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Historically, pyrolysis oil sells at a discount to WTI. Part of the reason is that pyrolysis oil is not compatible with most refineries. It's higher chlorine content and lower BTU value drive the discount. A couple years ago, I was involved in selling tire derived pyrolysis oil and received a 15 dollar per barrel hair cut. The long run price differential between sweet and sour oil is about 5 bucks a gallon. Then, add on the cost to ship it to the buyer and some discount for the chlorine. The real money is made when you invest capital to take it to a tank ready fuel or hydrogen.
The Foundation had previously provided a generous grant to aid in the construction of a building and its staffing. The site was named after them. There is no evidence that the Waltons or there Foundation is funding the 50 million dollar plant. What is clear from the press release is that the Walton named program will be providing access to 800 minds. So, no capital for the equipment means no revenue. It will be interesting what the audited financials have to say.
The project cost comes out to 400k per TPD name plate capacity which is more or less in the ballpark. Still no mention on how it is going to be funded.
And where is the hard cash to build that capacity?
Even with cheap systems making a crude oil will cost you 100k per ton per day of name plate capacity.
We have heard numbers like these before from our company. Remember Ecuador, the DRC and the Cameroons to name press released projects with large ticket prices.
The challenge with producing an intermediate pyrolysis oil product is that it sells at a discount to WTI. There is a significant capital cost to upgrade the oil to a take ready fuel or hydrogen.
The 2021 annual financial statements were issued in late March. It would be reasonable to expect that then2022 annual financial statements be issued next week. The only reason to go into early April would be for the added disclosure in the notes for the recent dividend and debt issue.
I am still in the green on my holdings.
We need to examine our track record of site announcements versus completions. Also, look at our track record of naming funding agents and actual funds delivered. Revenue is dependent on the availability of capital. Capital for a start up is very pricey.
A 500 TPD plant has a high capital cost if you intend to synthesize the scrubbed syngas into a tank ready synthetic diesel or pressurize/liquefy hydrogen. To convert syngas to make these fuels typically adds 20 pct to the total installed equipment cost. Yes, you can buy inexpensive offshore pryolysis units but they tend to have a short shelf life and thus raises the life cycle full costs. Revenue is one thing but after tax cash flow to service third party investors is quite another thing.
Unfortunately, revenue does not equate to after tax profit or available cash flow after the debt service cost and minority or partner interests.
Is there proof that the Waltons are directly funding the project? What we do know is that the staff of a Walton family member endowed a building whose staff would be available to consult. As for ASU, if they were told that CLVN had an LOI for funding, they are not liable, nor would they conduct due diligence on the claim.
Is it not reasonable as a shareholder to say CLNV is our company?
So far, nothing has been reported in the financial statements. I do know the industry and corporate finance. I do know that our company has press released projects that never materialized. We have gone through three corporate funding firms so far without tangible results. This is a common trait of small cap firm.
The official release is very clear that our company is responsible for funding the project. In speaking with several US investment bankers this week, the appetite for speculative start up operations is effectively on hold. This may be a new reality for CLNV.
Prime time in the business world is from 9 am until 5 pm. Anything on the weekends, holidays or evenings does not have the market draw. This is why the self promotion advertising and infomercial rates are affordable.
OTC companies do this as they do not have the demanding requirements for continuous disclosure.
The issue that I see is relying on past experience to sell the future. I suspect that the forty countries where solar and wind plants could be misleading. Does any one have a list of the countries where plants were installed as opposed to where plants were announced. Our record would show plants in Ecuador, the DRC, the Cameroons, UAE and likely Cape Cod.
You can buy time on networks to promote your story and by extension promote the stock. This is how business cable channels earn income. A little cash and some low cost shares and you get air time. I have seen this time and time again.
Do we know if the solar or wind projects were actually developed in the 40 countries or merely announced? Our company has announced projects which did not result in any development. The CLNV batting average is about 70 pct fluff and 30 pct actual or probable.
There are a few challenges with carbon credits.
In order to get cash for the carbon credits, you need to document the carbon saved less the carbon created to the new form or energy or solid outputs. This is done after the conversion process is completed. The savings is based on what the company saves rather than downstream benefits. Once the tonnage is calculated using a third party verifying firm, then the credits can be registered and then monetized. Pricing for carbon credits is quite variable. It depends if the markets has a formal regime or it is voluntary. The formal one in California is 30 dollars per ton before selling commissions and verification. An informal market is less than a quarter of the price. Europe is over 100 per ton.
One.of the realities of the current hydrogen market is that pricing in the US has fallen courtesy of early entrants becoming more competitive to keep market share. Further, the grants, tax credits and the like under the Inflation Reduction Act have suppressed retail pricing for hydrogen. Look at what happened to ethanol pricing in fuels over the long run.
It is the Walton named building at ASU and the support of its 800 scientists all through one of the Walton family foundations which is involved. There is no evidence of any direct financial investment by the Waltons into the capital cost or operation of the plant.
I focus on getting as much information on the WTE industry as possible then sift out what makes technological, environmental and commercial sense. Pyrolysis technology is proven. The trick is in the back end to clean up any fuel or to produce ample hydrogen. The block chain concept is novel but why add the complication. As for the commercial aspects, investors including green bond buyers and governments still want to see both skin in the game for new project builds and long term viability. Even our firm would need to pay about 8 pct on debt and 20 pct on equity even with assured inputs and offtakes to be viable.
I never said anything about SVB.
While your statement is true, it does not adequately respond to my comment on the nature of existing pyrolysis systems using plastics and such where our company says it is the first off the mark. There is nearly 500 TPD of new pyrolysis plants going into Australia, over 5000 TPD going into Canada and about the same into the US that I am aware of.
Unfortunately, there are already firms operating plants converting plastics, tires and other high carbon waste streams using pyrolysis. These can come from single or multiple streams. We do not have exclusivity on proven and commercialized pyrolysis technologies nor do we have a lock up on feedstock or offtakes.
How do you come up with revenue of 50 million?
While your statement can apply to many, in my situation, it does not. I am a licensed CPA and a principal in a well funded WTE firm.
Depending on the the nature of the investment and the elected accounting standards used, the revenue might be lower than you think. If you add in the sales income you will need to add in the direct costs, overheads, taxes and financing costs.
A new pyrolysis process was announced today in Waste Today for a plant in Greeley, CO. It must be substantial as it will cost some 95 million dollars and employ 35 persons.
Also, through my grapevine of contacts, a US firm received funding for up to 500 TPD of nameplate capacity to produce LCFS fuels and hydrogen.
I went through the press release and tested the throughput and expected revenues for a ramping up year. The gross revenues seem to make sense. When you consider direct operating costs, you get closer to about $ 10 million in margin before overheads, taxes ad financing costs. Even if there are no overheads and financing costs (wishful thinking) then you end up with about $ 6.3 million available for dividends to deliver to CLNV. It was not clear if CKNV will now own 100% of the Moroccan plant or the 51%. If the latter then the proportionate share is even smaller. If debt service costs are a reality then there will be less cash available to send up to CLNV. Depending on the accounting treatment that CLNV will use for consolidation then there could be further questions on the reporting of revenues or profits. While pushing the notion of revenues promotes the share price the actual cash flow is not quite there yet.
I believe that your response was not intended for me. I am long with over 700k shares down from 1,015k.
There is one small Walton Foundation which provided ASU with a generous donation for which a building was named after two members of the Walton clan. This is no different than corporations making a payment for naming rights for a sports facility although it is not a charitable activity. The ASU facility has a staff of 800 persons who are rightfully ASU employees who could be providing services to our company. My guess is that in might be a handful of persons involved on a part time basis.
I agree that you need to get the capital committed before construction can start. However, if you want to have a larger scale project or produce tank ready fuels or hydrogen it does not come cheap. The recent raise does not come close to what is needed.
If you read the ASU press release, they are providing access to 800 scientists and technicians. The Waltons donated money and lent their names to the University. None of this says that ASU or the Waltons are funding the project. As for the world of hedge funds, which I know something about, still require a project that passes certain investment criteria.
The challenge that the company has is that it has announced projects for which 70 percent of the press released projects never advanced. Further, we have not succeeded with at least three corporate finance firms to raise enough capital to build a good sized, quality plant. Our most recent funder is more at the small end of the financing spectrum. The recent deal reminds me of work done by Platinum Funding. They provided high interest rate loans secured against discounted shares. They sold the shares to recoup their investment. If they did not get made whole they used the note to claim more cheapie shares.
50k per month is 600k per year and not 6 million.
There is a big difference between 50k per month or 600k per year as revenue versus after tax cash flow and debt service costs. Depends how the deal us structured.
Just some of the profits off the table to get my capital off the table. I will still have about 600k or so freebie shares after the sales.
Dan has a long way to go to get the big bucks for multiple larger scale plants. There are other developers with proven equipment, feedstock and capital in the major markets right now. So, the competition for money will be a challenge in a higher interest rate environment. Green bonds for example is more of a marketing gimmick than a low cost debt.