Where is Cielo Waste at now ?
Cielo Waste Solutions Corp. (CMC.V) manufactures high-grade renewable diesel by using something everybody want to get rid of : garbage ! Which includes household, commercial/ construction/demolition garbage, organics, used tires, railway ties, telephone poles. What could we ask more ? Investors understood it is the key for the future. Right now, the stock is currently traded at 1,380% up year-over-year. But what would be the next catalysts for the company to bring them upper ?
Some numbers about Biodesel ?
As we all know, the world is trying to move toward green energies. It includes a plenty of sectors, including renewable energies (solar, wind, water…), hydrogen, and BIODESEL. The demand for biodesel will keep growing as well. The global energy compared to market size was worth $25Billion in 2015 and should reach $44Billion by 2024, or a 76% augmentation within only 9 years ! The capital expenditure (CAPEX) investment is increasing too in the global thermal energy-to-market by 27% to reach $19Billion in 2024.
By 2050 the world is expected to generate 3.4 Billion tons of waste each year of which 33% is reportedly mismanaged by open dumping or burning. Cielo Waste will have then, inexhaustible resources. The biodesel will follow the trend and will be multiplied by 4 by 2030 (4.8Billion liters were produced against 19.7Billion liters by 2030).
In Canada, the demand keeps growing as well. In 2020, the biofuel required represented 664M liters/year and sees a 31% increase for 2021 (872M l/y) to reach 1,098 Million L/Y (26% increase) over 2022.
The manufacturing cost of CIELO is also less expensive than the traditional biodiesel. Let’s compare each step’s cost:
-Production: $0.36 – $0.50 (Avg $0.43)
-Feedstock: $0.85 – $1.32 (Avg $0.97)
-Total cost: $1.21 – $1.82 (Avg $1.40)
-Price in Alberta: $1.25/Liter
-Gross margin: -12 %
Cielo Waste Biodiesel
-Feedstock: $0.06 – $0.11
-Total cost: $0.56 – $0.61
-Price in Alberta: $1.67/Liter
-Gross margin: 63.4 %
What Growth for Cielo Waste then ?
Their schedule is actually pretty busy for the next months. The Aldersyde facility is completing commissioning and expects revenues shortly. The facility currently produces 2000 liters per hour. Cielo has begun further expansions with the planning of their 100% corporate owned facility in Edmonton, AB. Funding for land purchase and engineering is also already in place. Cielo recently signed memorandums of understanding for Joint Ventures for a buildout of up to nine facilities.
CIELO will handle everything ( planning, construction…) and will manage the joint ventures. They will receive a 7% fee. If we calculate: 9JV facilities =$31.5M.
Until the JV partners recover 100% of the costs of the projects, the JV Partners will receive 70% of the profits and CIELO 30%. Again, 9JV’s= $75.6M. Finally, once the project cost recovery totally completed, CIELO will be entitled to receive 50.1% of the profits which we can translate to an awesome $126M/year.
They are also approached by a lot of municipalities, industries and countries which will enable CMC to get more contracts.
Cielo waste also developed a simple modular “plant” manufacturing system. Each “plant” can produce 4,000 liters per hour or 32 million liters per annum. Cielo expects to build at least 1-2 corporate facilities over the next 24 months in addition to another 1-2 JV facilities. With 5-7 facilities in operation, they expects to realize in excess of $350M in revenue and almost $200 million in profits.
For 2022, it should be busy busy too. By Q1 and Q2 2022, the land in the Toronto area will be purchased and the permitting and site engineering will begin. The production will begin at Dunmore facility Q3 2022 and there will be a commissioning of Edmonton new facility by Q4 2022.
Some Financials ?
The directory board is currently doing some actions to reduce their debt, they received $4,000,000M by issuing issued 4,000 non-interest-bearing, unsecured convertible debentures, each issued at CDN$1,000 per Debenture, on a prospectus-exempt basis, the principal amount of the Debentures being convertible into common shares at $1.25 per share during the 12 months term of the Debenture.
So far, the total number of shares ( fully diluted ) represent 649,879,912 shares. There are still 3,750,000 warrants left and 950,000 options. So we could see possibly more dilution. To go with this high number, the Price/Sales ratio is also too high ( 76,792.19). It is explained because investors plan on the future contracts’s value. Only positive number, 16.25% is held by all insiders which is positive. Once again, the financials aren’t currently relevant as the company is currently expanding and getting contracts. Once they will be well established, we will be able to analyze in further details their financials.
Cielo Waste has the future of biodiesel into their hands. Cielo is highly profitable without government assistance, and their fuels can be used in cold climates 365 days/year, where traditional bio-diesel is used in the summer months only. In their pipelines, facilities will bring revenues and a lot will come in the next years. Cielo Waste is definitely a long term investment.
This article solely expresses the opinion of the writer which might be disagreeing with the other writers of Money,eh?
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