LOCAL listed commercial lending company Financial Resources Limited has entered into a joint venture agreement with the owners of South African water control company, Sovereign. The agreement includes the creation of a new entity, Sovereign Hydrology, which will be held equally by both parties. Sovereign Hydrology will have the Australian and South African rights to a patent that has been under FRL’s control since 1999 and has been the subject of negotiation with several parties since that time. The patent covers the internationally proven water ingress and hydrostatic pressure treatment called NOH2O, which has been used in the civil and mining industries since 1975. Under the agreement, FRL is obliged to provide a loan of up to $300,000 to the new entity for working capital purposes, which will be fully secured with interest charged at commercial interest rates, the company said in a statement to the ASX. FRL estimates that the new joint venture will provide to it revenues of $2.6 million in the next financial year, growing to $3.8 million in the following year, with an immediate profit before tax of $686,000 this financial year.
