Shares digital

A £22 million deal to process 30,000 tonnes per year of green and kitchen waste from Buckinghamshire County Council helped shares in waste management group Bioganix (BGX:AIM) recover most of the lost ground since last week’s profit warning.

Bioganix advanced 6% to 110p intraday on Monday after being awarded preferred bidder status on the 15-year contract.

It offers some relief to shareholders who saw their investment fall 13% to 97p on 21 January after Bioganix warned that 2007 results would be ‘materially affected’ by an arbitration issue with a materials supplier.

Last September, Bioganix revealed that its Suffolk treatment facility had suffered from lower volumes due to a shortfall in contracted supply from a major customer.

An arbitration award equal to the shortfall in supply will help the business to break even in the second of 2007, the company said. If it does not get this resolution, it will face a £600,000 loss for the trading period. The outcome is expected by mid 2008.

Bioganix was founded in 2001 as a business to treat organic waste and produce a fertiliser for use by farmers and land remediation. It is currently building its third treatment plant at a site near Gloucester.

Shares says: Bioganix’s success is dependent on building up scale. Until it has at least three plants operating smoothly and more contracts, it will be a high-risk investment.