Cielo Waste Solutions
Ticker: CMC.CN / CWSFF
Listings: Canadian Securitites Exchange / US OTC
Market Cap: 360 MCAD at time of posting
Share price: 1.02 CAD at time of posting
Industry: Converting waste to renewable fuel
Cielo Waste Solutions today 9/3 2021 announced they are expanding into the United States and additional territories in Canada with their Joint venture partners. . The Memorandum of Understandings are signed with Renewable U Energy Inc. (“RUEI”).
The MOU provides for Cielo to build, and commission, at no cost to Cielo other than internal costs, three (3) waste to high-grade renewable fuel facilities, one each in Winnipeg, Manitoba, Kamloops, British Columbia and a high-volume location to be determined in the United States (each a “Territory”, collectively the “Territories”). Each Territory includes a radius of 250 km from the outer boundary of the named municipality.
ESG Comment: This expansion is where it becomes really interesting to calculate the future potential revenues for Cielo Waste Solutions. One time fees such as royalty fee of 7 % on 8 facilities adds up to $28 MCAD in total revenues for Cielo. Assuming all 8 facilities produce 12000 LPH and a run time of 11 months per year total output could reach 760 million liters per year ( 200 million gallons). Assuming a price of 1,67 CAD per liter that equals potential revenues of $1,27 Billion CAD annually. The production cost per liter is expected to sit at between 0,4-0,7 CAD per liter Assuming 0,7 CAD per liter thats a potential margin of $737 million CAD.
Cielo will receive a Joint Venture Fee of of CDN $250,000 per Territory, CDN $750,000 in aggregate (the “JV Fees”). Cielo confirms receiving a deposit of CDN $250,000. The balance is expected to be delivered on or before March 31, 2021.
The terms for the Joint Venture facilities are such that “Once up and running, the revenue split is 70% to the JV partner and 30% to Cielo, until the build and commission costs are recovered, then converts to a 50/50 revenue share forward.”
Cielo will also receivea management fee of 7% on all capital expenditures related to the project costs for the first facility in each Territory including a markup of 30% on the catalyst used in Cielo’s proprietary process of converting garbage to high-grade renewable fuel.
Renewable U Energy Inc. (“RUEI”) is expected to take over the rights from the other JV partner Seymour Capital explained in the press release as “Cielo has been advised by the principals of RUEI that, in order to accelerate and streamline funding of the Territories and the territories set out in the Existing MOUs (the “Existing Territories”, together with the Territories, collectively the “JV Territories”), RUEI has acquired all of the rights and obligations of SCI related to its Existing MOU related to the territory of Calgary, Alberta, as well as SCI’s option to acquire a territory in the Province of Ontario (to be determined).”
The most interesting statement is from CEO and President of Cielo Waste Solutions Don Allan stating: ““While we highly value our JV partnership with RUEI, Cielo can confidently source its own funds to build facilities in additional territories throughout Canada, the United States, and beyond. For the time being we will not be considering any further JV agreements with existing or other partners.”
This can only be interpreted such that Cielo now has gotten to a point where they potentially may be able to fund their own facilities with perhaps green ow interest loans and/or government contributions.
Cielo Waste Solutions remains as my largest position in the portfolio and I’m confident that the company is on a positive path towards commercial success even more so after this breakthrough.
Link to press release:https://ceo.ca/@thenewswire/cielo-expands-footprint-into-united-states-and-additional
This is not to be considered financial advise, always do your own research!