Please...by now everyone who reads this board should know the value of this initial CC contract, with perhaps the exception of one individual. Last week the appraiser verified that the company was capable of producing 3,000 ton of manure-based compost per month, or 36,000+ per year for the next 10 years. The Gold Standard determined that each of these tons was worth 20 carbon credit offsets, or approximately 740,000 per year and 7.4 million over the next 10 years. However, recent rule change, called backloading, only allows the producing company to only sell approximately 40% of what it produces for the first two years of contract, giving the company approximately 300,000 to sell at the beginning of years 1 and 2.
Today's price on the Gold Standard is 4.4 euros, or $6.08 per carbon offset. This would generate a sale worth approximately $1.82 million dollars. However, there are a number of fingers in the pie. The Gold Standard, the broker, plus other potential facilitators. Then there's the fact that the product has not yet been produced, so a pre-sale must be arranged to either an end-user or someone that wants to hold them as a speculative security. This means there is some risk involved, so that individual will want to receive a substantial discount. All in all, the company may only receive 50% of the original sales price. However, that is still huge number, especially if the company is able to sell the first two years production in one transaction. Also, the company is in essence banking the 880,000 carbon offsets it produced in the first two years, but was not allowed to sell. If these credits were to be sold at today's prices, which would be considered low two years from now, they would generate an additional gross profit of approximately $5.5 million dollars, to be received at the beginning of year 3. Incidentally, they would be a 'bookable' asset for the company while being held.
The giant upside to the business model comes from developing the rest of Castleberry and other locations. This because all the necessary mechanisms are in place and buyer's risk factor and pre-sale discount will be substantially less and the company's net profit substantially higher. Additionally, the cost of VER's are expected to reach $10 this year, which would create off the chart projections of future carbon offset sales. The company could literally give the compost away and still make a huge profit, but of that's not going to happen, they will simply choose to undersell the market and probably offer free delivery or some other buyers perk.
