Eco Investor May 2016

Pre-Profit Securities

Commercialization Successes for Eden Energy

Shares in Eden Energy reached an 8 year high of 34.5 cents with the company announcing some successful steps in the commercialization of its concrete additive that can greatly reduce the volumes of concrete used in commercial and infrastructure applications. Concrete is a major greenhouse gas emitting industry.

Eden has worked hard for the successes. Long time executive chairman, Greg Solomon, said the five year product development of the EdenCrete additive has delivered a high-tech carbon nanotube enriched liquid admixture that greatly improves the strength and performance of concrete. The additive is suitable for a wide range of applications such as concrete roads, bridges, high-rise buildings, water storages and pipelines, and pre-fabricated concrete products.

Trials by the Georgian Department of Transportation in the US produced a 45.8 per cent increase in compressive strength and a 56 per cent reduction in the rate of abrasion which led to its approval for use on highways for the Department's 24 hour repair mix and class B concrete.

In April EdenCrete secured its first commercial sale in Georgia. EdenCrete was used to replace a high strength concrete slab that is subject to extreme wear and abrasion. The project was for a large company where very heavy steel components from a national transport fleet are brought for repairs and maintenance. Under a scheduled maintenance program, several times each year sections of the area that are severely cracked are ripped up and replaced.

The EdenCrete replacement slab replaced only the upper 70 per cent of the original cracked concrete slab, and delivered a project cost saving of 45 per cent compared with an alternative high strength slab design. It was 50 per cent thinner than the ultra high strength slab design, used only fibreglass fibres and carbon nanotube reinforcement in lieu of traditional steel mesh or rebar, required almost no sub-base preparation, and will provide at least a comparable five year service life.

As a result, EdenCrete has been specified for the next replacement slab. The thickness of the slab will be reduced by 30 per cent. It will require less concrete, no steel re-inforcing and a reduced excavation time, and the budgeted repair costs for the replacement slab are 40 to 45 per cent less.

Mr Solomon said that if the improvements in performance and cost savings from this project can be replicated in highway and infrastructure projects, the commercial rollout of EdenCrete into the US infrastructure market may be significantly accelerated.

On the environmental side, the US Interstate Highway network consumes about 40 per cent of all cement used in the US, so there may be an opportunity to reduce emissions through a significant gain in efficiency.

Thanks to this and similar successful trials, last month the State of Georgia announced it will provide a US$24.76 million ($32.3 million) incentive package for Eden subsidiary EdenCrete Industries Inc. This is to underpin a proposed US$67 million first phase production plant in Georgia to produce the EdenCrete additive for the US concrete industry, including the massive US concrete infrastructure and highway repair sector, and for global export.

The package includes a grant of 45 hectares of serviced land in the Augusta Industrial Park with an option for a further 12.75 hectares. The plant is expected to create 251 jobs over four to six years. Its first phase will be developed in four stages and have an estimated output of 189 million litres a year.

The incentive package will enhance the overall attractiveness of the project to future investors and lenders for fund raising purposes, said Mr Solomon. The company can now move forward with a view to commissioning a large scale operation by late in 2018 to early in 2019, he said.

Meanwhile, the expansion of Eden's production capability in Colorado from 190,000 gallons per year to a target maximum of 2 to 2.4 million gallons per year should be completed in early 2017. At full production the EdenCrete would be worth US$50-60 million, he said.

To help sales, there are currently samples of EdenCrete with another nine US companies for trialing. Mr Solomon said trials often take at least three to six months so there is a slow lead-time for conversion into orders. The rate of conversion can help investors to measure progress.

Eden is an early stage company with other early stage projects. Eden's subsidiary, Hythane Company, has developed a fuel called Hythane. This is a mixture of natural gas and about 5 to 7 per cent hydrogen. The hydrogen improves the flammability of the methane in the natural gas, which leads to a more efficient and cleaner burn.

Hythane Company is also commercializing the OptiBlend fuel system. This is an easy retrofit technology for diesel generators that displaces diesel with natural gas or another alternative fuel. The OptiBlend lowers operating cost, increases back up runtime, and reduces emissions of nitrogen oxides, carbon dioxide and particulate matter. At this stage sales are modest, in part due to the low oil price.

Eden is commercializing a Pyrolysis Project that breaks down natural gas into its constituent hydrogen gas and carbon without producing carbon dioxide. The carbon is produced as either solid carbon nanofibres or solid carbon nanotubes that in some applications are stronger than steel. The project aims to develop reinforced plastic composites for automotive and aerospace applications.

Eden Energy will remain a speculative investment for some time. Its March quarter sales were $717,000 and it is still cash flow negative with cash at the end of the quarter of $2.5 million. It periodically raises capital and the last raising was $4.9 million in December at 5.5 cents per share. The big share price rise since then means long-time investors are finally seeing some upside. (ASX: EDE)


Top: A control slab showing considerable cracking. Above: The EdenCrete Field Trial Slab shows no cracking or damage.

 

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