Parkway Corporate to provide Major Update for Queensland CSG industry in February

Australian industrial wastewater treatment specialist Parkway Corporate (ASX: PWN; FRA: 4IP) is about to prove that disruption is possible even in a conservative industry such as the wastewater industry. The company aims to replace the industry-standard disposal of problematic CSG residual brine in Queensland in retention ponds with a truly circular economy alternative.

The solution proposed by Parkway’s subsidiary Queensland Brine Solutions, “QBS”, consists of an intelligent combination of innovative process technologies both upstream (QBS brine management complex) and downstream (QBS brine electrolysis complex). Parkway will initially use the residual brine to produce high-purity brine and salts that are suitable for further processing, including by electrochemical processes, to produce high-quality green chemicals.

The current quarterly report for the December quarter of 2024 reports on the latest progress: in the past quarter, Parkway has made a technological breakthrough in the recovery of pure, “green chemicals” through electrolysis (QBS electrolysis complex). At the same time, the company has already signed a term sheet for the site of the future QBS brine electrolysis complex. Parkway also reports positive feedback from the CSG industry itself and has held intensive consultations with various government agencies in Queensland. Parkway is already discussing the various financing options for the different projects with major investors and off-take companies. A series of strategic planning workshops are planned for February 2025, with several key stakeholders.

The quarterly report states: “Internal assessments confirm that QBS is likely to be able to provide the CSG industry with a highly attractive and sustainable liquid waste disposal service for which there are currently no other alternatives and which are not likely to be available in the foreseeable future.” The internal assessments mentioned above take into account extensive scenario analyses as well as technical and economic assessments and feedback from the industry itself. The aim of the major multi-stage “Queensland Brine Solutions” (QBS) brine management complex project is to provide a permanent, integrated industry-wide solution for the disposal of brine wastewater from the multi-billion dollar CSG industry in Queensland.

Planning activities for the upstream QBS brine management complex are progressing

The planning activities for the upstream QBS brine management complex are progressing positively. The quarterly report provides important information on the scale of the planned development. The proposed QBS brine management complex is expected to have sufficient nominal nameplate capacity to treat at least half of the waste brine that will be generated by the CSG industry in Queensland in the future, including the vast quantities of waste brine that have been produced over the past decade. While there are opportunities to further increase the capacity of the proposed QBS brine management complex, transportation distances for the remaining brines will likely require a separate centralized facility located upstream and closer to the remaining, less urgent waste brines.

Parkway also notes that it recently signed a term sheet with a project developer for the potential co-location of the proposed QBS brine electrolysis complex at the developer’s existing project site. The first phase of the planned QBS brine electrolysis complex is expected to have a nominal nameplate capacity sufficient to process more than 50% of the waste brine and salts generated by the CSG industry in Queensland.

As QBS is about establishing critical infrastructure on a significant scale, Parkway is already working to attract additional strategic partners, including strategic investors. As possible financing options, Parkway explicitly mentions selling equity at the level of the QBS subsidiary and/or at the level of the project-specific entity. In any case, Parkway intends to lead the development of the proposed projects and ensure appropriate value creation. Other financing opportunities have also been identified, including up-front payments for the liquid waste disposal services and/or industrial chemical sales to be provided by QBS, as well as a range of other options, including capital markets and government support.

Parkway is also in discussions with other key stakeholders, including potential OEM and EPCM partners that can assist with project development and execution, as well as several large, including global, companies that are interested in potentially acquiring an equity interest in the QBS brine management complex or the QBS brine electrolysis complex.

Progress toward increasing cash flows and profitability

Operationally, Parkway continued its progress toward increasing cash flows and profitability during the past quarter. In addition, the company is working on a project pipeline to further support long-term sustainable growth. Based on operating revenues of AUD 3.48 million and an increased focus on profitability and a contribution from the R&D rebate, Parkway generated EBITDA of AUD 0.23 million in the December quarter, an improvement over the same period last year (US$0.1 million in FY24-Q2). Customer payments during the quarter totaled A$4.08 million, an improvement over the same period last year (A$0.82 million in FY24-Q2). Parkway recorded a net cash flow of A$-0.10 million in the quarter, which was attributable to A$0.59 million from operating activities, A$0.56 million from investing activities (including capitalized R&D), and A$0.15 million from financing activities.

Conclusion: Large tasks are best solved by breaking them down into several digestible bites. Based on this principle, Parkway Corporate has divided the problem of CSG residual brines in Queensland into individual steps, so that the overall solution consists of the intelligent interlinking of various up-stream and down-stream processes. Parkway can claim to be the first company to take a holistic view of the problem. Gradually, all parties involved are beginning to realize that the approach proposed by Parkway could actually set a future standard in the sense of a “best available technology”, especially since everyone would benefit from it. Of course, such complex projects require a lot of preparation, but the plans and discussions with all stakeholders and partners are progressing positively. If Parkway succeeds in taking a leading role in the realization of a brine recycling economy in Queensland, this would be transformative for the company. Brine management in Queensland would provide significant, recurring cash flows over very long periods of time. Furthermore, Queensland could send an industry-wide signal for the shale gas industry. This potential does not seem to be reflected in Parkway’s current share price at this time.