innovative fuel quality control process for recycled wood mark christensen msc 07876 640 786...

Innovative fuel quality control process for recycled wood

Mark Christensen MSc07876 640 786

markc@reliagen.co.uk

Approx 4.1 million tpa of waste wood in UK (Poyry, 2010) with historic variation of 4.5 to 10.6 mtpa.

Sources: construction (25%), demolition (26%), packaging (27%), joinery/furniture (9%) and municipal (13%). Some unaccounted until the market values it.

Gate fees: Grade A @ £2/ to £15/t , Grade C @ £19/t and £33/t (ESA, 2008 to 2012).

Virgin biomass woodchip selling for ca.£85-100/t to RHI operators, compared to existing Grade A at £30-60/t and Grade B/C at £10/t (once processed).

Technological solution needed to ensure quality , scientific, technical evidence (End-of-Waste status).

Biomass sustainability criteria (EU Regs) not applicable to wastes, so avoids virgin biomass PR risk.

THE MARKET:

Automatic sorting of recycled wood grades Quality control to purities >90% and into

Grades Overcomes industry regulatory constraints Avoids pitfalls of current practices Adapts and combines innovations Unparalleled process spec with Patent Pending. Modular and replicable business model Refinance opportunity for quick / partial exit Deliverable in ca. 4-6 months, target urban areas The most sustainable and Carbon efficient fuel

THE SOLUTION:

Strategic location to RHI end markets with good access.

Wales has ca. 180ktpa (mainly urban) of waste wood. 45ktpa capacity (25%) with plus Bristol & Birmingham. Revenues from all metals extraction and two grades

of biomass fuels via highly energy efficient process. Avoids costs of fines (<10mm) and cleaned up for end

markets with less Regulatory risks with EA. Long established partner companies for process

design & install. Core team of 5 highly experienced, plus 3 NEDs.

Roll-out plan of 5 sites within 3 years, prior to sale. Option to expand site(s) into CHP, virgin wood

processing, bio-oils, pellet production (£150-200/t).

PROJECT SUMMARY:

THE FINANCIALS:

Site with Planning – freehold or leasehold option. Contractors for supply and off-take at Heads of Terms. £2.2m of capital needed for process, working capital, fees. £100k of SEIS to take to financial close (legals, etc). WAG funding potential for <50% of capex & Finance Wales. WRAP eQuip underwriting for asset finance (ca. 30%). BPRA Tax Relief if freehold taken (£3m), subject to details. EIS potential for <£5m capital project, application drafted. Project IRRs >18% (20 yrs) with refinancing upside. EBITDA at ca.£800k p.a. after year 3 (>35% gross margins) Ca.£2m T/O p.a. with issue ca.£400k of dividends p.a. Equity funding requirement of £1m for majority stake.