CLEAN TEQ COMPLETES SUCCESSFUL PILOTING OF PROPRIETARY CIF TECHNOLOGY AT COAL SEAM GAS FIELDS IN QUEENSLAND

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1 ASX / Media Announcement Melbourne, 26 August 2013 CLEAN TEQ COMPLETES SUCCESSFUL PILOTING OF PROPRIETARY CIF TECHNOLOGY AT COAL SEAM GAS FIELDS IN QUEENSLAND TECHNOLOGY DEMONSTRATES SUPERIOR WATER RECOVERIES WITH POTENTIAL FOR LARGE COST SAVINGS TO INDUSTRY Mr Peter Voigt, Chief Executive Officer of Clean TeQ Holdings Limited (ASX: CLQ), is pleased to announce the results of piloting test work recently completed in Queensland for the treatment of water produced by coal seam gas wells. The trials were conducted by Associated Water Pty Ltd, the 50:50 joint venture company held with Nippon Gas Co., Ltd. The performance of Clean TeQ s Continuous Ionic Filtration (CIF ) water treatment demonstration plant in Dalby, Queensland was assessed over a number of months of operation with a study compiled by a global leader in water engineering and consulting under funding provided by the Federal Government s Innovation Interchange Program. This study adds to the company s confidence in its potential to provide a transformative solution to cost-effectively and efficiently treat coal seam gas waters across Australia. We are extremely pleased with the results of the piloting program, said Mr Voigt. It has demonstrated that Clean TeQ s proprietary CIF process is able to treat water produced from coal seam gas wells and achieve higher water recoveries than conventional processes, such as reverse osmosis, whilst using less power. This gives CIF an enormous advantage for rural communities in water-scarce areas by providing fit-for purpose agricultural grade water. The advantages of the CIF process which differentiate it from competing technologies are: - The ability to efficiently treat variable water quality where it is generated, allowing farmers to retain physical access to water drawn from within close proximity to their properties, - Significantly lower capital cost, higher water recovery rates and lower brine volumes, - Compact footprint with the ability to install mobile plants to service expanding well acreage; and - The potential for brine streams to be selectively harvested as salts that have economic value for agricultural and industrial applications, such as gypsum and sodium sulphate. The pilot study focused on the key metrics required to deliver fit for purpose water to farmers and industrial users. These metrics included: water recovery rates, the salt content of treated water and power usage. The key findings from the study are summarised in the following table:

2 Performance Metric Relevance of Metric Pilot Plant Performance Comments Water Recovery Water recovery is a measure of reusable water 90% Significantly better than other standalone technologies (typically 70 80% recovery from reverse osmosis) Salt content of recovered water Salt content determines ability to use treated water in other processes 1,650mg/L A salt content of less than 2,000mg/L is fit for purpose for most agricultural and industrial processes (feed water averages 4,300mg/L) Power use Dictates operational efficiency and opens options for renewable / waste energy sources to treat water 0.5kWh per m 3 Significantly better than other technologies (typically 2 3kWh per m 3 for RO) Commenting on these results, Mr Voigt noted: With the Federal Government s Water Group estimating CSG water production anywhere between 470 and 1,500GL/year, the industry needs to treat these huge volumes which will generate millions of tonnes of salt over coming decades. These salts currently have no end application or use. The additional work we are undertaking to develop selective salt separation routes to complement the CIF process will allow us to treat water more efficiently and also realise full value for the waste streams for both farmers and industrial customers. Mr Voigt also noted that based on Clean TeQ s estimates of capital and operating costs for conventional RO plants, the CIF process results in significant improvements in return on capital for investors. We will be working with independent consultants over coming months to benchmark these results against alternative technologies, but initial indications are that we can expect unit capital and operating cost savings in the order of 30 to 40 per cent. The pilot study was conducted using water sourced from wells drilled on the Wambo feedlot in Dalby, Queensland. Mr Max Winders, the owner of the feedlot, believes that giving farmers control over the water taken from their land is fundamental to effectively managing water use. The piloting work we ve been doing with Clean TeQ demonstrates that it is possible to give farmers and land owners a real say over the use of their most critical resource. At Dalby we can continue investing in our business knowing we have secure access to our water. The CSG

3 industry is proposing to extract a significant proportion of the region s ground water resources over coming decades this needs both thoughtful policy development and innovative solutions. Getting these things right will be the foundation for the industry s social license to operate. Clean TeQ sees that the successful results of these trials will pave the way for the implementation of this technology into the CSG industry in Australia. Another option is the deployment of units to complement the established reverse osmosis plants by the pre-treating of feed water. The pre-treatment step has been shown to materially lessen scaling and fouling issues in RO membranes and reduce the amount of pre-treatment chemicals required prior to processing. Clean TeQ looks forward to partnering with the coal seam gas industry and the farming communities in order to show how its Australian developed, state of the art technology platform can help build wealth and prosperity for the farmers and also provide a sustainable solution for produced water management for the coal seam gas companies. Further information about Australia s coal seam gas sector and the application of Clean TeQ s technology is contained in the attached appendix. For more information: Peter Voigt, CEO Melanie Leydin, Company Secretary About Clean TeQ Holdings Limited (ASX: CLQ) Clean TeQ (ASX: CLQ) is a leading Australian clean technology business focused on providing solutions for the purification of air, water and mineral resources. As one of the world s leading experts in continuous ion-exchange technology, we provide our customers with focused, fit-forpurpose solutions that are specifically targeted; minimise energy input and waste by-products. Clean TeQ develops technologies in-house and partners with leading technology suppliers worldwide. For more information about Clean TeQ please visit the Company s website at

4 APPENDIX BACKGROUND Coal Seam Gas produced water contains coal and clay fines and salts making the water alkaline (ph 8.2) and high in sodium bicarbonate and carbonate and preventing direct use in agriculture. Produced water must be treated to make water suitable for agricultural use locally. The Clean TeQ Continuous Ionic Filtration (CIF ) process is simple, rugged, flexible and stable. The process operates like a continuous sand filter, removing particles by physical filtration and selected salts by ion exchange. The system does not use pressure membrane filtration and so the big operational problems of fouling, scaling and clogging are not an issue. Trials - just completed at WAMBO feedlot, have provided robust numbers for the water treatment results that can be achieved using Continuous Ionic Filtration (CIF ). BENEFICIAL REUSE WATER CREATED Figure 1 - Containerised mobile CIF plant The Queensland Government Coal Seam Gas Water Management Policy (2012) outlines the priorities for coal seam gas produced water. CSG water should be used for a purpose that is beneficial for the environment, existing or new water users, and existing or new water-dependent industries. The treatment and disposal of CSG water must be done in a way that firstly avoids, and then minimises and mitigates, impacts on environmental values. The treatment of CSG water ultimately involves desalination which creates a brine or salt by-product. The priorities on brine management are that brine or salt residues should be treated to create useable products wherever feasible. If it is not feasible to treat the brine or solid salt residues to create useable and saleable products, then disposing of the brine and salt residues is to be in accordance with strict standards that protect the environment.

5 Produced water can be processed to agricultural water by reducing the concentration of salts. In the pilot trials the CIF plant was operated to achieve a salt target of less than 2,000mg/L. This target was selected as suitable for agricultural uses in the region. In operation, the CIF plant consistently reduced the salt concentration from 4,300mg/L to an average of 1,650mg/L. Lower salt concentrations if required, such as 500mg/L, can be achieved through a simple process control change. WATER RECOVERY NEAR 90% Not only did the plant remove the targeted salt, but it did so with a water recovery of around 90%. While this recovery was a little under the 93% target we had set, the practical result is outstanding and we have confidence in achieving 93% on long term operations. So for every 1,000,000L of produced water treated, approximately 900,000L of water containing less than 2,000mg/L salt was produced. ENERGY EFFICIENT OUTCOME Power is both a cost and carbon footprint issue. The main power use in our CIF technology is for low pressure pumping to move the water through the filter columns. The power use is in the order of kWh per 1,000L water treated. Low power consumption also means that renewable power sources like solar can be considered and that power costs can be minimized further. This is an especially important outcome when working in remote locations where diesel power generation may be the only choice. BRINE MINIMISED AND FURTHER PROCESSED FOR RESOURCE RECOVERY Brine management is the most contentious area of produced water treatment. The current approach is to store the contaminated brine in ponds and evaporate and crystallise the brine over time and finally bury it in a secure landfill. This approach is expensive, destroys potential value and transfers the problem to future generations. The liability associated with the large brine storage facilities and a valley of buried contaminated salt is enormous. Continuous Ionic Filtration offers the potential for a better outcome. The CIF process produces considerably less brine volume; 5 10% compared to 20 40%, and offers the potential for reuse of the various salts produced. The chemicals used in the salt removal process, sulphuric acid and lime, are recovered as a by-product, gypsum, which is valued as a soil conditioner, especially in arid regions. Other by-product salts such as sodium sulphate and calcium chloride have potential value for industrial use. These brines could be transported to a central processing facility for treatment. It is envisaged that such a facility would be treating brine from a number of local water plants. The localised treatment of 20MLD would see 25 tonnes of gypsum, 20 tonnes of sodium sulphate and 10 tonnes of calcium chloride per day produced. These commodity salts would be available to the agricultural and industrial markets. Continuous Ionic Filtration provides the impetus for renewed thinking of how we treat this precious commodity, produced water, for beneficial reuse in our arid environment. Produced water holds a key to a more sustainable agricultural future in those areas where it is available. Continuous Ionic Filtration is the key to unlocking this opportunity. TURNING A POTENTIAL BURDEN INTO A BOON A plant treating 2,000,000L per day of produced water will produce 1,800,000L of agricultural grade water. This water will service 220 hectares of fodder production or 30,000 head of intensively farmed stock. This

6 can be scaled up depending on the need to any practical number which meets the objectives of the regulations, that is to capture, treat and beneficially reuse produced water in the local community. THE VISION Continuous ionic Filtration technology can be deployed as a mobile or fixed plant. The current thinking is that this would see the plants operated at sizes of MLD as mobile and 2MLD, 5MLD and 10MLD as fixed plant. The regulations have been written to promote the treatment and reuse of water locally. The current approach of removing water from the local community to a large centralised plant fails the legislative objectives. A decentralised approach to water treatment is the solution to the gas company versus farmer problems. Treatment should be employed locally and water returned directly for use or storage for later use. Water treatment plants should be interspersed on a grid across the gas fields to allow for economical water return to source. By-product salt production should be centralised for economy of scale in reprocessing and located where waste heat is readily available to minimise operational costs. Figure 2 - Modular CIF plant