President's Letter
12th July, 2012
Dear Shareholder,
I have not written to shareholders in 2012 until now, although it has been my practice to do so for some years.
Shareholders will be aware of our restructuring, whereby our European business has been transferred to our European subsidiary, CalciTech Synthetic Minerals Europe Ltd, ("CSME") incorporated in the United Kingdom. I provided a very full background to all these activities in my last letter to shareholders and I attach an abridged version below for those that did not see this. I can report good progress is being made relative to the planned activities of CSME and it now only requires funding completion, which I mention below. You can now visit CSME at www.calcitech-europe.com.
Earlier this year we welcomed John O'Kelly Lynch to our Board of Directors in a non executive capacity, which was confirmed on his reappointment by shareholders at the recent Annual General Meeting. John is a long term resident of Bermuda. A Fellow of the Institute of Chartered Accountants in Ireland, John joined a private shipping and venture capital group in 1984 as CFO. During the 80s and 90s he was actively involved in many US based venture capital projects and over the years has served in senior finance related roles for various international shipping and oil companies before forming Delphi Management Ltd. in Bermuda in 1997. John sits on the board of the funds that are managed by Delphi and also holds directorships' in various investment holding companies. In 2001, he acquired an interest in Interpetroleum Services Limited and other related companies which conduct chartering and financing operations in the gulf of Mexico offshore oil sector. He is former Chairman of the Bermuda Shipping Association and a Board Member of the Association of Bermuda International Companies.
In view of this he is able to represent us well in Bermuda, where we have never had a resident director before. He is also appointed a member of our compensation and audit committees.
In this current year, the management of CalciTech and CSME has been focused on arranging funding for CSME to become an independent operation and allow the financing with equity sources of the first plants planned. This is a challenging task with current financial markets so uncertain, particularly in Europe. However, opportunities are still available and particularly so for a situation like ours, where we meet a number of the criteria interesting to professional investors today. Our process technology with application defined specialty material products and in mature industries with our clear environmental and sustainability values, provide considerable investor interest.
Shareholders will be aware that we were unable to meet our filing date of 30th April this year resulting in our share quotation being moved to the OTC Link (formerly "Pink Sheets") where the shares continue to trade at low volume. Your Company was not made aware of this change from 30th June as in former years. Management accounts have been completed subject to audit. Our main business activity for audit purposes is now conducted through CSME and our London auditors, H.W. Fisher & Co will first be completing the audit for CSME for the year ending 31st December, 2011. This is required relative to the funding activities in progress and also is required to meet United Kingdom filing deadline of no later than 30th September, 2012. It is in the shareholders' interest to complete this to assist funding discussions as a priority. I intend to post the audited and filed accounts to our web site as soon as possible. We will also then have the audit of the consolidated accounts of CalciTech completed thereafter.
As soon as this funding process is completed we intend to commence activity in other territories where we have already carried out developmental work. We anticipate establishing territorial ventures that will be licensed by CalciTech Synthetic Minerals Ltd, where our IPR resides, and to participate directly in the ventures at the equity level. This will require our raising additional funds in the territories to complete projects and we will also look to raise further equity, most likely in the US markets to support the equity calls to participate in these ventures.
Your board is therefore committed to retaining its status in the United States and bringing us back to a suitable market quotation. Announcements will be made of all meaningful developments as these occur and will also be posted to its website at www.calcitech.com.
Yours faithfully,
R A Leopard
President & CEO
Extracts from the Presidents letter to shareholders posted 31st March 2011
We have progressed well with the development of our technology relating to the mineral wastes arising out of recycled paper. The first filing of our patent in this area was made in late 2009 and last year we entered into a co-operation agreement with industrial partners and sought a German Federal grant to support the project. This was approved late last year. This is an exceptionally interesting process as, by combination of CalciTech technologies, the waste minerals from re-cycled waste paper is purified and processed into two separate value streams of end product: Synthetic Calcium Carbonate ("SCC") with which we are all familiar, which will be re-cycled to the paper making process; and Sustainable Meta Kaolin ("SMK") that we believe has the potential to be a low energy cement substitute. This is a new product stream for CalciTech and requires further development, which is why a reputable cement company is part of the consortium. Our small scale plant at the Leuna chemical complex was moved to an adjacent site during the year and is being upgraded to meet the demands of this project in addition to its normal materials testing and sample production program.
A number of paper producers have taken a strong interest in our process and particularly because of its sustainability - "closing the process loop of materials". Dr Charles Kunesh, our US Development Director, presented a paper describing this at the Industrial Minerals Congress held in Miami early this year and a copy can be seen on our web page for more technical detail. Dr Robert Higgs, our R&D Director, presented a similar but more technical paper at the PTS-CTP Symposium in Munich.
As a result of this progress the Company has spent much time this last year reviewing the satellite concept of plant installation on site at customers. This type of plant, exclusively for production of coating SCC, we had anticipated as falling into a later phase in our program, but is driven by our advances in re-cycled paper. It is a very different model to our merchant concept, located at the customer's premises. It is normally a sole source of off take against long term contracts on very competitively priced terms and always delivered in a high solids slurry. Whereas our merchant concept can usually be located near CO2 and waste or other materials source and has mixed applications for our SCC in a variety of industries, and industry supply on small and short supply contracts to a wider range of customers, usually in a dry form. As such we have approached potential commercial partners with joint venture concepts, but we have failed to negotiate terms we would consider acceptable to our shareholders at this stage.
We have therefore decided to concentrate immediately on bringing several merchant plants to building stage and intend to concentrate on the smaller, non-paper coating, plants of which we have identified a number through our business planning. All prospective plants are now in Europe and therefore will be implemented by our new wholly owned subsidiary CalciTech Synthetic Minerals Europe Ltd. ("CSME") based in the UK. The prospective plants would be circa 40,000 tpa and could be in Germany, France, Spain, the Benelux or UK.
With several plants completed we have no doubt that execution on other projected merchant plants in Europe becomes very straightforward. We would expect thereafter to build a number of larger satellite plants for coating material at paper mills.
It is clear that the territories where SCC and waste remediation of our type will be used are quite different, either in their evolutionary stages, the market practices or management styles. In particular the local funding requirements and the need to secure the maximum protection for our technologies will require different local relationships and partners.
Michael Watts visited with me, both China and India earlier this year. Michael has considerable experience of working in Asia for much of his career. It is clear that there is a huge opportunity to recycle carbide lime waste and also re-cycled paper mineral waste in China providing significant environmental benefits, including absorption of CO2 emissions, while making certain industries completely sustainable with our SCC. India is potentially a similar opportunity to China, but may take longer to develop.
