AEG UPDATE - UPCOMING NEWSFLOW
So whats coming up to drive the price? Plenty!
The initial 2 weeks of the Utah Plant
As im sure you all know, the first commercial CoalSwitch plant is now operational in Utah. It is undergoing 2 weeks of commissioning and production tests. The CoalSwitch produced will be sold to Rocky Mountain Power (part of the huge utility Pacificorp). They will be testing a mix of CoalSwitch to Coal around 20/80 or 10/90. Richard Spinks tweeted such a preparation https://twitter.com/RGSAEG/status/952676780984291330
If RMP find it burns as expected and drastically reduces emissions as expected they could use the 10/90 mix to comply with emission standards. http://www.healutah.org/epa-action-will-boost-visibility-parks/
If we look at their Hunter Power Station. It uses 4.5mill tonnes of coal a year. If they changed to 10/90 Coalswitch that would be around 450k tonnes of CoalSwitch a year. If AEG sell CS for $180/tonne then that would be revs of $81mill from that one plant alone. If its 20/80 then $162mill revs a year. This is just one of thousands of Coal fired power stations in the developed world that are trying to change to biomass. The key advantage of CS is it can be used as a like for like replacement for coal with no retrofit costing hundreds of millions. It can be ground as fine as coal and burns with the same characteristics, unlike all other pellets.
Next up for the plant
Again RS tweeted...
"Visiting our CoalSwitch Plant in SLC this morning, meeting the Utah team making it happen & preparing for our international Government and Investor reveal/demo in 2 weeks time. So much interest in this amazing technology around the world!"
If we take both parts
1) Government - We already know the government of Utah are all over this. California has stopped buying their "dirty" power and they are at pains to clean it up. The government of Canada are fully on board. The Newfoundland and Labrador gov are keen for CS plants to be used in canada to create clean energy and create jobs. Across the world government want coal fired power stations decommissioned or switched to biomass. Look up recent announcements from the EU, Poland and Holland especially
2) Investors - Benefit Street Partners (a $20+bill fund) have been working very closely with AEG for quite some time. They have been touring Canada with them in the DD and i would expect them to play a big role in the coming months financing the global roll out.
After the reveal, the plant will be transported to Newfoundland to continue to produce CS.
Canadian Crown Timber License
See my previous blog on what this means to AEG and why its worth hundreds of millions to them. RS stated on a podcast that the CTL will be granted after the Utah plant is shown to work and ready for transport. I would imagine the Newfoundland gov will be at this "unveiling". Some excellent twitter DD has shown that the CTL is now free of any environmental committees, having been released by them as the final set to ministerial sign off.
As a stand alone venture, managing a huge forest is worth hundreds of millions in saw logs etc. But if we read another RS tweet... "CoalSwitch can double timberland asset values whilst providing cutting edge, relevant Biomass product hugely enhancing harvesting yields at fraction of white pellet capex & opex cost. Forest waste can generate sawlog returns from pulp and residue quality materials! Revolutionary!"
So by using the off cuts of the saw logs to create CS pellets the value of the timberlands is doubled. From hundreds of millions to, er, double hundreds of millions!!
Metis deal in Alberta
The Metis deal from a couple of years ago (for 1/10th the area of the crown timber license) was valued at $300mill and now seems to be close to finalised! RS has hinted this in podcasts and the gov of Alberta are working more closely than ever with the Metis, they got them elected after all!
Ive already commented on the asian CS plants about to be commissioned...
The company announced that the initial 8 plants in Asia https://polaris.brighterir.com/public/active_energy_group/news/rns/story/xo6709x will produce 1.5mill tonnes of product = $240mill in revenues.
The exact details of the JV with Lumino Capital aren’t known but I assume there will be a 50% split (again as was suggested in the broker note). = $120mill
I know there are surprises coming. RS has said this publicly. Im guessing European CS plants are coming sooner rather than later and more in North America. Perhaps supplying Drax 4th power station??
1) Government and billion dollar fund investor reveal in Utah in a week or less
2) Crown timber license granted worth hundreds of millions
3) Metis deal worth $300mill coming off
4) Asia plants about to start getting built
5) If one utility or power station change to coal switch its worth tens to hundreds of millions to AEG in revs and will snowball the rest of the world into using it.
All in all i cant see this string at £20mill Mcap for much longer. Id guess a rapid re rate to £100mill mcap or more in the coming weeks as the plan is laid before us.
Don't forget RS has went "all in" with £500k of his own money not very long ago