Ticker: CMC.CN / CWSFF
Listings: Canadian Securities Exchange / US OTC / Frankfurt
Market Cap: 287 MCAD at time of publication
Share price: 0,74 CAD at time of publication
Industry: Converting waste to renewable fuel
ESGFIRE had a sitdown yesterday 27/5 with Don Allan, CEO of Cielo Waste Solutions to ask a few questions on the latest press release , the ongoing activities such as TSX uplisting, Desulphurisation and also what lies ahead. We hope you’ll enjoy this interview as much as we did !
ESG: Hi Don and welcome to this interview with ESGFIRE!
Don: Thank you!
ESG:First of all we have to ask, do you have any further comment in regards to the article by “Night Market Research”?
Yes, we think our investors, before blindly believing what this “firm” writes, should check their background. Go to their website and look at how they make money, they basically write negative reports and short stocks. They seem to do this by telling a pile of untrue statements and bet money on this. We know some shareholders would like us to reply to this “report” in detail but our management is focused on moving this company forward and we don’t want to give them too much attention. We believe our press releases and advancements speaks for themselves.
ESG: Can you provide some details around the Press Release you just sent out on 27/5 regarding the Edmonton land purchase and what it means to Cielo Waste Solutions?
So, we have been looking for an ideal place for our Edmonton facility for quite some time now. I think we have finally nailed THE best site in perhaps, all of Canada. The reason is this is the number one hydrocarbon region in all of Canada that has over 40 billion dollars worth of infrastructure we can sell to. Close to this facility we have Canadian Pacific railways, CNM rail, and a couple of miles away we have Shell Oil refinery which they use to blend for the renewable fuel mandate ordered by the Canadian government. Finally, we are not far away from Suncor, Imperial and a lot of other potential clients. We have more than 80 % of our customers in the area of this refinery site for this facility.
What’s also great is this facility has a lot of infrastructure so we are able to shorten the original time plan from 24 months to maybe 18 months or less until commissioning. This facility will be our showpiece for customers around the world, as its only a couple of kilometers from an airport and near international airport. We are already in talks with the municipality of Ft. Saskatchewan for permits and our environmental report is up to date. We are looking to commissioning Edmonton and Dunmore facilities maybe in Q3 of 2022.
ESG: There has been questions in the investment community regarding large offtake agreements for sales. Can you tell us when we will see this?
Our Desulphurisation process being completed is a big part of this. We are in talks with major airline and marine companies, major refineries and off highway buyers, such as oil and gas exploration and railway companies. They need to get samples of our fuel to see that it meets their standards which I’m sure it will. We can sell our fuel as it is to Jet and marine sector but for the highways we need the desulphurisation complete. Our fuel still needs to be tested by engine manufactures for airplanes such as Boeing and Rolls Royce. We have hired the number 1 certification company in North America to do this testing which only a handful of companies are capable of , unfortunately we cannot name them as of now.
I want to reiterate we can sell the fuel today as is but we would not get top dollar for it. Once our desulphurisation process is done we have a 900 000 liter order to begin filling. We do have customers who want to buy our fuel as well as an offtake agreement and they will get a sample to see if it meets their criteria or if we need to change anything once the desulphurisation is complete. I cannot provide a timeline for when the fuel will be approved by all our sectors but its an ongoing process and I’m confident we will meet all requirements.
ESG: Cielo seems to have many great opportunities ahead of themselves. Can you identify what path you feel may be your best opportunity to use as your primary growth strategy?
Don: There are many interesting roads to growth and we are currently working with paper mills to taking their pulp sludge and environmental companies covering human solid waste from municipalities as feedstock. Seeing as our growth plan is to build 40 facilities in the next 5-7 years our goal is to help municipalities turning their cost of waste into a revenue stream for them. Landfills actually take, on average, 25 % of the budget from municipalities. We will turn this into a revenue stream for them.
Some municipalities also have 2030 targets to be carbon neutral and 2050 to get rid of landfills and they wont be able to reach these without us (Cielo). Cielo process runs on green electricity, so we can help them recover the methane and have them turn it into green power.
ESG What , if anything, will Cielo do with the existing methane gas coming off the municipal landfills?
Methane is one of the most harmful of all greenhouse gases and 25 % of the world’s greenhouse gas comes from landfills. With third party contractors we can recover the methane, which is a syngas, the municipality can then put this into a turbine and use it as electric power. We would then buy the power from them. The municalities would also recycle all the metals, glass, copper all with value they can collect and sell. The feedstock that we can use from their landfills we turn it into renewable diesel which the municipality can then put into their commercial and transportation vehicles for example.
ESG: Why does Cielo pay a tipping fee for feedstock?
We pay a tipping fee because it costs money to recycle. If you look at big contractors like GFL there is no way you get recycled material for free but it really comes down to pennies on the liters as we produce. Instead of paying $1.25 on canola or other agricultural feedstock we have a much cheaper feedstock.
ESG: Does Cielo disrupt any current other business models in this process?
No we are actually complementary, when it comes to landfills there is so much garbage and we are giving municipalities a solution by turning a deficit into revenues. Much of the renewable fuel in Canada today is imported so we have the ability to put in high quality renewable diesel fuel instead of using other sources such as crops.
ESG: How will this strategy play out in Edmonton, your most recent facility location?
We are using multiple feedstocks and we have signed 5 mous with feedstock providers already. The feedstock is everything from municipal waste to landfills , waste from logging industries (wood) , sawmills , sewage as possible feedstock , plastics, we luckily have enough feedstocks for 20 plants at our Edmonton facility. We will build infrastructure for 3 plants as a start . One plant can produce 4000 Liters per hour ( 1056 gallons per hour) . So the first goal will be 12000 liters per hour (3170 gallons per hour) for Edmonton but ideally I would like to get this number up to 24 000 LPH (6340 gallons per hour).
ESG note: A 12000 LPH facility running at 20 hours a day for 7 days a week for 11 months would equal close to $135 million in annual revenues assuming a 1,67 CAD price per liter for the Edmonton facility alone not taking into account any revenues from potential emissions rights.
ESG: What is the actual Greenhouse gas emissions impact of Cielo’s renewable diesel compared to regular diesel and gasoline?
We have actually hired the number 1 company in North America to find out the actual GHG savings and we will likely be able to update the market on this in approximately 6-8 weeks.
If Canada goes forward with their 170 dollar tax per tonne of green house gas emissions we could make more money off these emission rights than selling the actual fuel. We are likely the only company who likes this tax. However we do not count in any subsidies in our business model because you never know what happens with politics. Our revenue numbers NEVER include GHG emission rights, so this COULD potentially be a big and solid revenue for us.
ESG: How are things going with the planned uplisting to the TSX Venture?
We have given TSXV everything they’ve asked for and they have a meeting on June 3rd to put Cielo in front of them. We should hopefully be trading, approximately the middle of June unless the exchange has more questions for us to answer
ESG: How confident are you that your planned facilities with Renewable U Energy Inc will be financed on time?
We talk to them (RUEI) everyday. I can tell you everything seems to be going extremely well. They are keeping up with their invoices to us and the Dunmore facility is being paid and I don’t think it will be difficult to finance.
I have no doubt in my mind that they can do the financing that they are claiming.
ESG: Can you give us an update on the desulphurisation process?
Yes, 90 % of the equipment is on site today and our crews are working 7 days a week. We still have some work to do such as electrical connections and welding but we are hoping to be commissioning between mid to end of June.
Do you have any further plans how to finance cielos growth for your fully own planned facilities?
We currently have a number of term sheets looking to finance the Edmonton facility. We are currently working with some of the largest banks in the world and we are likely looking at 50-60 % bank financing for the first 100 million dollar phase ( out of which $12 million has been covered by the land purchase ).
We expect debt rates to be reasonable going forward and it wont take long until we are in higher revenue range and at which point we will be able to get even better debt terms and less need for equity financing. We will likely have a lot of revenue to finance our growth down the line.
The financing looks like this:
-Edmonton first phase, 100 million dollars, infrastructure for 3 sites ( 12 million is done by the land purchase)
-second phase will be 30 million
-third phase 30 million
The second and third phase we will likely will be using cashflow from the first phase.
For the first 100 million dollar phase minus the 12 million we have done from the land purchase we are likely looking at 50 % debt and 50 % equity. The debt rate will most likely be in the single figure range, definitely not double range.
ESG: Thanks for joining us today Don!
Don: It was my pleasure!
We own shares of this company personally.
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