INTERVIEW WITH ROBERT SCHUITEMA, CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR OF PHOSLOCK WATER SOLUTIONS LIMITED (PHK)

“Funds to Support Key Markets in Europe, North America & Australia”

http://www.brr.com.au/event/48059

WEDNESDAY, JULY 23, 2008, 10:30 AM.

BRR Today on Boardroom Radio we are joined by the CEO and Managing Director of Phoslock Water Solutions, Mr. Robert Schuitema. Welcome to Boardroom

10 Radio, Robert.

PHK Thank you.

BRR Robert, Phoslock has just announced that it has completed a share placement. Can you firstly provide some details as to the placement that you

15 have just completed.

PHK Yes, the Company has just completed a placement of approximately 9.1 million new shares, raising $1 million at $0.11 per share. In addition, participants in the placement also received one option for four shares subscribed for. The options have an excise price of $0.11 per share and

20 expire in July 2009. The issue was placed with institutional and sophisticated investors qualifying within Section 708 of the Corporations Act. The Company sold to diversified shareholder base and targeted these to London and Toronto. Currently, approximately 90% of Phoslock shareholders are Australian residents. Looking at our business plan going forward, less than

25 20% of future sales are likely to be raised in Australia with the bulk forecast in Europe, UK, Canada, and US in aquaculture. The Company is putting a lot of effort into this region and it is a natural progression to try and attract some local shareholders in these markets. The Company will put significant energy in broadening our shareholder base in the UK and Canada, targeting

30 environmental funds and large broker clients. We believe that a company like Phoslock offers an excellent investment opportunity for them. Projects are taking place in and around UK, Europe and Toronto and we hope to get interested parties along to these applications to see Phoslock applications firsthand. In fact, we have a Phoslock application in Northern Toronto later

35 this week and we have some brokers who took shares in the placement coming along to see the application and meet the client, the Phoslock team and get a bit of understanding of the business. Share placement is also well supported by a number of our top 20 shareholders. In addition, Directors and Senior Phoslock Executives have also subscribed for 1.6 million new shares.

40 Approval for this placement will be acquired at the next annual general meeting.

BRR Robert, what do you intend to use the proceeds of the placement for?

PHK Funds raised from the placement will provide further support to the significant

45 sales and marketing impetus for our key markets in Europe, UK, Canada, USA, and Australia in aquaculture. The Company has experienced delays on some projects and this has affected our funding. The delays are mainly approval-related, either environmental or local regulatory. Our technical group has accumulated a multitude of various studies relevant to the requirements of decision makers. The more projects we undertake, and we have risen up on projects completed, the easier the next approval is. After three years of doing this, the Company has condensed the approval timeframe significantly.

5 BRR Robert, tell me about some of the projects in your pipeline that you have mentioned.

PHK The main projects we are currently working on are, in Australia, we are in the final stages of planning an approval with the customer and stakeholders for an application to a 500-hectare drinking water body. The purpose of the

10 application is to reduce phosphate to low levels and absorb phosphorus releases from sediments. The client wants largely nutrient-free water leaving its reservoir. This is an important application for the Company. Good results will provide further opportunities with the client and other drinking water companies for applications to much larger reservoirs both here in Australia

15 and other drinking water companies which we are talking to in UK, North America and Singapore. It has taken 12 months to work our way through the various approval processes to get where we are today.

In Canada, later this week, the Company and our client, a major lake

20 authority in Northern Toronto area, are holding a demonstration for the Canadian Ministry of Environment for an application to stormwater basins. These basins accumulate runoff water from industrial and domestic sources in a capacity overflowing to various lakes. They are a natural phosphorus trap; however, there is nothing to absorb the phosphorus travelling from these

25 basins into the lakes. The addition of Phoslock in these stormwater basins will absorb a large portion of phosphorus and prevent it from entering the lake system. There are thousands of stormwater basins in Ontario alone that would benefit from Phoslock being applied several times a year. This is a relatively low technical use of Phoslock, but it is very effective and will provide

30 a steady flow sales for the Company. We are also progressing approvals to use Phoslock on inflow canals and lakes.

Another pilot was completed yesterday, the results of which are to be actively monitored. The monitoring focus is on phosphorus reductions in the lake

35 without any detrimental effect to the fish or the (inaudible) (0:04:33) in the lake. We are confident that these criteria will be met as have been evidenced in other countries around the world.

We are very excited about the business opportunities in Canada as the arrival

40 of Phoslock has also coincided with both federal and provincial government committing 42 million Canadian dollars over the next five years to reduce pollution by cutting phosphorus overload, rehabilitating fish and wildlife habitat as well as controlling pollution from sewerage and stormwater basins.

45 In Europe, Phoslock has had (inaudible) (0:05:02) since late 2005 based in Northern Germany working alongside our main western European licensee, the Novak Institute. They have seven full-time employees working on Phoslock including four doctors. They have taken a very technical approach to addressing water body issues and have completed approximately 10 applications to date in Germany and Holland. These applications have generated significant media and community interest in our best marketing tool. Our application to Lake Rauwbraken in south-eastern Holland in April this year has been described by the media as a wonder project. This was a

5 troubled swimming lake and closed for most of last year due to blue-green algae outbreaks and health warnings. The Phoslock application transformed the water body into excellent water quality within two weeks and was reopened to swimmers. Now, over a thousand people a day are using the facility with water quality continuing to be excellent. We also have licensees in

10 Poland and Hungary who are very active. We expect to complete approximately 10 applications in Germany, Holland, Poland, and the UK, totalling around 400 tonnes in the post-summer period.

BRR Robert, how is the aquaculture business going?

15 PHK Trials continue in Malaysia with the harvest after 120 days, and the growing cycle is about to take place. We have been working with the growers for 12 months from three separate crops now. Indicative results have been very promising. We will analyse these data with the growing company after the harvest to determine the sales usage with them. We are selling to a

20 distributor in India who has confirmed excellent results to date and expecting increased sales. Our trial in Indonesia with the largest prawn grower in the world is progressing slower than anticipated. They have been caught up in the integration of a recent acquisition of a large rival prawn growing company. Their need for a product like Phoslock still exists and senior management are

25 keen to trial the effectiveness of Phoslock.

In Northern Queensland, we conducted a pilot program with a large grower last year who is looking again to use Phoslock this year. Their focus is very different to Southeast Asian growers who have to endure very poor source of

30 water and have issues day 1 with the water quality. Phoslock is being profiled at a major aquaculture conference in Brisbane next month, prior to the start of the North Queensland prawn-growing season.

In Southern United States, Phoslock is working with parties to trial Phoslock

35 in catfish farms.

From management's point of view, Phoslock’s use in aquaculture is very promising with no adverse results to species. However, we are yet to get to the commercial impetus that we are looking for. Phoslock remains committed

40 to this market and believes that this will be a significant market segment for the Company.

BRR Robert, how is the manufacturing operation in China going?

PHK We run our factory near Kunming in China on a campaign basis and bets run

45 to several hundred tonnes at a time. Sales at this stage are not sufficient to run the factory continuously. The cost of maintaining the factory is very low. We continue to get great support from our Chinese joint venture partner, Yalong.

BRR What is your message that you want to leave the Phoslock shareholders with?

PHK The Company is making good progress in getting Phoslock established as an accepted treatment and preventative product for reducing phosphorus in

5 lakes and rivers as well as stopping phosphorus entering lakes through absorbing it in stormwater basins and inflow canals. The Company has experienced some delays in various projects, and as we all know, time is money. However, the Board and Management believe that progress over the last 12 months in establishing Phoslock particularly in Europe, UK, Canada,

10 and in parts of Australia will result in significant sales going forward. The Company continues to develop other markets at the same time. Aquaculture in Southeast Asia, catfish farming in southern United States, penetration in the US market, New Zealand lakes projects, and works on specific projects in China. Global awareness of the need to treat (inaudible) (0:09:01), blue-green

15 algae and high phosphorus affected water bodies has never been greater. Phoslock is the only natural-occurring solution that addresses this need.

BRR Robert Schuitema, the CEO and Managing Director of Phoslock Water Solutions based in Sydney, thanks very much for the update today on the

20 Company and the recent share placement.

PHK Great, thanks for your time.

BRR Remember, if you have any questions about this broadcast or any others, please feel free to contact us at brr@brr.com.au or via the Contact Us button

25 on the home page. I am Terence Bell. Thanks for listening to Boardroom Radio.

INTERVIEW CONCLUDED

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