Ticker: CMC.V / CWSFF
Listings: TSX Venture Exchange / US OTC / Frankfurt
Market Cap: 542MCAD at time of publication
Share price: 0.84 CAD at time of publication
Industry: Converting waste to renewable fuel
Cielo has had a rough trading in the last week and management decided yesterday (7/8) to clarify points made in the webinar last Thursday (2/9) that caught investors by surprise.
“Management would like to reiterate that there are no operational or financial reasons for the decline in Cielo’s share price over recent trading days. The Company looks forward to announcing its audited financials in the very near term. For more information on recent Cielo highlights, please see below.”
Highlights from the webinar:
- Cielo’s strategic intent is to become Canada’s leading waste to fuel company using its environmentally friendly and economically sustainable technology.
- There has been an increase in demand for Cielo’s waste to fuel products.
- Cielo’s revenue stream is not dependent on the desulfurization process. However, a product with a lower sulfur content ought to increase the profit margin of Cielo’s waste to fuel product.
- Cielo’s mid to long term plans remain intact.
- Operational update:
- The Aldersyde “Pilot” plant has been producing in batch mode since
opening in July 2019.
- Cielo’s proprietary technology has been proven out at bench scale and at the Aldersyde commercial pilot plant.
- The Company has reached 1000-lph and has historically produced on a 24-hour continuous basis. Cielo has temporarily slowed production to improve the consistency of the product.
- We have internal engineers and external engineering consulting firms engaged in continuous optimization and improvements for the
development of full-scale facilities.
- The desulfurization system is anticipated to be commissioned in September 2021. The Company expects to achieve its objective of producing fuel with a sulfur content under 15 parts per million.
- Letter of Intent in place to enter into an agreement for the sale of Naphtha. This is a potential high margin revenue stream for Cielo.
- Cielo is well capitalized and in a strong position to aggressively move forward towards revenue and the construction of facilities.
- Cielo purchased a site with amenities in Fort Saskatchewan, Alberta and it is expected to accelerate the build-out of the proposed facility.
- Engineering, site planning, and permitting are in process for the first joint arrangement site in Dunmore, Alberta.
- Negotiation of the joint arrangement agreement with Renewable U Energy Inc. is in progress and expected to be finalized in the near future.
- Multiple additional RUEI Joint Arrangement sites are being evaluated across Canada and potential entry into the US with pending RFP about to be released.
- Cielo is in the process of setting up a new office in downtown Calgary to facilitate the growth of the Company.
As all of our readers most likely know any investment associated with stocks can be risky. What we have seen the latest week is most likely an overreaction to investor expectations that were higher than what Cielo were able to deliver at the given time. Investor sentiment last week was according to us that most people expected the desulfurization equipment to be done and installed which was clearly not the case. Could management have been more transparent about the issues? YES. Would it necessarily have been the best choice? NO. The reason for our conclusion is that personally, we prefer that the company informs investors about the issue when they have an actual solution.
If the company had gone out and informed about problems with their desulfurization equipment without having an overview of how to fix this or the timetable this likely would have caused even more panic.
We urge all our readers, after this eye-opener to evaluate what risk they want to expose their portfolio for. We always urge our readers to execute strict risk management and to never invest all their money into one stock. Our conviction in Cielo Waste Solutions remains firm however if your mental or physical health has suffered the last week due to Cielo’s share performance you are likely taking too big of a risk in your portfolio.
We own shares of these companies personally.
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