Announcement PDF ASX Announcement 23 January 2025 DECEMBER 2024 – QUARTERLY REPORT HIGHLIGHTS Strong Quarterly Operating Revenue of $3.48m Efficient Cash Conversion of $4.08m Significant Brine Technology Milestone Consolidation of revenue. Solid cash conversion. High purity salt product. Progressing Brine Opportunities with Global EnergyCo Planning Activities for Upstream CSG Development Site Term Sheet to Develop Industrial Chemical Complex Treating CSG brines. Strategic project location. Electrochemical project. Operations § Strong quarterly operating performance with focus on core strategic growth and profitability. § Implementation of improved project evaluation process to prioritise strategic opportunities. § Developing project pipeline expected to further underpin long-term sustainable growth. Technology § Planning activities for upstream QBS Brine Management Complex proceeding positively. § Project progress including binding term sheet executed for QBS Brine Electrolysis Complex. § Significant brine technology milestone underpins key downstream electrochemical pathway. Corporate § Implementation of initiatives to further strengthen Parkway as a provider of integrated solutions. § Rapid progress in implementing go-to-market strategy to achieve CSG industry objectives. § Advancing specific upstream and downstream projects at key strategic project locations. Parkway Corporate Limited (“Parkway” or the “Company”) (ASX: PWN) is pleased to report its activities for the quarter ending 31 December 2024. Background Parkway is a leading Australian water & wastewater treatment and process technology company. Parkway is focused on the commercialisation of a portfolio of innovative process technologies in key industrial markets, as Parkway believes this is an important and effective strategy for addressing various global water related sustainability challenges. In recent years, Parkway has made significant investments in groundbreaking research and development (R&D) related activities, including in the acquisition, development, validation and optimisation of a comprehensive portfolio of cutting-edge industrial water treatment related process technologies. In support of Parkway’s accelerated technology commercialisation strategy, Parkway primarily operates through two strategically integrated capacities: § Industrial Operations business division is focused on the provision of conventional water and wastewater treatment related products & services, incorporating fabrication as well as project delivery related services including installation, for a broad range of predominantly commercial, municipal and industrial clients. § Industrial Technology business division is primarily focused on innovative process technology related R&D, including process screening, evaluation, optimisation and piloting, as well as a range of technology commercialisation related activities. As the Industrial Operations division continues to grow and build critical mass, it is increasingly important in providing Parkway with a suitable platform to commercialise its portfolio of proprietary process technologies, being developed by the Industrial Technology division. Integrated Water Treatment Capabilities Parkway has assembled a fully integrated inhouse project delivery capability, including for the innovative process technologies being developed and commercialised by Parkway. As a result of these integrated water treatment related capabilities, Parkway is increasingly capable of delivering a diverse range of industrial water, wastewater treatment and infrastructure related projects on a turnkey (engineering, procurement & construction – EPC and design & construct – D&C) basis. Further details about the integrated water treatment solutions, including turnkey water infrastructure related solutions provided by Parkway, is outlined at: https://pwnps.com/collections/integrated-water-treatment-solutions INDUSTRIAL OPERATIONS DIVISION Industrial Operations are performed through Parkway Process Solutions (PPS) and predominantly focused on the provision of conventional water and wastewater treatment related products and services, including specialty project execution related services. In addition, PPS is increasingly involved in integrated project delivery related services including specialty fabrication and installation services for a diverse range of commercial, industrial and municipal clients. Operating Performance During the quarter, PPS generated strong group revenues of $3.48 million, underpinned by a strong contribution from the Tankweld business division. The robust operating performance was reinforced by strong cash conversion, with cash receipts from customers for the quarter of $4.08 million. www. pwnps.com DECEMBER 2024 | QUARTERLY REPORT | 2 Project Delivery Capabilities As the Industrial Operations of Parkway continue to grow, Parkway is increasingly involved in the design, fabrication and installation of complex water and wastewater treatment related infrastructure. As outlined above, building these project delivery capabilities, is an important aspect of Parkway’s broader priorities in providing integrated industrial water treatment solutions, including solutions incorporating PPT technologies. In the ordinary course of operations, Parkway collaborates closely with leading industrial companies including in energy, mining and major engineering contractors as well as municipal water authorities, to provide a range of water infrastructure related engineered solutions. In many instances, Parkway is one of only a few suitably experienced service providers capable of providing the specialised solutions for critical water related infrastructure, in key markets. Business Development & Growth Outlook Parkway continues to improve its market penetration through PPS, by securing new business from a diverse range of clients, for the provision of industrial water and wastewater treatment related products, services, and solutions. PPS continues to grow its client base, which includes large mining and energy companies, a diverse range of industrial companies, as well as engineering services, government, and municipal clients, amongst others. The growing PPS client base, together with the established Tankweld client base, provides a strong foundation and supports future sales growth as these commercial relationships continue to grow and mature. The growth outlook for the Industrial Operations division of Parkway remains encouraging, as Parkway has a significant project backlog as well as a substantial pipeline of project opportunities, particularly in Victoria where water authorities are investing $15 billion in water related infrastructure over the next 5 years. As a nominated delivery partner, Parkway is well placed to capture an increasing share of these project opportunities. INDUSTRIAL TECHNOLOGY DIVISION Industrial Technology related activities are performed through Parkway Process Technologies (PPT) and predominantly focused on innovative process technology related R&D, including process screening, evaluation and piloting, as well as a range of commercialisation related activities. Technology Development By leveraging the process engineering capabilities of Parkway, PPT continues to build a portfolio of proprietary technologies, capable of providing highly integrated process solutions, for a range of complex wastewater and process streams traditionally considered difficult to treat. PPT has developed innovative applications for these technologies, including applications resulting in improvements in the processing and treatment of challenging industrial wastewater streams, particularly for large scale industrial, oil & gas, mining and mineral processing operations. PPT Technology Priorities The development and commercialisation of a portfolio of proprietary process technologies remains an important priority for Parkway, with a range of ongoing activities focused on realising the substantial advantages of the PPT technology portfolio. During the reporting period, the core emphasis in terms of technology development, was focused on two separate but interrelated technology packages: www. § Upstream brine pre-treatment, processing & concentration, and the subsequent treatment of these processed brines with; § Downstream process technologies including electrochemical technologies. pwnps.com DECEMBER 2024 | QUARTERLY REPORT | 3 Although these respective technology portfolios are currently being advanced in the context of coal seam gas (CSG) related opportunities, these technologies have broader applications, which Parkway is also concurrently pursuing, particularly given Parkway’s growing project delivery capabilities. PPT Upstream Brine Processing The upstream brine pre-treatment, processing and concentration technologies being commercialised by Parkway through a series of highly innovative process flowsheets, incorporate a combination of conventional processes (provided through PPS) as well as proprietary process technologies developed by PPT, including but not limited to aMES® and iBC®. The upstream process technology packages developed by PPT have undergone extensive process development, bench-scale piloting, large-scale piloting and various engineering studies to confirm key technoeconomic parameters necessary for commercial scale adoption. In addition to enabling subsequent downstream processing, the adoption of PPT’s upstream process technologies provide a cost-effective brine dewatering/concentration option for industry as well as assisting in the reduction of costs associated with building, maintaining and rehabilitating regulated waste brine storage ponds. PPT Downstream Electrochemical Technology As part of Parkway’s ongoing efforts to improve the water and salt balance for various upstream projects including CSG projects, PPT has been evaluating novel integration pathways for several innovative downstream process technologies for sequestering intermediate brine and salt streams into industrial chemicals. The production of industrial chemicals from these processed brine streams is an important pathway for achieving improved environmental outcomes and also provides an opportunity for significant additional value creation. In late 2024 Parkway disclosed that several CSG derived brine samples underwent upstream brine processing and further processed through a proprietary downstream flowsheet, incorporating pilot scale electrochemical salt splitting technology. Parkway disclosed that these highly innovative piloting activities were successful in converting waste salt products into caustic soda, as well as hydrochloric acid. The proprietary downstream flowsheet has significant potential applications for Parkway’s Master Plan related objectives, with the production of hydrochloric acid and caustic soda presenting significant opportunities for both the CSG industry, as well as for mining and downstream mineral processing and refining industries. Given the production of high purity feedstock salts is an important requirement for electrochemical technologies, in late 2024 the primary process development related activities were focused on systematic purification of the byproduct salts. In January 2025 Parkway received results from a third-party NATA accredited laboratory confirming that a batch of CSG derived salts processed through a proprietary Parkway process flowsheet, had produced processed salts with a high-level of purity (>99.9% NaCl). Whilst the key impurities in the products salts were mostly below detectable limits, Parkway expects this product quality can readily be improved further, through a range of additional salt processing processes. These results provide further confidence in Parkway’s ability to produce high-purity salts upstream, which are of a suitable quality for downstream processing, including through electrochemical processes, for the production of high-quality green chemicals. Further details regarding the production of high-purity CSG derived salts, is outlined in the Activities Subsequent to Reporting Period section. Similarly, additional details regarding the implications of these important technical milestones, is referenced in the QBS Salt Electrolysis Complex section, below. www. pwnps.com DECEMBER 2024 | QUARTERLY REPORT | 4 Technology Commercialisation – Queensland Coal Seam Gas Industry Since the large-scale development of the CSG industry in Queensland in 2010 and the corresponding establishment and subsequent transition to the export of liquified natural gas (LNG) commencing in 2015, the CSG industry has been a significant part of the Queensland economy. In addition to supplying a significant proportion of East Coast gas production, according to estimates from Australian Energy Producers1, in FY24 the Queensland CSG industry generated $22.4 billion in LNG export revenue and $2.4 billion in local and state government revenues, highlighting the scale of the industry. Waste Brine Related Challenges Notwithstanding the significant scale and importance of the Queensland CSG industry, over the life of currently operating CSG projects in Queensland, an estimated 6 million tonnes of waste salts are forecast to be produced by these projects. A significant proportion of these salts have already been produced, in the form of waste brine and are currently being stored in regulated waste brine storage ponds, awaiting a viable long-term disposal solution. The disposal of waste brine and salts, as contemplated by the CSG industry, present extensive environmental risks and challenges, and remains deeply unpopular, with significant opposition from a range of stakeholders. Recognising these significant challenges, in recent years, Parkway has systematically developed a portfolio of proprietary process technologies (as outlined above), to specifically address the waste brine and salt management and disposal related challenges facing the CSG industry. These technologies have undergone extensive process optimisation, piloting and technoeconomic evaluations, providing a high level of confidence in the value proposition presented by these technologies, particularly in comparison to the industry’s proposed approach of sophisticated salt disposal (salt encapsulation). Importantly, the encapsulation of waste salts from the CSG industry remains unproven, is inconsistent with the long-established regulatory (waste management hierarchy) and policy framework and no disposal plans and/or facilities have been permitted in Australia, highlighting the enduring waste management related challenges facing the industry. QBS Master Plan As part of a long-term strategy to address the significant CSG derived waste brine and salt challenges in Queensland, on 22 June 2023, Parkway released2 a Master Plan, an innovative, sustainability driven concept based on providing an industry-wide solution. Parkway’s CSG brine processing and commercialisation related activities in Queensland are being conducted through Queensland Brine Solutions Pty Ltd (QBS), a wholly owned subsidiary of Parkway. The primary objective of the QBS Master Plan is to utilise the proprietary process technologies developed by Parkway, to convert CSG derived waste brine and salts produced in Queensland, into valuable industrial chemical products. This proposed approach is intended to improve the sustainability of the Queensland CSG industry, by addressing major community concerns and by providing a permanent waste “disposal” (convert waste-to-products) solution. Go-To-Market Strategy Consistent with the published objectives of the QBS Master Plan, Parkway has been progressing a goto-market (GTM) strategy based on Parkway providing integrated solutions for the Queensland CSG industry. Following a series of internal evaluations including extensive scenario analysis and technoeconomic evaluations, as well as feedback from industry, Parkway has developed a highly effective pathway for providing an industry-wide solution to the waste brine and salt related challenges facing the Queensland CSG industry. Importantly, the GTM strategy provides a defined roadmap for a permanent solution to the enormous waste brine and salt challenges impacting the Queensland CSG industry, based on the best available technology (BAT) being commercialised by Parkway. 1 Australian Energy Producers, Queensland’s natural gas: A plan for energy and economic security. Published by AEP in October 2024. 2 Refer to 22 June 2023 ASX announcement, available at Parkway Investor Hub: https://investorhub.pwnps.com/announcements/4372527. www. pwnps.com DECEMBER 2024 | QUARTERLY REPORT | 5 The QBS GTM strategy consists of the following key components: § The upstream pre-treatment and stage 1 concentration of brine (depending on the specific CSG project, this may occur at the client site), which is then transported to (QBMC, see below); § The QBS Brine Management Complex, where regional upstream brines are consolidated, undergo processing and stage 2 concentration, before the now much smaller volume of brine and/or salts are transported to (QBEC, see below); § The QBS Brine Electrolysis Complex, where the brine and/or salts are converted into valuable industrial chemicals, in a strategically located downstream plant in proximity to key industrial chemical markets. An overview of the integrated solution being proposed by QBS is outlined below, with further details about significant recent progress including in securing key project locations, is intended to be disclosed in the next few weeks. QBS – Liquid Waste Management Services QBS – Industrial Chemical Complex Logistics Operations CSG Brine Transport brine direct to QBMC for processing Product 1 Caustic soda (NaOH) CSG Brine Pre-concentrated on-site to reduce brine volume CSG Brine Pre-treated on-site to reduce off-site waste QBS QBS Brine Management Complex Brine Electrolysis Complex Transport Transport brine and/or salts for processing Other Industrial Brine Transport brine direct to QBMC for processing Nominal Capacity 100% of total CSG industry waste salts Product 2 Hydrochloric acid (HCl) Product 3 Other green chemicals Water Recovered During treatment process QBS Brine Management Complex As part of plans to provide a viable long-term solution for the CSG industry in Queensland, Parkway is developing standardised process plant designs incorporating modular equipment, based on Parkway’s proprietary upstream process technologies. Internal evaluations confirm QBS is likely to be able to provide a highly attractive and permanent liquid waste disposal service to the CSG industry, where no other alternatives currently exist, and unlikely to be available in the foreseeable future. Parkway has identified several strategically located project sites which would provide QBS with the opportunity to establish a QBS Brine Management Complex, to consolidate, process and concentrate regional CSG brines at a central upstream location. The proposed QBS Brine Management Complex is currently expected to have a nominal nameplate capacity sufficient to process at least half the waste brine generated by the Queensland CSG industry moving forward, including the vast quantities of waste brines produced during the last decade. Whilst there is potential scope to increase the capacity of the proposed QBS Brine Management Complex further, the implied transport distances for the remaining brines are likely to require a separate central upstream plant, more proximal to the remaining, but less pressing, waste brines. Parkway has recently signed several MOUs, including with entities that own project sites suitable for hosting the proposed QBS Brine Management Complex and is in the process of exploring options to secure an option for a long-term lease that would underpin project development. Parkway has been collaborating with a proponent of a major sustainability precinct, to explore the feasibility of co-locating the QBS Brine Management Complex, which would potentially enable the development of shared infrastructure, thereby accelerating the development timetable as well as reducing development costs. As part of Parkway’s growing project delivery experience, Parkway is increasingly capable of designing, fabricating and installing the appropriate process plant, equipment and associated infrastructure, required for upstream industrial brine processing, including as part of the proposed QBS Brine Management Complex. www. pwnps.com DECEMBER 2024 | QUARTERLY REPORT | 6 QBS Brine Electrolysis Complex The proposed QBS Brine Electrolysis Complex (previously referred to as QBS Downstream Hub) is intended to convert all of the brine and/or salts from the QBS Brine Management Complex (previously referred to as the QBS Upstream Hub), into a range of valuable industrial chemicals, including hydrochloric acid and caustic soda. Parkway recently disclosed that it had entered into an MOU with an industrial-scale project developer in relation to the potential co-location of the proposed QBS Brine Electrolysis Complex on the developer’s existing project site. The potential co-location opportunity provides several significant project development related synergies in relation to shared infrastructure, accelerated permitting as well as a wide range of operational synergies and other strategic benefits. The MOU outlined a roadmap for advancing the co-location opportunity, including the preparation of a range of joint studies including preliminary process plant designs, site layouts, non-process infrastructure related planning, permitting related matters as well as a range commercial considerations. Following completion of the deliverables outlined in the MOU, in late December 2024, the parties executed a binding term sheet, outlining a roadmap for the parties to jointly develop an industrial-scale electrochemical complex. The proposed QBS Brine Electrolysis Complex is in the immediate vicinity of key target markets for the industrial chemicals planned to be produced by the downstream plant, providing a range of operational, logistical and commercial advantages. The initial stage of the proposed QBS Brine Electrolysis Complex is currently expected to have a nominal nameplate capacity sufficient to process in excess of 50% of the waste brine and salts generated by the Queensland CSG industry. The development plan proposed by QBS and its partner, envisages a staged development to ultimately treat all of the waste brine and salts generated by the Queensland CSG industry, including all the legacy brines currently being stored in regulated waste brine ponds. Whilst the term sheet provides priority for QBS to supply CSG derived salts, under the terms of the agreement, the parties have also agreed to partner to explore a much larger development, in subsequent stages, subject to market demand. QBS Stakeholder Engagement Parkway expects that in time, the innovative process technologies developed by Parkway, will become BAT for treating CSG derived brines, in Queensland. As the owner of these innovative and highly proprietary process technologies, to ensure appropriate alignment of strategic interests, appropriate value capture and the efficient roll-out of suitable industry-wide solutions, Parkway is well placed to lead the development of the proposed projects. As outlined above, Parkway is progressing a range of predevelopment related activities, to establish QBS as the proponent of this critical infrastructure, which is expected to enable QBS to attract additional strategic partners, including strategic investors. Given the highly strategic nature of the proposed QBS Brine Management Complex and the QBS Brine Electrolysis Complex, Parkway expects to be able to sell down equity in either QBS and/or at the project specific entity level, to fund development costs. Additional funding routes have also been identified, which include prepayments for either the liquid waste management services to be provided by QBS and/or for industrial chemical sales, 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 capable of assisting with project development and delivery, as well as several major including global companies interested in potentially acquiring an equity interest in either the QBS Brine Management Complex or the QBS Brine Electrolysis Complex. In addition to strategic and funding related collaborations, during the reporting period Parkway also proactively engaged with a diverse range of other stakeholders, including all levels of government. Key interactions involved various Queensland Government departments, including the Department of State Development, Infrastructure and Planning, including the Office of the Coordinator General. As previously disclosed, Parkway has performed various studies for the CSG industry, including several significant studies for a major CSG company (a global energy company), to further advance various objectives, including the brine processing projects proposed by Parkway. These collaborative discussions continue to progress positively, with a subsequent commercial engagement incorporating a strategic planning workshop, planned for February 2025. www. pwnps.com DECEMBER 2024 | QUARTERLY REPORT | 7 Technology Commercialisation – Mining Industry In parallel with the research and development activities relating to the portfolio of innovative process technologies, Parkway is also focused on the commercialisation of PPT’s more advanced proprietary flowsheets, with applications in the mining industry. Applications in the Mining & Minerals Industry Potential applications for the proprietary process technologies developed by PPT include, but are not limited to, the treatment of a range of complex industrial wastewater streams including brines, as well as acid and metalliferous drainage (AMD). Parkway is collaborating with various parties, in relation to several mining and downstream processing related opportunities, involving the production of critical minerals, as well as the potential treatment of complex wastewater streams, through proprietary process technologies developed by PPT. www. pwnps.com DECEMBER 2024 | QUARTERLY REPORT | 8 CORPORATE Operating Revenue Parkway generated group operating revenues of approximately $3.48 million for the December quarter, compared to $0.67 million for the prior corresponding period (FY24-Q2), representing a 420% increase. Outlook Given the significant growth in revenues generated during the last year and the encouraging activities outlined in the Business Development & Growth Outlook section outlined above; Parkway expects to continue to achieve improved operating results into the future. Notwithstanding the confidence in ongoing revenue growth, given the inevitable volatility impacting various project specific activities, particularly in terms of timing impacts, at this stage the Company does not provide any form of guidance or financial forecasts. As Parkway transitions towards sustained profitability, the Company intends to commence providing guidance at the appropriate time. Finance EBITDA Based on operating revenues of $3.48 million and an increased focus on profitability, as well as a contribution from the R&D rebate (as outlined below), Parkway generated $0.23 million in EBITDA in the December quarter, a favourable movement compared to the prior corresponding period ($0.1 million in FY24-Q2). Cash Flow Cash receipts from customers was $4.08 million during the quarter, a favourable movement compared to the prior corresponding period ($0.82 million in FY24-Q2). Parkway experienced net cash flow of -$0.10 million during the quarter, due to $0.59 million being generated in operating activities, as well as $0.56 million in investing activities (inclusive of capitalised R&D) and $0.15 million consumed in financing activities. Further details are outlined in item 1.9, item 2.6 and item 3.10 of the attached Appendix 5B, respectively. Although these results are unaudited, and therefore subject to change, this performance represents a significant improvement (compared to pcp) as a result of continued growth towards achieving sustained group profitability in the near-term. As of 31 December 2024, the company held $2.77 million in cash reserves. It should be noted that the reported cash balance excludes, i) undrawn balance of the term loan facility, ii) undrawn grant funds, iii) the anticipated R&D rebate for FY25, and iii) other receivables. R&D Rebate As a technology focused company, Parkway continues to invest in a range of commercially oriented, industrial research and development related initiatives through the Industrial Technology business division. As a result of these ongoing activities, Parkway is eligible for certain, Australian Government research and development tax incentive (R&DTI) related reimbursements. During the reporting period, Parkway received a $0.67 million refund in relation to the R&DTI submission for FY24. Inventory The supply of specialised industrial water and wastewater treatment related products continues to be an important component of Parkway’s go-to-market strategy for the Industrial Operations division operation by PPS. On this basis, PPS carries significant product inventory (stock on hand) across its various operations in Melbourne, Darwin and Perth, with the estimated value of inventory across the group at the end of the period being $1.78 million ($1.66 million in FY24-Q2). www. pwnps.com DECEMBER 2024 | QUARTERLY REPORT | 9 Investor Relations At the conclusion of the 2024 Annual General Meeting (AGM) held on 27 November 2024, Parkway Group Managing Director & CEO Bahay Ozcakmak, delivered a presentation that