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Technology Stocks : Geo2 Ltd. Green technologies -- Ignore unavailable to you. Want to Upgrade?

To: richard badauskas who wrote (47)	6/7/2000 10:27:00 PM
From: Henrik	Read Replies (1) \| Respond to of 70

Richard, your comments to the attached newspaper article in today's (8 June '00) issue of The Australian would be appreciated. Thank you. =========================================================== By The Australian's MICHAEL WEST 08jun00 Gushing forth, Geo2 lands in hot water. SELF-STYLED environmental technology company, Geo2, made a very impressive announcement to the Australian Stock Exchange in September 1998. Accompanied by much public relations fanfare, Geo2 declared that it had struck a joint venture with the People's Liberation Army of China to sell water purification units. This contract had a total sales value of $17 million a year. The press release was effusive: "We are in the door," Mr Laycock said triumphantly. (Charles Laycock is Geo2's executive chairman). Fired up by the prospects of this "lifesaving" device and the "enormous and profitable market" in China, Geo2's share price shot up. There was, however, a hitch. There was no contract with a commitment for $17 million. No such contract existed. It never happened. Geo2's strategic alliance partner in China at the time, Clyde Owens, told Margin Call: "We realised there was no $17 million commitment and we became concerned. "They (Geo2 directors) made a false statement to the stock exchange. We did not want to be involved with false statements." Owens' company, Australian Joint Economic Development Corporation, had introduced Geo2 to its network of Chinese contacts. Laycock rejected claims that the stock exchange had been misled. He passed the issue off as the work of disaffected parties trying to destabilise the company. There are indeed many disaffected parties. "We entered into agreement with the PLA for a joint venture to manufacture these things. We signed off on it," Laycock says. On further questioning, however, Laycock conceded that part of the agreement was, in fact, not signed, but verbal. "The agreement was different from the announcement," he said. "There was an order, verbal, for the number (of water purifiers) and then it didn't happen". Laycock said: "We were a little bit used." That seems at odds with Geo2's 1998 annual report, which features these words in its Major Highlights for 1998: "The signing of a joint venture agreement with the People's Liberation Army of China to manufacture, market and distribute 300 water purification units and 600 boiler units a year for a total sales value of $17 million." It gets better. Geo2 was again running low on funds in late 1998. By early January 1999, Laycock and fellow directors raised $2.5 million through Wilson HTM. The focus of the presentation was Geo2's China Water joint venture and a commitment worth $51 million over three years. Owens' claims are backed up by others. We have an affidavit from a technician, Petra Luidas Volodka, who worked for Geo2 in China at the time of the fanciful $17 million contract commitment. Volodka said he had established to his own satisfaction that no written contract or verbal agreement existed between a Geo2 Ltd company in China to manufacture or supply up to 300 mobile water plants and up to 600 water softening units for any customer or the PLA. Headquartered in Melbourne, Geo2 bills itself as "one of Australia's leading environmental companies". The glossy pages of the company's annual reports and other literature beam with these words, "SOCIALLY AWARE -- ECOLOGICALLY SOUND -- RADICALLY COST EFFECTIVE". The reality could not be much further from the truth. Despite its grandiose pretentions to the environment, Geo2 earns the vast bulk of its revenue from a cyanide gold processing plant in China. It is not high-tech, nor is it green, rather a traditional metallurgical leaching process. But you would have to read the company literature very carefully to work that out. Geo2 reported $2.8 million in turnover for the September 1999 quarter. Its gold leaching operations in China tipped in $2.7 million and there was "other" revenue of just $93,000. Laycock batted off suggestions from Margin Call that Geo2's activities might not be in-synch with its corporate rhetoric. He conceded the refinery in Huludao in northern China did use high levels of cyanide but stressed the plant was "zero-discharge". During the past three years, Geo2 has had a plethora of capital raisings, tapping the market for about $20 million. In the same period, as shareholders have been heavily diluted, the company has racked up about $28 million in accumulated losses. ? e-mail MICHAEL WEST at: margincall@matp.newsltd.com.au