Chemeq's fall from grace continues

Chemeq’s (ASX:CMQ) prolonged bout of the winter blues have continued even as the first commercial batches of its antimicrobial polymer flow from its new production plant in WA.

Shareholder discontent and media criticism of the series of delays which set back the original February start-up date by six months have seen Chemeq shares plunge from $4.72 at the end of July to as low as $3.60.

Shareholders’ moods were not improved by Chemeq’s statement to the ASX last Friday announcing that it had established a $5 million borrowing facility with a major bank.

Executive chairman Dr Graham Melrose has acknowledged the delays in commissioning the plant, but promised product would begin flowing to customers in the next quarter.

By last Friday the new Rockingham plant was running at 15 per cent of capacity, with a target of 20,000 kilograms of active pharmaceutical ingredient by the end of the year.

Chemeq said it was already working on an upgrade at the Rockingham plant that would lift production to 50,000 kilograms a year by the middle of next year.

The company is designing another plant that will scale up production to 400,000kg a year.

Melrose declined to comment on a report in the West Australian that the cost of the plant had blown out from $30 million, to $52 million. He also refused to say whether Chemeq planned to undertake a further capital raising.

Shares in Chemeq regained some of their lost ground today, and at time of writing were up slightly to $3.80.