Eco Investor November 2015

Unlisted Companies

BioCube Raising $3 Million

The developer of a portable and community-sized biodiesel processor called the BioCube has sold its first unit in Africa and is raising $3 million to make more units and take advantage of joint venture opportunities.

The BioCube can produce quality biodiesel from a wide variety of vegetable oils and the fuel can be used in any modern diesel engine without modification. The BioCube makes sustainable distributed biodiesel and gives fuel energy independence to commercial and community enterprises.

BioCube Corporation is based in Bundall, Queensland and has an office in Vancouver, Canada where it has a Canadian manufacturer, CBVL Robotics Inc.

Eco Investor first wrote about BioCube in March 2009 and since then the technology has grown from a 10 foot shipping container to a 20 foot container able to produce over 250 litres per hour of high quality biodiesel. It comes in off-grid and on-grid versions, with the off-grid version powered by a diesel generator that runs on BioCube's biodiesel. It has a touchscreen interface and can be fully operational in 48 hours.

Units are made as ordered. The first manufactured model of the new BioCube was shipped to a customer in Queensland where it uses the seeds from a pongamia plantation to produce oil. Orders are pending for machines in India, Oceania, Africa and south east Asia.

Director Laurence Baum told Eco Investor that there are four commercial units in operation at present. The others are in India, in Canada where the manufacturer uses it as a demonstration unit, and in Africa.

The African order is to Feronia Inc., an agribusiness operating in the Democratic Republic of the Congo (DRC). In 2009 Feronia acquired a 104 year old palm oil business, Plantations et Huileries du Congo (PHC), and has invested tens of millions of dollars to rebuild the business after years of under-investment and disruption due to the long period of conflict in the DRC.

With over 3,800 employees, PHC is one of the largest employers in the country and operates in remote areas where there are few other job opportunities. BioCube said that in many instances, PHC is the only provider of infrastructure such as schools, hospitals and medical facilities, sanitation, housing and roads for its employees and the local communities.

PHC will use the BioCube to produce affordable, clean and renewable biodiesel on its plantation from some of the crude palm oil and other crops it produces. The fuel will power its generators, vehicles and machinery and replace imported fossil diesel which is expensive and needs to be transported vast distances.

Xavier de Carniere, chief executive officer of Feronia said "The BioCube will enable immediate and substantial progress towards our long-term objective of becoming energy independent and forms part of our commitment to environmental and sustainability good practice. Access to energy is an important factor in delivering on our commitment to improve the lives of our employees, their families and local communities and the BioCube represents an economic and sustainable means of achieving this critical objective."

BioCube chief executive, David Tait anticipates significant demand from across Africa where energy is expensive and often unavailable in more remote areas. "Feronia and the DRC is an ideal proving ground for BioCube's technology to demonstrate its capabilities," he said.

Mr Baum said potential clients need to see a unit in operation as sales can be ‘one plus', where there is an initial unit then more orders after it proves itself. This could be the case in India where there is interest for one trial unit with another 29 to follow if all goes well.

The BioCube Corporation Ltd is an unlisted public company aiming to tap into the worldwide growth opportunities for biodiesel. There is enormous opportunity for distributed biodiesel processing in the developing nations of Asia, the Pacific, Latin America and Africa and where large centralized refineries do not meet the needs of the market. However, sales have been made harder by the falling oil price but should now become easier as the oil price has stabilized.

Mr Baum said product development is focused on developing a 500 litre per hour unit. A base BioCube costs US$325,000 and has a short pay back time. But there is also interest from clients in leasing a machine with an option to buy, and in joint ventures where clients supply the feedstock and power offtake arrangements.

The company is seeking to raise up to $3 million in equity for 13 per cent of the company. The funds are to accelerate commercialization through sales and marketing, continue product development, produce demonstration units, for staff and salary costs, marketing and travel, working capital, and to take advantage of joint venture opportunities.

The equity parcels are $25,000 each. The pre-money valuation of the company is $20 million with IPO as the likely exit strategy. Mr Baum said the company has no debt, having developed this far in seven years using only equity. So a public listing, possibly in about 18 months, makes sense.

BioCube has net assets of $0.5 million and forecast revenue for 2016 after the new equity is $1.4 million. The capital raising is being assisted by Mark Rainbird, managing director of BlueMount Capital.

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