Shares in Welshpool-based Advanced Nanotechnology Ltd fell by 6.25 per cent today after UK-based customer Oxonica plc announced the end of its supply contract with Turkish oil company Petrol Ofisi AS.
ANL supplied Oxonica with diesel fuel combustion improver Envirox to help it meet obligations under the $16.6 million agreement with Petrol Ofisi, having received purchase orders of $850,000 for the year ended December 2006.
But sales had started drying up in 2007, with total ANL sales for the March quarter totalling $595,000, down from the $1.4 million recorded in the December quarter of 2006.
The company today announced it expected a significant reduction in future orders from Oxonica following the announcement, but its agreement with Singapore-based alternative energy technology developer Energenics Holdings Pte Ltd would compensate for the sales reduction.
The full text of a company announcement is pasted below
Advanced Nanotechnology Limited (ASX: ANO) advises that one of its customers, Oxonica plc, has announced that it has received formal notification from Petrol Ofisi (Turkey) of the termination of its Envirox™ supply agreement with effect from 10 July 2007. The full text of Oxonica's statement to the London Stock Exchange is attached to this announcement.
Advanced Nano supplies Oxonica with Envirox™ to meet Oxonica's supply obligations. Consequently Advanced Nano expects a significant reduction in future orders from Oxonica.
Advanced Nano's CEO Paul McCormick commented "While the cancellation of the contract between Petrol Ofisi and Oxonica is disappointing, Advanced Nano continues to make solid progress with the commercialisation of its other products such as the newly released ZinClear-IM™. The Oxonica announcement highlights the importance of Advanced Nano's strategic alliance with Energenics, which the Company believes presents an excellent pathway to the variety of opportunities in the rapidly growing clean-burn fuel markets".
Advanced Nano and Singapore-based Energenics Holdings Pte Ltd executed a Letter of Intent on 11 April 2007, to create an integrated fuel-borne catalyst joint venture. The Letter of Intent provided for Energenics to subscribe for A$6 million of new Advanced Nano shares at a price of A$0.22 per share in two equal tranches. Advanced Nano will also provide Energenics with one free option for every three new shares subscribed for at an exercise price of A$0.308 per share expiring on 30 June 2012. Further details regarding the Letter of Intent are contained in the Company's ASX announcement dated 11 April 2007.
Temporary Suspension of Trading in Shares
Further to the announcement dated 28 March 2007 regarding the inconclusive track trial results in Turkey, the Board has today received formal notification from Petrol Ofisi of the termination of the Envirox(TM) supply agreement with effect from 10 July 2007.
Given the financial uncertainty regarding the anticipated termination arrangements with Petrol Ofisi, the Company has requested a temporary suspension of its shares, pending further dialogue with Petrol Ofisi and clarification of its financial position.
A further update will be provided in due course.