RE:RE:RE:RE:Sheet show
JustLookn wrote:
Removing sulfur is not new, the technology exists, other companies do this already. My understanding is that they wanted in an in-house solution, not a more expensive purchased solution. Another cost savings advantage. Too many on here are worried for desulfurization to work and think it's the holy grail when achieved. It may have an impact, but imho it won't be the action to creates the big move. In my mind finishing the continous flow and executing the JV deals will be huge. Even with working technology, all it takes is one mistake, one breakdown to delay continous production required and this stock will drop fast. I fear a freak accident or silly mistake more than anything. If they do execute the JV deals, I fear JV funding. We really have no knowledge if those funds are in place. I trust management that they are, but those would be my concerns more than the sulfur. I'm long, GLTA
Yeah I'm not worried about desulfuring either, my point was more that they've said they were close a couple times in the last few years when they weren't so I'm taking all of their predictions with a huge grain of salt. Hell even the $1.67 is a completely misleading number because it completely ignores/doesn't include the commission they're paying to the "third pary" in the form of 3,750,000 - 0.13 cent warrants for brokering the deal. They also are claiming 50-60 cents in variable costs per liter when the sale of 900,000L says right in it that variable costs are expected to be around 0.90 cents. Of course that will come down as production increases but I still find a lot of their forecasting to be based on wishful thinking.
For any other business that would be reason enough to stay away. In this case given what they say they can do and the fact that the plant isn't even up and running yet I can at least understand why they would paint things in an overly optimistic light because by the time things shake out they'll be so successful it won't matter.
To your other post my only comment is that if I understand correctly the fuel delivery infrastructure in Canada is built on long standing agreements with the federal government where the oil companies have built the infrastructure in exchange for protections and kickbacks. This is necessary otherwise oil companies wouldn't bother providing infrastucture to get fuel to everywhere that people need it. I don't believe it is legal for Cielo to set up their own fuel delivery network in Canada, and that the only way to distribute fuel at a retail level is through the existing infrastructure. If I am wrong or if someone can provide more info on that by all means please do.
I do agree with your point that there will be opportunities for Cielo to sell directly to large industrial users of diesel fuel which could be extremely lucrative, especially after adding in carbon tax credits (I really need to do some research into how those are structured).
The two biggest issues with all bio-diesel have traditionally been input costs (not an issue) and offtake agreements. The fact that we don't have guidance on their plans for offtake agreements is one of the elements of risk, but I don't find it to be that different than the risks associated with being invested in an industrial company and waiting to find out if they have any new contracts rolling in.