Contact Financial Interview with Stephen Morris.... Contact Financial Question:
Can you please give our readers a brief introduction to Lignol Energy and its operations?
Stephen Morris:
Lignol Energy Corporation is an emerging producer of biofuels, biochemicals and renewable materials from waste biomass. We currently have a fully integrated state of the art pilot-scale biorefinery in British Columbia, Canada with a highly qualified staff consisting of scientists, engineers, and technologists. To date, the team has successfully conducted projects starting at lab scale, moving through integrated pilot operations, and all the way to developing engineering designs for commercial biorefineries.
CF:
What are the differences between regular biofuel and what Lignol is doing?
Stephen Morris:
Biofuels from food sources is ultimately unsustainable. First generation biofuel is derived from biomass (biomass refers to recently living organisms, mostly plants) and the biomass is then converted into solid, liquid or gas form. Lignol is focused on cellulosic biomasses, derived from non-food sources, (trees, grass, etc.). The purpose of this is to lower the costs of biorefining by using feedstock from waste materials.
Everyone within the cellulosic ethanol space can make bioethanol from the sugars; but with the exception of us, our competitors are burning their lignin for 5¢/lb - lignin is 25% of woody biomass. Our high purity lignin can replace petrochemicals in thermoplastics, resins, paints etc. in multi-billion dollar markets at $1/lb., which can transform the economics of a project.
CF:
Why did you get involved in the company?
Stephen Morris:
Lignol piqued my interest for a number of reasons. The company’s proprietary biorefining technology and focus on cellulosic ethanol was definitely in the right space. But it was Lignol’s very strong patents in the high purity lignin space which made me feel they would be a player. I firmly believe that all other cellulosic ethanol companies should license our technology in order to remain competitive. My decision was made easier by the fact that this technology, originally pioneered by General Electric, had previously been scaled to 60 tons per day, substantially de-risking the project. The next generation bioethanol space has remarkable opportunity for replacing expensive food inputs with waste material (close to $1,000/ton becomes nearer $100/ton feedstock cost) and turning 5¢/lb crude lignin into a $1/lb green substitute for petrochemicals – there should be a profitable business in that.
CF:
In your eyes, what are some advantages Lignol holds?
Stephen Morris:
Briefly, Lignol's industry-leading patent position provides multiple layers of protection and restricts potential competitors who may attempt to copy elements of Lignol's proprietary process and use different lignins for various applications claimed by Lignol. But most importantly, it is quite likely that many competitors will produce lignin via their own processes and choose to simply burn it for fuel value rather than further refine it and sell it into our markets, and that alone will likely cross our composition of matter patents; making it necessary to licensee our IP in order to provide them with the freedom to operate.
CF:
How do you intend on growing the business and what are some of the catalysts that will help you achieve this?
Stephen Morris:
Lignol has been acquiring interests in first generation biodiesel plants that were previously designed to process food grade vegetable oils. A good number of these are trading at fraction of the original cost. We intend to acquire and repurpose these plants, via front end pretreatment upgrades and post refining steps. This will allow us to use a more cost-effective feedstock (including used cooking oil, tallow, palm oil sludge etc.) and produce higher value outputs (pharmaceutical grade glycerine, propylene glycol etc.).
Lignol currently has more than 20% of Australian Renewable Fuels Ltd., a profitable and growing company that demonstrates our strategy, and 66% of Territory Biofuels Ltd., the largest biofuels plant in Australia, which we hope to have up and running with a similar strategy in the near-term. In addition, our seasoned and forward thinking management team is reviewing a variety of potential acquisitions which would provide near term cash flow.
CF:
How did the project first get financed? Do you have any partnerships or strategic investors?
Stephen Morris:
Michael Wekerle and the entire team at Difference Capital have played, and continue to play, a significant role in moving the project forward and sustaining it for the foreseeable future. The company recently increased its ownership in Lignol to just shy of 34%. Beyond that, Difference Capital has arranged for a $12.5 million revolving credit facility to ensure our future success - together we intend on building a market leader in the sector, with an initial focus on Australia and North America.
CF:
What are some of your key goals for the remainder of 2013?
Stephen Morris:
With our investments in Territory Biofuels Ltd. and Australian Renewable Fuels Ltd. over the past year we have begun to transform our company and position us for near term commercial success.
Our major focus is on Territory Biofuels Ltd. with plans to bring it into production by year end. Developing partners for Lignol’s core technology and licenses for our Lignin technology will continue as top priority as we see more activity developing in second and third generation biorefining technologies. Our goal is to establish a successful commercial enterprise that can leverage the tremendous domain expertise of our people and our intellectual property and become profitable company in this exciting industry.
*** SPECIAL NOTE: A significant news event for Lignol was announced on September 5, 2013 where the company is to acquire a 40% equity stake in Neutral Fuels Parent Co. Lignol continues to aggressively move forward on its acquisition strategy towards providing near-term cash flow. Neutral Fuel’s closed-loop business model, which was developed specifically for McDonald’s, takes used cooking oil from its local restaurants and in return provides B100 biodiesel to fuel its suppliers’ delivery fleets.***