Hydrodec hails transformer deal

Profitability is now in sight claims 'green' oil technology hopeful Hydrodec following a bulk order for its 'Superfine' transformer oil.

AIM-quoted Hydrodec, set up to commercialise Australian technology to remove harmful contaminants in oil refining, says written acceptance from a major transformer manufacturer Down Under and conditional acceptance from another for bulk use of Superfine could ensure a firm market for at least half the capacity of Hydrodec's newly-commissioned refining plant in New South Wales. That, says the company, should generate annual revenues of £1.8 million, underpinned by feedstock supply commitments from major utilities.

John Gunn, the former City tycoon-turned young company backer who chairs Hydrodec, says the company, which lost nearly £6 million last year, will now be 'cash-flow positive next month and profitable in the fourth quarter'. The New South Wales plant is 'on time, and under budget' and should reach 80 per cent capacity by the end of the year and hit its full 20,000-litres-a-day potential by the first quarter of 2007.

He says the contracts 'go on', without a set termination date, and argues that Superfine faces a 'virtuous circle'. It is 'very "green" and self-sustaining': once used or filtered, it can be re-used and re-refined and 'we will refresh it and give it back over the long term.

'We have done the tests', explains Gunn, 'and the product comes up better than new after this process, with even less sulphur second time round'. With a management team boasting senior experience at chemical giants Dow , Du Pont and ICI, he says Hydrodec now intends to build a new plant and is weighing whether to site it in the USA, Japan, Turkey or Germany.

Gunn insists Hydrodec, which ended last year with £3.3 million cash and put a value of £7.3 million on its patented technology, is not looking for joint venture partners. 'We will need no new money until we have to build the new plant', he asserts.

At 28.75p, Hydrodec is a long-term gamble, which could pay off handsomely if present hopes are realised.

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