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bigguy's math debunked:
Big guy... that's a large cocktail napkin, but thanks.
About a thousand words into your post, you wrote "So what are the costs, and does the number of 45 seem accurate? ... I can't really pursue the analysis because of a lack of specifics".
I think that is the best summary of your post actually. At the end of it, you asked for help. Please allow me...
Perhaps the largest error you made was the 110 bbl/day. That is the minimum throughput of a single operating processor (20 tons/day). So if you want to count THREE processors, you're already off by 300%.
But then you say the machines will run 24x7, and not just a regular 8-hour work day (it's how you calculated your labor cost). If that's the case, recall that 20 tons takes about 2 hours to process. So being conservative.. your bbl/day number should be at least 4x higher, per processor. That's now 1320 bbl/day for 3 processors. That's already a 1200% difference from your numbers.
Even at $45/bbl COST (recall that JBI claims $10), that means revenue of about $60k/day or $1.7m / month, or $21m / year.
Of course this logic is inside out.. it shows what is possible to generate in revenue from the costs you outlined.
The original claim you made was that the cost of producing a barrel of oil from JBI's P2O technology cannot possibly be $10. Your post didn't even address this with the single exception of sky-high labor costs.
To do this, we must exclude start-up costs (CapEx), which you pegged at $2m (recall that JBI claims their processor is $200k, which leaves $1.8m for other equipment (shredder, etc.) development / construction costs, etc.)... fine.. let's leave that, for now.
So excluding CapEx, you have only OpEx left (operational expenses). These can include: lease/rent on the industrial facility, operational staff, insurances, transportation, and feedstock costs.
. annual lease: $250k
. annual insurance: $40k
. annual staff: $480k (your number $100/hr @ 8 hr/day)
. feedstock: let's assume zero for now (see below for details)
= $770k
But if you have the workers putting in 8 hours days, it's safe to say the output should be minimally 2x110 bbl/day, thus 66000 bbl/year. (either that or you cut labor costs in half)
And what do you get..... (drum-roll please)..
770000 / 66000 = $11.67 per barrel!
At today's oil prices, that means a gross profit of $4.3m for one processor, on a $2m investment (not really since you claim that number was for 3 processors and here we counted only 1).
Now about feedstock cost: high-quality recyclable plastic sells for anywhere from $100/ton to almost $1000/ton, which is $16/bbl and $160/bbl respectively (assuming 1kg plastic = 1L fuel). So if the OpEx cost to product a barrel of oil is $11 (less feedstock), then JBI can affort to pay up to $75-11=$64/bbl before losing money.
$64 per barrel is fantastic margin, and that gives them plenty of room to "buy" feedstock.
But trust me -- they don't need to. There is plenty of homogeneous industrial unrecylclable waste plastic that goes to landfill for a fee today, that can be diverted to "for free" to JBI.
This will be a very profitable business IMO.
Tykün
P.S. I'm also open to comments, corrections, criticisms, so please... don't hold back.
It's not about JB being a nice guy. It's about his integrity and his conviction that his P2O technology is superior to what's available on the market today.
Lucky for us he's had those convictions backed-up in formal statements by state-certified scientists who are unaffiliated with JBI. In other words, somebody double-checked and vouched for his claims.
If you take that to be true, then what's left are the various degrees of success they might have in implementing the P2O business plan. But even at the low end of what's possible, it's gonna be a very profitable venture!
I'm glad I'm holding shares in this company, and despite seeing a healthy "unrealized loss" on my brokerage account right now, I'm not in the slightest bit uncomfortable about it.
Tykün
Big guy, could you cocktail-napkin this for us? Many here have not done the math nor seen the numbers -- this would help clear the air as to the profitability claims JBI is making.
Thanks!
Are you referring to the agenda-riddled criticism & accusations of fraud coming from the peanut gallery?
Big guy, can you share with the board the breakdown of the operational cost you believe P2O would require? Your background is possibly the most relevant of all who post here -- we'd appreciate the "truth" on the cost analysis.
Thanks,
Tyk
Agreed! It only matters what the stock price does.. not where it does it! That whole discussion doesn't add any value to this forum.
You mean the DEC employees are all insiders?
[scratches head]
Does that mean we have an answer to the question: why would somebody sell $10m worth of media credits for less than $10m?
Or why somebody would dump shares of a company at a fraction of their future worth?
syracuseo, speaking of "grossly inaccurate".. do you care to share with us the competition that you know of who are permitted, operational, and generating revenue?
I know of about a dozen "legitimate" P2O technologies out there, but very few who are generating revenue and even fewer who do so profitably (excl. subsidies) or without a negative environmental impact. And of those, ZERO of them have an ROI of under a few years from the information that is available.
Does that match your findings, and do you care to share the company's names with us?
Thanks in advance -- just trying to keep the board honest.
Tyk
Perhaps.... But what is also "true" is that following the issuance of those permits, JBI will have: a working p2o product, customers, sales, and revenue.
Gosh, that WILL be a quick catch-up won't it?
Tyk
Nobody is forcing you to support the company or buy their stock. But my opinion is that I'd rather invest in a company that has superior technology and isn't operational yet, than one that is operational with inferior technology.
I'm betting the path JBI has left to "catch up" is far shorter than the competition's.
Tykün
I think scion is just pointing out that the would-be competitors to JBI's Plastic2Oil(TM) have a long way to go to catch up. We thank him for his posts.
This is great.. a PR push with institutional investors will help to increase their visibility with the kind of investors they need to better support the share price!!
"Attendees will include institutional investors and research analysts, all of whom will also be visiting bus stations, taking bus tours, learning more about the broadcasting system installed in buses operated by CME and also visit the Company’s headquarters"
One statement is their safe-harbour stance and reflects the status-quo: unless there is new revenue, given the current burn rate they will not last beyond 12 months.
The other statement reflects their belief that p2o revenue will begin before they run out of money, and be sufficient to make them cash-flow positive (hence no need to raise more funds).
That may appear to be a contradiction, but I believe these two statements are BOTH factually correct -- one of them is simply a forward-looking statement.
GAME ON!
Tykün
From your perspective -- that of the poor souls standing on the tracks in the train's path -- yes.. it's a wreck.
From the perspective of the longs -- the passengers -- it's just another casualty that will go unnoticed.
You should buy yourself a ticket -- they're currently having a seat sale!
Tyk
I like Scheer's reference to the oil spill .. "what do you prefer, a noisy chip bag, or an oil spill". Sadly, the host said basically that people don't think about the oil spill on a daily basis, but they do notice the noisy bag. Jesus, what a world we live in.
Cereplast is incredibly well positioned to dominate this market in the coming years with their range of bio-resins, hybrids, patent portfolio, and forth-coming algae-based resins. And they have a great team to build from.
Tykün
We're near the bottom, and I'm still extremely and nonobjectively bullish.
Ha, dude.. you are SO mistaken.
The only "when" question is when to sell -- that will be a very difficult decision to take. $20, $50, $200? Or maybe we don't sell.. maybe we just hang on for the dividends
Tyk
bienvenue fishin! Second best stock you can own right now
There's a video I posted back in Feb also... that shows the company's founder explaining the desktop model. He says they sell their machines mainly to schools for educational purposes. Don't think that will help their bottom line much.
JBI's Plastic2Oil(TM) .. coming soon, to a site near you.
Tyk
Can't happen soon enough, given how your back yard is starting to look Z... LOL
Beer, you don't want a Blest machine.
Here is their catalog: http://translate.google.com/translate?u=http://www.blest.co.jp/seihin.html&sl=ja&tl=en&hl=&ie=UTF-8
And here is their "competitive" price list... LOL
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46970241
P.S. Scion knows very well they are not fit to be called a "competitor" given their prices, as my original post in Feb was in reply to him!
Sep 24 after the bell
I've spent far more than 10 minutes viewing only 1 video my friend. I'm well aware of the comparisons and the differences.
By the way, there was no magic at the AGM .. "yellow pee" as you call it came from a tap on the last tank. Believe it's a hoax if you must. Try to convince others it's a hoax too if that's what makes you feel good. But you miss a great investment opportunity.
Tyk
Yep. And CERP scored their top sales guy too. He's no dummy.
Scheer said "we're happy with our 30% margins today", then hinted that they might get eaten into a little with more R&D, etc. (or that was how I interpreted it).
So consider that 2012's earnings should be about $25m, and their P/E no lower than 20 given their growth rate. That's a $500m company ... over 10x today's valuation in 24 months.
There's only 1 stock I'm invested in that can do better than that
Tyk
I guess you missed the conf call (not surprising, most nay-sayers don't like to listen to the CEO of the company tell them things they don't want to hear).
The process separates the "near diesel" into pure diesel and gasoline. You may have heard of these.. they are quite common fuels, and relatively easy to sell.
Holy crap.. I'm listening to a recording of the conf call now. Scheer just said revenue projections are $10m for this year (we knew this), $25m next year, and they expect to do $100m in 2012.
That's the first time I've heard CERP mention any guidance for 2011 and 2012, and it's freakin' HUGE.
Normally I don't like when CEOs make bold statements like that on conf calls, however in the case of CERP.. I quite simply believe him!
He also mentions some new contract news that he'll be announcing in the fall of this year. Can't wait for that.. and for cash-flow +'ve in Q4. Next year should be a great one for the share price which has been beaten down badly lately.
Tykün
False. Diesel + Gasoline. Listen to the last CC -- it's all explained in there.
Tyk
That Swiss plant cost CHF 5 million to build by the way ($4.8m). Does anyone recall from the last conf call what JB said the Plastic2Oil(TM) processors would cost each? That's right.. less that 5% of that number. Sure, that's not the final cost of a P2O site, but if you are still wondering if P2O will be profitable those figures may help to clarify things a little.
Tyk
Interview & video about the site (in Swiss German):
http://www.videoportal.sf.tv/video?id=22ae8654-6243-48fe-8703-a6308dddea7f
P2O diesel now selling at a pump near you.
OK maybe not near you, but near anyone living in central Switzerland. Proof that this technology and business model is both mature and legitimate.
Some buses in the city of Baar run on Syntrol, which is the trademarked name Nill-Tech gives to their P2O output.
An article about the project: http://www.globel-projekt.ch/index.php?S=1&Folder=1
Some photos of the buses:
https://docs.google.com/leaf?id=0B-5LYrqHUB2OMDY1NjRkYWUtNjgxOS00NDc0LWI2ZDEtMWUxNDM0NzRjNmE5&sort=name&layout=list&num=50
https://docs.google.com/leaf?id=0B-5LYrqHUB2OZThkMzEyZWYtNzE2Ny00NTZmLTg2MTAtY2VjNWZiM2IzMjBl&hl=en_GB
https://docs.google.com/leaf?id=0B-5LYrqHUB2OYTcwODAyMGUtODM2NC00MTQyLTljM2MtYzExZmU5ZmYzM2Nm&hl=en_GB
And an article about these buses (in German): https://docs.google.com/fileview?id=0B-5LYrqHUB2ONmZiOWNmN2YtNmU5NS00NmQ0LTkxZmMtNmY3MjI5OTkzM2Jh&hl=en_GB
Recall that JBI's tech is not only significantly cheaper to build, but the yield is better, and the output is higher quality. These kinds of waste-to-energy systems are coming on-line rapidly lately, and JBI has a real leg-up on the technology that's out there today.
Investing in JBI today is a no brainer folks.
Tykün
You can stop guessing now MLM: http://www.otcqx.com/otcqx/market/quote?symbol=JBII&tab=0
That will be the folks who listened to the "other side".
I think in a few years you'll have a rather large collection of JBI longs joining Mr. Lynch in retirement.
You would SO lose the argument if the AGM attendees were to be surveyed today about whether they think JBI is a "nothing company". I can vouch for a statistically significant number of them -- they are all longs, and not merely because they may be underwater at today's price, but because of JBI's technology and potential profitability that are game-changing in the waste-to-energy space.
Tyk
Very lame math JJ.
A net profit of $65 per barrel is the equivalent $440 per ton of plastic. That means that JBI could pay up to $400/ton for waste plastic before they merely break-even.
$75 oil - $10 cost-to-produce = $65 net profit per barrel
$65/barrel = $65/159litres = $0.4/litre
1kg plastic = 1 litre fuel
Thus $0.4/litre = $0.4/kg plastic
= $400 / ton plastic
There is a VERY big gap between tipping fees @ -$70/ton and break-even @ $400/ton.
Tyk
I would say that it's just more people who are learning what we already know.
Ah, EP.. you are back in full-swing bull mode! Nice to see that!
It's true that an early 10Q goes a long way to restoring investor confidence.
Indeed ...we are days away from stack tests and permits, the last obstacles to the first ever P2O revenue for JBI!!
Tykün
I know of at least 9 JBI longs here in Switzerland, some of whom were even at the AGM last April.
Tyk
w w wee w wee w weeee .....
sorry... don't mind me.. I'm just warming up.....