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I've read it. As said below, not much to write home about. Did get development tax refund of $379,275 which gave us net income for once.
10Q is out
ir@cleanpowerconcepts.com - if you are reading this, please click the "file" button
I interpreted the KND agreement to be the selling of canola oil and canol meal takeoff that CPOW generates. We are already posting revenue for canola oil and meal. This agreement would have to provide us with a new customer base for the purhcase of these commodities for us to see any significant growth in our canola oil and meal revenues. I just think in reality, it is going to take a little bit of time for it to fully come on line.
Also I believe the KND agreement does not include canola oil under the China agreement but would include meal generated. Based on the repairs identified in the lease agreement, and the fact that the Culbertson facility has been sitting vacant for some time, it will probably be a good 6-8 weeks before it is up and running. These opportunities appear to be where the real increase in meal and oil exisits, and they make take a little time to be realized in the financials.
So, what are we looking for on the 10-Q for the 3rd quarter? I would like to see at least $310k of gross revenues for the quarter.
Personally, I don't think we will see any real revenues associated with all of the PRs until the first quarter of next year (May-Jul 2011). But I would like to see something solidifying all of PRs either in a new PR or in the MD&A section of the 10-Q.
21% of volume so far today in 5 transactions between 1:20 and 1:55 with great support.
I agree. If it were not for the other, I would be very skeptical about the China deal. Regina does not appear to be operating at anywhere near capacity. I see no other reason to increase capacity to this point other than to supply an immediate need. IMO
I have been viewing the shorting issue from a different standpoint. There has been tremendous volume on this stock recently, based primarily on the China deal. I believe there are a lot of people holding this stock at a much higher price than its current market, all hoping the China deal will materialize. I believe there are also a lot of people betting that history will repeat itself. Schehner has a history of making statements about multi-million dollar deals coming with no follow through.
As you know, General Bio Energy, Inc. was formerly known as Canadian Green Fuels. In 2008, Schehner announced a deal to supply biodiesel to FC Stone Group worth $15-20 million. Of course, this opportunity never materialized.
http://www.canada.com/reginaleaderpost/news/story.html?id=be7f4be0-21de-4614-add0-ad66765f5f7b
Also in 2008, announcements were made regarding the building of a $50 miillion 200 million liter per year biofuel plant. Of course, that never materialized also.
http://www.greentrucker.com/index.php?pgsIA=84&pgnorIA=87&pgnopIA=13&iEnviroArticle=48&p=environmentalnewspage
Both of these annoucements were before General Bio Energy, Inc. was acquired as a subsidiary of CPOW.
If I were shorting this stock, I would be betting on the trend to continue and nothing substantive will follow Schehner's announcement, and there will be just as many people trying to dump there stock.
I also think they are going to string these press releases out as long as possible. We know cash is tight, and all of these losses have been funded by related party loans to the company or other debt. Every time there is a press release, this little cash-strapped company gets a lot of free advertising. I would want to drag that out as long as possible. Also, press realeases and 8-k's cost money, which many not be much, but it is a lot to a small company leveraged to the hilt.
Scout, here is how I approached my Culbertson earnings model:
1. Maximum crush capacity = 5,000 MT per month (assumed as it is not known right now)
2. Price per MT of Crude Degummed Oil = $963 / MT (used weighted average of calendar year prices for 2008 - 2010. Although current prices are $1,200 / MT, I believe there is too much fluctuation in the historic prices to use this going forward or trending it out)
3. Price per MT of Meal = $239 / MT (used same weighted average for same reason)
4. I did not adjust the price per MT from Canadian $'s (Canola Council data is in Canadian $') to US $'s becuase the conversion rates have historically been so close.
5. Assumed 1,079 liters of Crude Degummed Oil per MT (can someone check this?) I based this on the 10/31/10 10Q which states 19.7 million liters is approximatley 18,250 MT.
6. Resulting weight of meal would be 10% of gross canola weight input
Scenario 1 - Gross of $1,093,000 / month or $13,116,000 per year(Assumes 3,000 MT of Camelina and 2,000 MT of Canola per month.)
Camelina = $180,000 (3,000 MT x $60 / MT)
Canola = $865,000 (((2,000 MT of seed x 2,204.63 lbs. / MT) / 50 lbs per bushel) x 11 liters of oil per bushel) = 970,000 liters of oil / 1,079 liters per MT = 900 MT of oil x $963 / MT = $865,000
Meal = $48,000 (2,000 MT of seed x 10% = 200 MT of meal x $239 / MT) (I did not calculate anything for the resulting Camelina meal, as I am not clear from the lease what happens to it. I am assuming Great Plains keeps oil and meal.)
Scenario 2 - Gross of $913,000 / month or $10,956,000 per year(Assumes 0 MT of Camelina and 2,000 MT of Canola per month.)
Scenario 3 - Gross of $2,280,000 / month or $27,360,000 / year(Assumes 0 MT of Camelina and 5,000 MT of Canola per month.)
Scenario 4 - Gross of $516,000/ month or $6,192,000/ year (Assumes 1,000 MT of Camelina and 1,000 MT of Canola per month.)
I think gross of $30M on Culbertson is best case scenario all of the stars lining up. I am leaning toward somewhere between scenario 2 and 4, but that also assumes we are up and running from day one. I would possibly need to adjust for ramp up and seasonality. ALL IN MY OPINION.
Can anyone provide a link to a third party source for the wholesale market prices of canola and camelina oil per metric ton?
Some calculations on production capacity. Please take a look at my variables and let me know if I missed something:
CCG LOI per 12/21/10 8-K states expected average sales of 2,500 MT of canola oil per month. This equals approximatley 30,000 MT of oil per year.
The Regina plant has a stated capacity of 19,700,000 liters of oil crushing capacity per year, or 18,250 MT of oil per year. (10/31/10 10-Q)
The rental agreement for the Culbertson facility states that CPOW will crush at a mininimum 2,000 MT of seed per month. This is equal to a minimum crush of 24,000 MT of seed per year. There are 2,205 lbs. per MT. That is a minimum required crush of 59,920,000 lbs. of seed per year. Based on what I can tell, 50 lbs. (1 bushel) of canola oil seed produces 11 liters of oil. Dividing 59,920,000 lbs. of seed per year by 50 lbs. equals 1,058,400 bushels. Multiply this by 11 liters per bushel gives a minimum required oil production of 11,642,400 liters per year. That equates to an approximate minimum annual production of 10,800 MT of canola oil per year.
In addition to the base monthly rent of the Culbertson facility, there is additional monthly rent of $15 per MT of seed crushed in excess of the minimum 2,000 MT per month required under the agreement. I cannot find anything that gives the total crush capacity of the Culbertson facility, but the example in the rental agreement for the excess monthly rent uses 5,000 MT per month. Assuming this as the maximum, the Culberston facility would have the ability to produce up to approximatley 27,000 MT of canola oil per year.
Regina (18,250) plus Culbertson (27,000) equals capacity of approximaltye 45,250 MT of canola oil per year. The CCG agreement was expecte to average 30,000 MT of oil per year. That appears to give excess capacity to 1) service existing and future customers and 2) the rental agreement for Culbertson also states CPOW will process, at the Landlord's request, up to 3,000 MT of camilia seed per month for the Landlord.
IMO, this provides pretty convining evidence the CCG deal has either gone through or is going to go through, as I see no reason, based on current output, for CPOW to incrase its capacity to this degree.
I have not included Bridgeport becuase it appears this facility is dedicated to the production of bio-fuel, not canola oil. This fits with the most recent 10-Q in which management states, "We also plan to research acquisition of a U.S. based biodiesel operation to assist in meeting this production goal and to capitalize on a ‘blenders credit’ that is provided by the U.S. government."
Looks like Great Plains Oil & Exploration, LLC first begain leasing this property from Carbonics Capital Corporation back in October 2009 when Carbonics started having problems. From the PRs during that time:
Culbertson consists of oilseed handling, storage and processing infrastructure, including mechanical crush and vegetable oil refining equipment. It has over two million gallons of crude vegetable oil storage, over one million bushels of oilseed storage, and over four thousand tons of meal storage. Additional infrastructure includes a rail siding, truck and rail scales, and major U.S. highway frontage.
I am not sure if this information was previously posted, so I appologize if this is old.
I know there was some questions about the address associated with Alabama Bio Energy, LLC. If you put the address into Google Maps, it brings up a neighborhood, not the large industrial plant at the end of the street. Back in late 2006, Alabama Bio Energy, Inc. received a $500,000 USDA Rural Development Renewal Energy Program grant for the conversion of the 50,000-square-foot plant located at the site of the former Jacobs Manufacturing cast-iron plant, to a soybean biodiesel production facility. The address associated with Jacobs Manufacturing Co. is the same address presently listed for Alabama Bio Energy, LLC. (311 Edmonds Avenue
Bridgeport, AL 35740)
I am not sure of the difference between the Inc. and LLC. The Inc. was formed on 1/5/06 and filed a name change with the AL Secretary of State to change the name to WFJM, Inc. on 3/13/06. The LLC was formed on 3/13/06. They are two separate legal entities, but I do not know what the purpose of WFJM, Inc. serves. Could possibly be the entity that holds the real estate while the LLC has the equipment / operations.
The only sales information I could find for Alabama Bio Energy was on Manta that says current estimates show the company has an annual revenue of $1 to 2.5 million and employs a staff of approximately 5 to 9.
Does anyone have any other information about this?
I still believe the long-term intent is to supply Chongqing Grain Group Co. Ltd by increasing production (purchasing assets of Alabama Bio) and then the building of the production facility through the JV.
Has anyone tried calling Dr. Freeman to see if the asset purchase is going through?
From everything I have read, I believe in the short-term, CPOW will provide oil in house and from third parties to Chongqing Grain Group Co. Ltd., but the long term intent of the parties is the JV (building of the production facility). I would expect them to start operating under the sales agreement during the year, but the production facility will take time to build, and therefore, generate revenue. Regardless, if this ever gets inked, I think CPOW is looking at significant growth.
I believe it meant 60 days, not buiness days, but I do not think any announcement will be made until March 1st or later. The original press release stated, "To complete the agreement Clean Power Concepts will be hosting a formal delegation from Chongqing within the next 60 days which will be comprised of private company officials and Chinese state representatives."
If you read the actual Memorandum of Understanding dated 1/15/11 filed with the SEC between CPOW and Chongqing Grain Group Co., Ltd., it tells us that both parties agree to:
1. For a Joint Venture Relationship, the objective of which is to explore the feasibility of jointly building and managing a 600,000 MT food canola crush plant located in Wester Canada.
2. The JV will be a separate LLP established for the purpose of building and managing the plant. The ownership will be CGG 90% and CPOW 10%.
3. CGG agrees to commit to purchase all oil output and CPOW agrees to puchase all meal output. (This is why CPOW signed the agreement with KND to sell its cannola meal off-take, becuase it expects to have a lot of it.)
4. The anticipated combined minimum investment would be between 70 to 90 million Canadian dollars.
5. That the agreed concepts and principles of the MOU be more fully documented in the form of a more detailed and executed binding agreement between the two parties. The process of finalization of this agreement is agreed by both parties to be completed within 45 days of the signed acceptance of both parties of the MOU.
My take on it is that the delegation did come within 60 days, but the completed agreement everyone is looking for is partly the MOU that was filed on 1/15/11, and we should expect a final signed acceptance 45 days from 1/15/11, which is March 1st.
I believe the viability of the Chinese deal going through is very good. They are supposed to close on the asset purchase of Alabama Bio Energy, LLC on March 15, 2011, (2/3/11 press release). The assets of the facility they are purchasing have a stated production capacity of 100 million liters annually. Given the current size of CPOW, I find it unlikley they would be contemplating increasing their current plant crush capacity from 19.7 million liters annually without something as big as the Chinese deal driving it. The original press release back in December stated the parties had agreed that CPOW would initially supply Chongqing from its own inventory and through purchases from third party suppliers as it increases production facilities to bring all production sold to Chongqing in-house.