H2O Innovation awarded contract to supply RO system to U.S. city

QUEBEC, CANADA, May 16, 2007 -- H2O Innovation (2000) Inc. ("H2O")(TSX VENTURE: HEO)(ALTERNEXT MNEMO: ALHEO) is proud to announce the execution of the most important contract concluded through its US subsidiary, Membrane Systems Inc. ("MSI"), for the supply of a drinking water production plant to the City of Cape Coral in Florida. Total value of this contract is $CAD 3,140,000.

Faced with a rapid growth of its population, the City of Cape Coral gave a work authorization to MWH Constructors for the design and construction of the entire treatment facilities, and Poole and Kent Company of Miami (FL) was subcontracted for the construction of the reverse osmosis treatment system including building that will house the system. MSI has been selected to design and furnish the 10 MGD (37,850 CMD) reverse osmosis system to Poole and Kent.

"The City of Cape Coral has been running reverse osmosis facilities for over two decades. The new facilities will augment the City's current production to supply potable water to 160,000 residents. This is one of the very important and exciting projects that MSI is proud to be associated with and our selection demonstrates recognition of MSI capabilities and expertise by the consultants and general contractors. The treatment plant is projected to start production of potable water in June 2009", commented Harbans Kohli, Vice President, Sales and Marketing at MSI.

The system will comprise of four trains of low pressure reverse osmosis units. Each unit includes 504 membranes to process groundwater with high total dissolved solids and high chloride content. In addition to design and furnishing of the system, MSI will supervise the installation and start-up of the treatment units.

"The H2O team is very proud to secure this contract which perfectly caters to our development strategy in the US market. This contract typically represents the positive result of the synergies between H2O and MSI, which successfully put together their expertise to secure new contracts in the United States", commented Guy Goulet, President and Chief Executive Officer of H2O Innovation.

Bearing in mind the contracts recently secured by H2O with a number of US municipalities such as Wellington, Boynton Beach, Palm Coast, Dunes, Bruneau and Santa Cruz, this widespread project strengthens the Company positioning as water treatment specialist with local communities authorities and major consulting engineering firms. With this contract, the Company expands its presence in North America. Moreover, the Cape Coral project will enable H2O to confirm its ability to offer optimised design solutions and expertise in drinking water production.

H2O is pursuing its market development in drinking water with a complete portfolio of membrane technologies for municipal, industrial and commercial sectors. H2O's mission is to develop, produce and market state of the art, environmentally friendly products dedicated to the production of drinking water and the treatment of wastewater and industrial processed water.

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Also see: "H2O Innovation foresees financing and plans to acquire U.S. wastewater treatment company"

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