Company: Char Technologies Ltd Listing: TSX Venture, US OTC Tickers: $YES.V / $CTRNF Market cap: 42.34 MCAD at time of publication Share price: 0.60 CAD at time of publication Website: https://www.chartechnologies.com/ Comparable peers: Xebec, $XBC Market cap $642 MCAD Greenlane renewables, $GRN, Mcap $210 MCAD
We are pleased to see Char Tech announce a test project with Hitachi Zosen Inova (HZI) to develop a high temperature pyrolysis to green hydrogen system at their existing San Luis Obispo (SLO) anaerobic digestion facility in California. Under the definitive agreement with HZI’s SLO operating company, CHAR’s high temperature pyrolysis system will process 18,000 tonnes per year of solid anaerobic digestate into 1,320 tonnes of green hydrogen per year, and 2,800 tonnes per year of biocarbon. The project will be delivered under a BOOT (build-own-operate-transfer) model, where CHAR will be the initial project owner, with HZI managing system operations. While CHAR owns the assets, CHAR will receive revenues directly for the project outputs (green hydrogen and biocarbon). Upon executing the transfer, at their option, HZI’s subsidiary will purchase the project for a one-time payment. Ongoing project output revenues will be dispersed based on a predefined agreement.
ESG comment: We are very excited to see the first commercial breakthrough order of a Char Technologies pyrolysis system to an end client. Char technologies are certainly delivering on their 100 million USD backlog! Hitachi Zosen Inova is a global cleantech company operating in energy from waste (EfW) and renewable gas. The corporate group has a turnover of close to 4 billion USD annually. We estimate that this test project deal will generate project revenues of 560 000 USD for the biocarbon and between 4-6.6 MUSD for the green hydrogen annually. All in all the project revenues for operating the plant for the operator would likely equal 4,56 -7,2 MUSD annually. We estimate that the final sales value of this test project once it’s transferred from Char Technologies to Hitachi Zosen Inova will be approximately 5 million USD . We think that this lower sales price will likely be applied since this is a first test project and if successful Hitachi Zosen Inova most likely would want to implement this technology at their 100 plants globally . Instead of putting their waste material into landfills Hitachi Zosen Inova can actually use it to create substantial revenues with this pyrolysis system from Char technologies. The financials of the system are so economically appealing that we think Char Technologies will have little trouble executing on their backlog and also continue growing their sales pipeline.
Legal Disclaimer:
We own shares of this company personally.
Investing in stocks is combined with certain risks and it is possible to lose your entire investment. My posts are made for Educational purposes only and are not to be interpreted as tips , financial advise or recommendations of any kind to either buy or sell any stocks.
Companies may or may not be paying us for content posted on this blog.
It’s been a while since we last gave an update on our ESG portfolio. Since our last update we have been active in our reallocation of funds. New additions have been made and old positions have left our portfolio. Moving forward we will aim to update our readers on our portfolio atleast once a month, more often than so if changes are made to the portfolio. We have decided to concentrate our portfolio as it was too diversified previously.
Below you will find a list of our updated portfolio . New additions will have the (NEW!) symbol next to it and will be marked in bold style. To simplify for our readers we have also made a short list of all the positions we’ve sold with a short explanation.
Newlox Gold has implemented a unique, environmentally friendly and socially responsible process to profitably produce gold. There will be a comprehensive analysis on this company within the next month. Newlox Gold has identified a lucrative yet neglected niche within the precious metals industry and has commissioned it’s first high-grade, low-cost gold producing plant in Latin America. Newlox focuses on the re-processing and remediation of artisanal tailings and toll milling of artisanally mined ore; a strategy which results in very high margin operations while delivering environmental and social benefits to local stakeholders. We will be doing a bigger analysis on this company in the coming months.
Char Technologies – (NEW!) Tickers: YES , CTRNF Listings: TSX venture and US OTC
Char Technologies is the leading cleantech and environmental services company when it comes to converting woody materials and organic waste into renewable gases (RNG), hydrogen and biocarbon. Char technologies is converting challenging organic streams into greenhouse gas neutral biocoal, second generation Renewable Natural Gas”(RNG)” and hydrogen. You can find our extensive analysis of the company here .
Desert Control offers the solution that can revolutionise the war against desertification which is one of humanity’s greatest challenges since every year millions of people become climate refugees due to infertile lands. The patented product Liquid Nano Clay (LNC) from Desert Control can turn desert sand into fertile soil in less than 7 hours. A process which previously has taken between 7 and 12 years. This is a true game-changer. Desert Controls product offers a strong value proposition for customers with short payback times. Their LNC product reduces water consumption up to 50% and increases crop yields up to 62%. Payback times for customers on water consumption alone is expected between 1-2 years. Changing desert to the green land also reduces CO2 emissions by between 15 – 25 tons/hectare annually. We will be doing an extensive analysis on this company in the coming months.
Absolicon is our only exposure to the solar and thermal heating industry. We’ve previously written an extensive analysis on the company which you can find here . The company has recently raised 6 million USD in funds for its rapid international expansion. Since our analysis the company has signed an additional two framework agreements and also started a massive collaboration with the billion dollar company ABB for international sales and support. The company also has ongoing customer discussions with 10 of the world’s 20 largest beverage producers. We believe its only a matter of time before the “ketchup effect” is visible in Absolicon’s sales pipeline.
Earthrenew – (NEW!) Ticker: ERTH / VVIVF Listings: CSE Canada and US OTC
Earthrenew is a very exciting addition to the ESGFIRE portfolio on which we will be doing an extensive analysis on in the coming months. Earthrenews patented thermal processing technology transforms livestock manure into a powerful, all-natural organic fertilizer that promotes plant growth and restores soil health.This means, in simple terms, that farmers which use Earthrenew products not only get higher yields by 20-40 % on their crops but it also enables for the soil to sequester(store) more carbon. Studies have also shown that farmers who use this fertilizer on average saves the climate for aproximately 1 tonne of carbondioxiode for each tonne used compared to chemial fertilizer. The best part of the equation is the product is priced at the same level as chemical fertilizer and with possible carbon credits the products is actually cheaper. No wonder the company is sold out completely for 2021! The company’s plan is to increase their output to 400 000 tonnes by 2024-25 equalling revenues of about 140 million CAD.
Stockwik ESG Comment: We took profits on this company since it’s been in our holdings since early 2018. After 800 % returns we decided the time had come to realize our profits.
Enzymatica ESG comment: We left this position since we feel the company needs time to grow into its evaluation after the latest disapointing financial reports.
Thermal Energy international ESG comment: Temporary exit since we’ve found other better risk/reward positions at the moment.
Blue Bird Corp ESG comment: Exit due to better risk/reward in the EV sector with Vicinity Motors Corp.
Fusion Fuel and Hydrogenpro ESG comment: Temporary exit since there has been heavy selling pressure on the hydrogen sector. There is also a strong price pressure on hydrogen as a commodity therefore we are currently evaluating our exposure to the hydrogen market.
We hope you enjoyed our portfolio update and don’t forget to subscribe to always stay ahead of the herd as we always aim to give our subscribers a head start before we release our blog posts on our other social media channels!
Legal Disclaimer
We own shares of these companies personally.
Investing in stocks is combined with certain risks and it is possible to lose your entire investment. Our posts are made for Educational purposes only and are not to be interpreted as tips , financial advise or recommendations of any kind to either buy or sell any stocks.
Companies may or may not be paying us for content posted on this blog.
Company: Char Technologies Ltd Listing: TSX Venture, US OTC Tickers: $YES.V / $CTRNF Market cap: 45 MCAD at time of publication Share price: 0.64 CAD at time of publication Website: https://www.chartechnologies.com/ Comparable peers: Xebec, $XBC Market cap $642 MCAD Greenlane renewables, $GRN, Mcap $210 MCAD
Short summary:
We are initiating coverage on the Canadian cleantech company Char Technologies which is the leading cleantech and environmental services provider when it comes to converting woody materials and organic waste into renewable natural gases (RNG), hydrogen and biocarbon. They are thereby taking care of existing waste and turning this into valuable commodities. Char technologies is converting challenging organic streams into greenhouse gas neutral biocoal, second generation Renewable Natural Gas”(RNG)” and hydrogen.
Some of the company’s competitors such as Xebec & Greenlane renewables both participate in first-generation anaerobic digestion (biogas) technology , Char technologies has what is known as second generation biogas technology .
Char Technologies currently has proposals out for over $100 million in projects and consulting activities. They also have a strong balance sheet with NO Debt ,a current burnrate of 2 million CAD per year, and a market cap of only $45 million CAD!
Stock history background:
Char technologies went public in March of 2016 through a qualifying transaction with a capital pool company with an IPO price of $0,17 CAD. The stock has had tremendous success during last 12 months with an increase in share price of 436 %. We believe however that the journey has only just begun since the evaluation is still at a nano cap level of only 45 MCAD and especially considering the huge current pipeline of projects the company has coming valued at over $100 Million . The pipeline consists of about 70 % systems sales and 30 % consists of building own operating facilities.
Company structure:
Char technologies consists of the two subdivisions Altech and Chartech Solutions . Altech is an environmental consulting division that focuses on environmental solutions mainly towards industrial clients. A few of the services worth mentioning include environmental audits, ESG public reporting ,wastewater management and regulatory services.
Chartech Solutions is the division focusing on the company’s High Temperature Pyrolysis technology, and the biocarbon product from the technology called Cleanfyre which is a carbon negative emissions biocarbon that can replace regular coal in power plants. Biocarbon can also be used for agricultural improvements but this is not an area that Char technologies is pursuing at this moment. The production process also produces second generation of natural gas and hydrogen. The technology has been validated and tested for over two years and management is confident that the time is right for large scale operations. [1]
We believe that Chartech Solutions is the subdivision that will bring in most revenue for the company for a foreseeable future.
[1] SOURCE MANAGEMENT’S DISCUSSION & ANALYSIS FOR THE QUARTER ENDED: MARCH 31, 2021 Page 5
Giant Market opportunity for Cleanfyre: The product Cleanfyre (biocarbon) from Char Technologies has the massive potential to replace the fossil fuel of natural coal in power plants and transportation. The global coal market alone is worth an estimated $366 billion USD and this is something that Char Technologies is aiming at taking a big stake in. The biggest advantage of the biocarbon product is that it does not require any change in the existing infrastructure of coal power plants and this is a BIG deal since the capex cost of these facilities generally is VERY high. Secondly the biocarbon from Char technologies is carbon negative . To quote CFO Mark Korol “ one ton of coal replaced withone(1) ton of Cleanfyre reduces GHG emissions by three (3) tons.”
Many other governments around the world are following Canadas path of taxing coal consumption with the European Union being the pioneers and especially Sweden which has the highest carbon tax of the European Union with 108 Euros per metric tonne of CO2. In the United states there are currently 11 states that have implemented carbon pricing, there is currently however no government to implement it on a national scale although it’s not a far fetched thought that this soon could become a reality with the new Biden administration. There is also a possibility of selling carbon credits on the open market as revenues if a customer of Char Technologies does not need all of the credits that they are eligible for. In conclusion the worlds energy consumption of coal is under harsh pressure by legislation and Char Technologies has the chance to provide many businesses and industries with a revolutionizing product that actually will be cheaper than regular coal. It should also be mentioned that Char technologies produces both hydrogen and renewable natural gas in their pyrolysis process thanks to the high temperature. These are valuable by-products that can be sold to add extra revenues .Since the sales of biocarbon gives good revenues to Char Technologies they are able to sell the hydrogen and renewable natural gas produced at a very competitive pricing which improves the payback time of their plants considerably. The world will need 80 % of its renewable natural gas from this type of pyrolysis technology if it’s to meet the 2030 green target according to a study commissioned by Énergir. Another very positive side effect of the production process is that when processing biosolids the companys pyrolisis system destroys harmful PFAS particles in the waste/sludge from wastewater that is processed. These PFAS particles are a major concern in many countries!
Pricing model for biocarbon
The global coal market is segregated in terms of coal types and prices. Prices have plummeted due to Covid-19 and prices today vary from 40-125 $USD per tonne however this does NOT include carbon tax which differs between 30-150 USD per tonne globally. Typically industrial users will utilize a blend of different grades of coal. The biocarbon from Char Technologies has a very high energy density this means one tonne of Cleanfyre can replace 1,1 tonnes of high-grade coal which typically is priced at $100-$125 per tonnes not including carbon credits.
The actual emissions of carbondioxide (CO2) for burning coal is the following simplified equation:
1 tonne of anthracite (fossil) coal consumed = 2.9 tonnes of GHG/CO2 released
1 tonne of CleanFyre consumed = 0.27 tonnes of GHGs (CO2) released
1 tonne of CleanFyre replaces 1.1 tonnes of coal, so 1 tonne of CleanFyre can therefore reduce net GHGs by 2.9 tonnes.
The actual pricing in Canada of high-grade coal due to CO2 emissions equals $216 – $241 per tonne compared to 250 $ per tonne for Cleanfyre including carbon credits. As we previously stated the current tax credit for CO2 emissions in Canada is 40 CAD per tonnes but this is set to increase to 170 CAD by 2030. Therefore Cleanfyre from Char Technologies will become CHEAPER than regular coal already by 2022 with added ESG benefits. If you instead look at Sweden, in the European Union , Cleanfyre is actually CHEAPER today since the total price the product in Sweden equals $283 CAD per tonne including carbon tax credits. In conclusion Cleanfyre from Char Technologies is today only slightly more expensive than regular coal but is set to become cheaper and with very good ESG benefits for coal consumers and therefore already by 2022 it will not make sense for producers to use regular coal over Cleanfyre.
Business model: Char Technologies plans to both operate their own pyrolysis facilities and to sell their system for the production of the biocarbon product Cleanfyre. The company also sees opportunities for Joint Venture agreements for pyrolysis plants both domestic and abroad. There may also be revenue from recurring service and monitoring contracts and recurring biocarbon management fee. The purchase price for a customer of a facility that is capable of producing 25 000 tonnes of Cleanfyre per year ( and 500,000 GJ/yr RNG) amounts to ~30 million USD. The potential revenues for a facility of this size equals upwards of 25 Million CAD annually with good margins (50-80 %). This includes revenues from both Cleanfyre and the sale of the renewable natural gas or Hydrogen which is created in the manufacturing process of the biocarbon. The CAPEX for building a fully owned facility of 25 000 tonnes is about 30 million CAD. According to the company the payback time on the capex can be as fast as 2 years.
Char Technologies Pyrolisis device
Intellectual property protection
Char Technologies, according to CEO Andrew White, has “a very defensible intellectual property position”. They believe they have protected how to convert their feedstock into Cleanfyre, Hydrogen and renewable gas. The company also believes it would be very time consuming and costly for someone to even try to copy what they are doing.
Char technologies currently have 10 patents protecting their “recipe book” and also more patents have been filed.
Competitors According to CEO Andrew White the big differentiator for Char Technologies is that their pyrolisis system runs at 800 degrees Celsius, this is hotter than other pyrolysis plants, which allows them to create both biocarbon (cleanfyre) and also extract renewable natural gas /hydrogen.
The company has different competitors in different product segments. For renewable natural gas there are many actors active in this segment such as Xebec. However Char Technologies has the advantage of being able to price their hydrogen and renewable natural gas at very competitive pricings as it’s a biproduct of the biocarbon production.
Looking at biosolids (biochar) there is, as far as we have found, only two commercial scale competitors in the United states.[1] One of these competitors is BioforceTech. The maximum output from a plant from BioforceTech with a solid content of 95 % appears to be 7600 tonnes per year, in comparison Char Technologies plan to have an output of 25 000 tonnes per year for their upcoming facility. The largest competitor for Char Technologies for biocarbon in North America appears to be National Carbon. They claim to have the largest advanced biocarbon production facility in North America with capacity to convert hundreds of thousands of tons of biomass into patented carbon products, there is however no public information on their revenues or pricing. The market should however certainly be big enough for more than one big biochar actor.
CEO Andrew White of Char Technologies mentioned during our latest interview that they are not aware of any competitor that produces BOTH biocarbon AND renewable natural gas and we have yet to find anyone either. ESGFIRE has found two competitors mentioned above who produce biocarbon for coal plants and we have also found other potential biocarbon competitors such as bcbiocarbon and AIREX energy however these two companies do not appear to create high energy density coal and they do not appear sell their products to steel producers but instead they appear to be more focused on agriculture.
Risks Char Technologies is not yet a profitable business and as such there are a number of risks that have to be addressed. Burnrate and financing risks is one main aspect. The company raised 6 million CAD in February of 2021. The warrants attached to the financing if they all are excercised will add another ~3,7 million CAD . As of March 31st the company was sitting at a cash balance of close to 6 million CAD. The company appears to have a pretty low burn rate of about 500 000 CAD per quarter. Assuming this does not increase the company should be fully funded (not taking into account larger projects) until Q3 of 2022. We think however that the company does have plans to soon build their own 25 000 tonnes facility so they will likely will be looking to take in more capital within the next 6-12 months. Most likely the financing of the 25 000 tonnes facility will consist of a mix of debt and equity. If the company is unsuccessful in funding their expansion it could pose a serious risk for the expansion plans. This risk could however be outweighed by a potential Joint Venture partnership should the company not be able to raise all funds needed by themselves. A joint Venture project for the 25000 tonnes facility could also be a way of expanding without further dilution. There are no known issues with the scalability of the biocarbon product Cleanfyre as of today, infact the company recently announced a 1000 tonne breakthrough order from one of Canada’s largest steel producers. The breakthrough order was a result of a successful pilot production run of 20 tonnes. However, should there be any unexpected problems with the scalability of Cleanfyre then this is a risk that could severely impact the company’s revenue streams. As we have mentioned in the competitor section there is no extensive competition in the field today, putting price pressure on the biocarbon market. Should more serious competitors arise with access to better financings then this could pose a serious threat to the company’s expansion plans. However, it should be stated that there is likely room for more actors in the biocarbon business seeing as in Canada alone there is a need for close to 50 million tonnes of coal per year . One final longer term risk that should be mentioned is the possibility of steel refineries completely abandoning furnaces and switching to other types of energy sources such as hydrogen or other gasification processing.
Upcoming catalysts
There are a number of upcoming catalysts for Char Technologies. The company’s pilot plant today has a production capacity of 5 tonnes of Cleanfyre per day totalling a potential revenue of 900 000 CAD per year. Short term catalysts could be more orders for the BioCarbon product Cleanfyre and also clarification on when and how the company aims to begin construction of their planned 25 000 tonnes facility. Medium term catalysts could likely be Joint Venture partnerships for co-owned facilities and long-term catalysts are likely licensing agreements to international partners for the patented production methods as a way of expanding internationally without the need for use of own capital expenses.
Conclusion and summary
Char Technologies is, as far as ESGFIRE can tell, the only publicly listed and investable company which produces both Biocarbon, Hydrogen and Renewable Natural Gas. The company appears to have a cost competitive and scalable product which, if the business plan is executed properly, has enormous growth potential. Assuming the company is able to take a 10 % market share of its domestic market it could equal revenues of $1.25 billion CAD with margins likely ranging between 50-80 %. This could in turn lead to an EBITDA profit in the range of 500-600 million CAD. The interest for ESG investments has exploded during 2020-2021 and the company should, in our honest opinion, have little trouble in attracting more capital to finance both their own facilities and also be able to find a Joint Venture partner for co-owned facilities where they won’t be forced to put in capital expenses to the same extent. There are also very exciting opportunities in licensing out their technology to third parties on other continents around the world.
Finally, the fact that on a global scale the world will need 80 % of its renewable natural gas from either gasification or pyrolysis is a huge competitive advantage for Char Technologies as they are able to offer very competitive pricing on their RNG and hydrogen thanks to the great pricing model of their biocarbon product. We think Char Technologies has a very exciting and bright journey ahead and we look forward to keeping our readers updated on their progress.
We own shares of this company personally.
Investing in stocks is combined with certain risks and it is possible to lose your entire investment. My posts are made for Educational purposes only and are not to be interpreted as tips , financial advise or recommendations of any kind to either buy or sell any stocks.
Companies may or may not be paying us for content posted on this blog.
Company: Char Technologies Ltd Listing: TSX Venture, US OTC Ticker: $YES.V / $CTRNF Market cap: 47 MCAD at time of publication Share price: 0.68 CAD at time of publication Website: https://www.chartechnologies.com/ Comparable peers: Xebec, $XBC Mcap $675 MCAD Greenlane renewables, $GRN, Mcap $270 MCAD
Char Technologies has a patented Biocoal product that now can replace regular coal in power plants and also produce Renewable natural gas / hydrogen. The technology has a tremendously positive impact for the environment and reduces greenhouse gas emissions. Char technologies converts challenging organic streams into greenhouse gas neutral biocoal,second generation Renewable Natural Gas”(RNG)” and hydrogen. Char’s pyrolysis technology is recognized as a future solution by NYC DEP to process biosolids into value-add products. Char also has a solution to eliminate contamination of PFAS in landfills and water reserves. Competitors Xebec & Greenlane renewables both participate in first-generation anaerobic digestion (biogas) technology , Char technologies has what is known as second generation biogas technology .
Below you will find a transcript of the interview call done with CEO Andrew White, CFO Mark Korol and Ellen Fowler marketing director.
Andrew: We consider this a milestone order, it’s much larger than our previous production runs, and it demonstrates the market value and need for low greenhouse gas biocoal. Our projects produce both renewable natural gas or hydrogen and biocarbons, like our biocoal CleanFyre. The renewable natural gas and hydrogen segments already have market validation and potential long-term contract offtakes. Validating the market for our other products, in this case CleanFyre with this milestone order, further shows the tremendous overall economic and environmental value of these high temperature pyrolysis projects. We are very excited to break into the enormous potential in the Steel Industry for our Systems and Products.
Andrew White, CEO of Char Technologies LTD
ESG: When do you expect to generate more significant revenues?
Mark: Covid has been frustrating but this fiscal year (September 2020-2021) we are expecting a revenue base between $3-5 million CAD however we are looking at a potential backlog in the amount of + $100 million CAD based on proposals and submitted bids for projects. If one of these projects happens sooner rather than later our financial outlook for this fiscal year would definitely increase for the better.
Mark Korol, CFO of Char Technologies LTD
ESG: What is the total addressable market for biosolids processing?
Andrew: The total addressable market for biosolids in North America is around $2,7 billion USD per year. However, the global hydrogen market is a lot bigger at about $120 billion USD. Renewable natural gas market in North America is worth around $10 billion USD and the potential market for our product Cleanfyre is about 12 billion USD. ESG comment: All in all total adressable market = $144,7 Billion USD
ESG: What are the big milestones for Char Technologies in the near future and is there any other development projects ongoing other than Cleanfyre and Sulfachar?
Andrew: As we recently have seen commercial size orders of Cleanfyre our plan is to deploy a facility to make hydrogen and RNG on a commercial scale. We are planning a 20 000 tonne facility (which could produce revenues of up to $23 MCAD annually) and we would look to start developing that now since we have gotten a large commercial order from the steel industry at 1000 tonnes of Cleanfyre.
Andrew continues: We have talked to partners and expect to finalize an agreement and then do serious development work on this facility within 6 months and it should be commercially active in less than 24 months.
ESG: How much does your pyrolysis plant cost and what is the payback time for your customers?
Andrew: For a plant which can handle 20 000 tons of feedstock per year it costs around 5 million USD. The payoff time equals under one year if you get the price that the state of California pays for green hydrogen however I’d like to be conservative to say that in most cases the payoff time is between 1,5-2 years for the system. When dealing with the food and beverage industry your technology needs to have a payback period of 2 years or less.
Mark: We have a tendency to look at 3 years payback with contingency built in and that’s assuming very conservative pricing.
ESG: Are you planning on doing more promotional investment relations service for the company in the near future? Considering how low Char Technologies is valued in terms of market cap compared to its peers.
Mark: We are working on a new website and investor deck which will be launched shortly and our website is being updated to include more clarity on our pyrolysis technology. We have been devoting time to interviewing IR firms to find out which one is the most suitable for us, We want the right fit for our culture and someone who shares the same passion and beliefs.
ESG: How has Char technologies been affected by Covid?
Andrew: We did not sit idle during the lockdown period we’ve in fact had a nice period testing the market towards biosolids contamination issues and we’ve run trials with biosolids with a number of large players in Canada and the US to prove the technology. We were slowed down a bit since particular markets like food and beverage, animal food producers require on site visits for our environmental teams and we have focused on the health and safety of our workers. But because we have diversity in our business and also a consulting group that department had a bit of revenue runway with compliance work that still needed to get done.
ESG: At what cost per kilogram can your high temperature pyrolysis produce hydrogen and how easy is it so scale up this production into meaningful amounts?
Andrew: So the difference between us and competitors is that we do slow pyrolysis that take about 20-30 minutes to flow through the system. We run this at 800 degrees celcius which is a lot hotter than most systems which gives us the advantage of both producing biocarbon /biocoal (also known as the CleanFyre product) and also get hydrogen out of the pyrolysis gas. With an input of 20 000 tons of biosolids a year we can do 200 kilograms of hydrogen per hour. Hydrogen is basically a byproduct of the process. Since we get well paid for the biocarbon/biocoal we can afford to sell the hydrogen at a much lower competitive price.
Andrew continues: We also have the ability to generate our own thermal energy which brings down the operating cost significantly.
ESG: One question my readers have been wondering about is what are your current patents actually protecting?
Andrew: We do have patents but there is also key IP in the recipes and know how. It’s not the pyrolysis equipment directly we have protected but more the feedstock we handle and the process. We have a very defensible intellectual property position. We have protected how we convert our feedstock into the acual output such as Cleanfyre, hydrogen and renewable gas. We believe its very difficult, time consuming and expensive for someone to even try to copy what we’re doing.
ESG: Will Char technologies focus on building its own plants or will you focus on selling your equipment to other external customers and if so what does the business model look like?
Andrew: The short answer is both. The core of Char Technologies will be engineering , building and delivering turnkey pyrolysis gas plants. Being a plant operator and selling plants is two different things.
When it comes to the Biosolids market there are multiple actors who get paid a tip fee for biosolid waste which they turn into pellets and sell to the agricultural sector. The issue here is that this waste can sometimes contain very harmful contamination in the form of PFAS. During the start of COVID-19 Char technologies spent time proving that our technology actually destroys these harmful PFAS contaminants.
We are looking to be a partner to these waste handling actors since it would be difficult for us to alone disrupt this business.
Andrew continues: However looking at the market for renewable natural gas and Cleanfyre this industry is one where we will be pursuing it with our technology and developing projects oursevles since there is little competition in this field.
ESG: So what is the plan for your product Cleanfyre short and long term AND what does your plan to start producing/selling this large scale look like?
Andrew: In the short term our plan for the coming 6 months is to produce Cleanfyre ourselves. We have our production system in London Ontario ( about 1 hour from Toronto) which is close to the big steel hub of Hamilton, Ontario. That plant will produce enough product to get steel mills to use it. Medium term we are looking at building our production with partners that have feedstock lined up and that have good background / operations.This plant would produce two products such as Cleanfyre and renewable natural gas.
Andrew continues: The plant output of the planned facility could produce about 25,000 tonnes of Cleanfyre which alone equals potential revenues of around $6 MCAD – $10 MCAD which is a very good start. The same plant could also produce around 800 000 gigajoules of renewable natural gas which equals an additional potential revenue of $12MCAD so all in all potential revenues for this type of facility is expected to be around $18-$22 MCAD with very good margins.
Mark: Margins are estimated to range between 50- 80 % depending on the Project. The best part is the capex for this size of a plant is about $30 MCAD and would generally take roughly 2 years to payoff.
Andrew: The big cost component is labor and our larger plants usually only takes 3 operators to run, the feedstock is low to zero cost as well that’s another reason why we can get great margins.
Mark: Long term we expect to be looking at doing multiple plants since we should also hopefully be able to get good debt financing with the numbers we just presented. As soon as we have a key reference facility we should be able to a lot of non-dilutive financing for additional plants.
ESG. I’m sure many would like to know by how much does Cleanfyre actual reduce greenhouse gas emissions?
Mark: Simply put it you can say that one ton of coal replaced with one ton of Cleanfyre reduces GHG emissions by 3 tons. So not only can we get a good price for our product our customers also can get paid in carbon tax credits.
ESG: What does the competition look like for Char Technologies?
Andrew: We have different product areas so we have different competitors.
Looking at renewable natural gas we see a HUGE opportunity for Char because to meet the 2030 green target (according to a study commissioned by Énergir) the world will be needing 80% of the total RNG generation from technologies like pyrolysis in order to meet this goal. So either you need gasificaton or Pyrolysis. I’d say Char Technologies is very well positioned in terms of competition on the renewable gas market.
Instead looking at the field of biosolids processing there is literally only one commercial scale competitor called BioforceTech in the United states. Our competitive advantage here is scale since their largest system is basically the size of our smallest system. They have an advantage in small waste water treatment plants to get rid of biosolids however they can’t produce the renewable gas and green hydrogen product that we can.
We have first mover advantage when it comes to creating hydrogen from biomass.
Andrew continues: When it comes to the area of our product Cleanfyre it’s interesting because we have more competitors in that space but in that case our advantage is the by product we produce which is renewable natural gas. We are not aware of anyone who makes biocoals AND renewable natural gas. A few competitors to name are BC biocarbon, and there is AirX in Quebec. There is also one US company called National carbon who only make one product which is biocoal. However speculatively speaking you could say our business model is way more attractive in terms of financing and payoff time since no one has our co-product scale.
ESG: You recently completed a private placement, what has your development costs looked like historically and what will you use the new funds for?
Andrew: We went public in 2016 and have only had to spend about $6 MCAD in development costs so we believe we have been very conservative using our shareholders money. When we see what other competitor spend on research and development we don’t understand what they’ve actually spent their money on! Moving forward we will be spending more money on business development and delivering more projects as they come.
ESG: Will you be needing further capital shortly?
Mark: We don’t necessarily need a capital injection. We will grow our human capital within our Management Team, Sales and Project management however before these additions we are close to break even result month to month. These additional expenses will create a relatively small cash burn until meaningful revenues kick in. We are well positioned financially to build out and commercialize our company now and we have NO current debt.
However if we get a large project and/or a utility project or an acquisition that adds value to the company, yes, then a capital injection would be needed. We may do a financing within 12 months but that would only be made for growth reasons and not by the need for cash from a basic operating perspective with modest growth.
ESG: Can you tell us a little bit about the recent suggested additions to the board?
Andrew: Yes we have three new members coming aboard. They are Nick Nanos, which many Canadians will recognize from his firms polling activities during the election campagn and is well connected in cleantech on the government side. Then there is Paul Pellegrini who has a similar understanding of the marketing and government policies since he works at a government relations firm called Sussex Strategy. Then we have Jane Pagel with a very strong history and background in Canada’s cleantech with a lot of public board experience. We had over 10 candidates for the Board to provide some rotation and new ideas and we have a good network in the clean tech area.
ESG: Thank you for taking the time for this interview and hope to see you back soon again!
Mark/Andrew/Ellen: Likewise it was a pleasure!
I own shares in this company personally andthis is not to be considered financial advise, always do your own research!
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