class Action Remains at Discovery Stage
Legacy legal matters continue to weigh on the company’s risk profile. The shareholder class action brought by the Banton Group in the Federal Court remains largely at the discovery stage, and PET said formal court proceedings may not take place until 2027. The company also said the outcome cannot be predicted.
For now, the quarter offers PET a more comfortable cash-flow reading, but one shaped by uneven sales timing, a production pause and inventory already occupying substantial storage space. The next test is whether manufacturing restarts without rebuilding stock faster than deferred European projects and new product trials can absorb it.
Bottom Line?
PET’s cash position is steadier for now, but the next meaningful signal will be whether production resumes alongside firm orders rather than simply adding to inventory.
Questions in the middle?
- When will the deferred European projects convert into sales, and what volume will they require?
- Can the new lanthanum formulations progress from encouraging laboratory results to repeatable bulk performance?
- How will the company fund operations if cash outflows return to the levels seen earlier in 2026?