EDE - Eden Innovations

[basilio]

Re: EDE - Eden Energy

I thought it was a very (purposefully) vague but extravagant announcement. But it is also very exciting.

As I read it a very substantial part of the infrastructure development cost are being covered by the various grants. As well there will be rebates on future local taxes. The "$67m development" is for the first phase which will be made in four stages over 4-6 years. So perhaps $17m a stage ? Less the various grants to pay for land, water, power roads etc.

Projected costs are always creative. From memory the costs of the pilot reactor were relatively modest. A few years of trial and use should have helped reduce costs further.

From a sale point of view the concept of having an additional 8 development phases probably similar to the first phase of 50m gallons looks awesome. The current price for the additive is $25 a gallon. That suggest a gross income of $1.25 billion in 4-6 years. And then add 8 more phases ? It will be interesting to see what sort of analysis is offered in the near future.

I also go back to the current pilot plant production.

The current expansion of Eden's Colorado based production capability of
EdenCreteTM, from its current maximum level of approximately 190,000 gallons
per year to a targeted maximum (operating on a 24 hour/day basis) of
approximately 2.4 million gallons per year, is underway and is now scheduled to
be in production between late 2016 and early in 2017.

Surely the sale of sale 1- 2.4m gallons of Edencrete at $25 a gallon is no small figure particularly when the development cost of the new site is around $17 m a year less local subsidies. I think shareholders should be updated on the progress of the current expansion and sales of the product. It's proven. There are a number of users who have tried and tested it. It should be selling and making a decent dollar.

On the other side of the ledger I wonder how strong the intellectual rights are on the process ? And can it be easily replicated ? Perhaps the Solomon Bros would be wise to create an attractive big picture story and flick it on to an industrial behemoth who knows their way in the business.

 

[pixel]

Re: EDE - Eden Energy

Basilio,
could it be that the Solomons kept it deliberately vague, and could it be that they threw in the bit about potential expansion to 8-fold size on purpose to cause you to think the way you do?
Read the disclaimer about "forward looking" ...

I am certainly not the only trader who looks for - and often finds - ulterior motives of directors. They say past performance is not always a reliable predictor of future performance. But observation of human nature does give some clues. Let's leave it at that.

I remain cautious.

 

[basilio]

Re: EDE - Eden Energy

Totally agree on the "creative suggestion" of another eight stages to the plants expansion. A lot of blue sky in this story. Clearly the boys are on the sell.

With feet on the ground I am keen to hear how the current expansion of the pilot plant to 24hour production is going and how much Edencrete is being sold from current production.

IF the pilot plant reaches it's targeted 2.4 million gallons per year of production and IF the product is sold at approx $25 a gallon there is a $60m a year business. Can the Solomon Bros actually run a business ? When will we know ?

__________________________________________________________________________________

What would be worth calculating is approximately how much concrete is used each year around the world that is a candidate for improving with Edencrete. Then calculate how much Edencrete is required for the process. Clearly one doesn't just dominate a market in a short while but the overall figures would be worth seeing. That would also give us an idea of what needs to happen for a 50million gallon a year plant to sell all it's product.

 

[skc]

Re: EDE - Eden Energy

Maybe I'm overly cautious, but I have now started to look at it the other way around:
If TAS "should be" 25% above EDE, that means EDE "Should be" 20% below TAS.
What if TAS knew a little more than you, I, and all the mums and dads? Given that TAS can't easily turn their EDE holding into cash, they would have to value it at a long-term average.
Assuming then the current 15cps TAS is "about right", EDE's target price would come down to about 12c.

TAS derives it price through it's shareholding in EDE. It will always follow but not lead EDE.

I wouldn't worry about TAS knowing a little more than others... TAS itself doesn't control it's own share price. What you are proposing is that the punters, mums and dads who trade TAS are somehow more informed than the punters, mums and dads who trade EDE. That is unlikely to be the case.

As a consequence, I'm treating both as highly speculative and only trade short-term swings.

Very astute... there's little doubt that both are highly speculative.

What would be worth calculating is approximately how much concrete is used each year around the world that is a candidate for improving with Edencrete. Then calculate how much Edencrete is required for the process. Clearly one doesn't just dominate a market in a short while but the overall figures would be worth seeing. That would also give us an idea of what needs to happen for a 50million gallon a year plant to sell all it's product.

50m gallons = 190m litres of additive. I think in one presentation they mentioned applying 4gal/ cubic yard of additive... so working to metics it is about 20 litres per cubic metre. In other words, 190m litres of the additive = 9.5m cubic metres of concrete.

To put in some perspective...9.5m cubic metres of concrete is enough to build 1520km of 8 lane motorway (say 25m wide) with 250mm think concrete pavement. I am sure the world's concrete market is much much larger than that, but it'd take some effort to win enough projects to take up the volume.

In my past life I was a civil engineer, working with concrete etc. There were no shortage of companies trying to sell additives that do all sorts of things... better consistency, better flow rate, improve strength, improve wear etc. It will take quite some time for something like EDENcrete to gain acceptance in the industry. It will need to be allowed in design standards before it will be specified by the design engineers. The contractors won't just use EDEN additives on his own, while thinning the slab and/or take out the steel.

There are probably some applications that are more suitable... like repair jobs, hardstand etc, but a major infrastructure (like a bridge) with design life of 50 years the standards required will be much more stringent.

I note you mentioned that the price is ~$25/gallon ($US or $A?)... that's quite expensive. This adds about $135 per cubic metres of concrete. Concrete supply costs would be <$250 per cubic metre. So the saving to offset this will have to come from alternating the design by some 1/3 of the volume. This is not easy to achieve.

My take is that the current valuation of some $275m for EDE is very speculative. Quite a lot of things must go right for this business to prosper.... and it will take a long time (>10 years) before quite of lot of things have the chance to go right.

 

[nioka]

Re: EDE - Eden Energy

The progress with Eden has been outstanding to a point where, in my opinion, it is no longer a spec stock. I believe it has proven a product that has huge potential. It has a pilot plant that will be producing product and it is being assisted in a big way to scale up production. The pilot plant is modular and can easily be replicated. This is now a company that will take its place as a worldly Australian company.

I believe that because of the company structure it will remain under Australian ownership and control unless there is a gigantic offer too good to refuse.

What is confusing is the company structure. Eden Energy has a major shareholder, Noble, that is totally owned by TAS. The Solomons direct and manage all three. There is plenty of talk that TAS is underpriced on the basis that it owns approx. 46% of EDE and on a market cap basis it's SP should be approx. 1.4 times the SP of EDE and actually the reverse applies. I believe in trading between the two using the ratio of 1.4 TAS = 1 EDE.

My reasons are;

1. That's the way the market sees it.
2. EDE is the one that will be the "earner" TAS is a potential spender(based on past history with mineral exploration)
3. Profits from EDE will be shared between shareholders. Profits going to Noble will probably not go 100% to TAS as there are costs, including management and directors fees, with that step. Then when these diluted funds get to TAS there may or may not be a distribution to TAS shareholders and there will be diluting costs as with Noble.
4.Follow the money trail. Remember EDE is the earner.
5. By using my ratio I have successfully traded between the two for almost a year.

Before accepting repeated statements on forums that TAS and EDE are trading at unreal ratios it is wise to look for the reasons.

I own all of EDE, TAS and EDEO. EDEO at times is the best value and my major shareholding is in EDEO. Next is TAS with EDE itself only a token holding. If the ratios change then so does my holding. Holding any of these gives a holding in this exciting new product.

 

[jbocker]

Re: EDE - Eden Energy

...

I note you mentioned that the price is ~$25/gallon ($US or $A?)... that's quite expensive. This adds about $135 per cubic metres of concrete. Concrete supply costs would be <$250 per cubic metre. So the saving to offset this will have to come from alternating the design by some 1/3 of the volume. This is not easy to achieve.

... .

Hi skc
I read that there were some alternating of design = significant reduction in volume of concrete required and we need to add the saving that is expected with less steel mesh or rebar. 40-45% saving in cost and 50% thinner concrete.
http://www.asx.com.au/asxpdf/20160401/pdf/43671rtk49f5pn.pdf

The significance of what this might mean to Edencrete can be seen in this statement, In 2005, the US Geological Survey reported that 40% of all cement used in the United States is used on interstate highways.
Point 4 in the Chairman's address (Nov 2015). You can also read why there what might be the reasoning behind the action with recent grants and funding.
http://www.edenenergy.com.au/pdfs/8fa15da71ff2e15e2f781f27545f0033.pdf

I understand that there also is a university project with Eden to test building construction minimising steel re-enforcement. (cannot find the reference to this just yet)

 

[skc]

Re: EDE - Eden Energy

I read that there were some alternating of design = significant reduction in volume of concrete required and we need to add the saving that is expected with less steel mesh or rebar. 40-45% saving in cost and 50% thinner concrete.
http://www.asx.com.au/asxpdf/20160401/pdf/43671rtk49f5pn.pdf

That's correct. My point is that, these savings must come from a holistic approach to design and construction, not just as simple as pouring in the product and mix on the construction site (which is what most current concrete admixture are designed to do). It will require changes to design standards before designers / contractors are comfortable with thinning the concrete slab and taking out rebars.

I understand that there also is a university project with Eden to test building construction minimising steel re-enforcement. (cannot find the reference to this just yet)

I will be very surprised if there aren't hundreds of university projects around the world, at any one point in time, researching how to make concrete better, one way or another way.

Carbon reinforced concrete has been around when I was an engineer 10 years ago... And I believe it has yet to takeoff. So let's just say EDE's product is at best evolutionary and will need to overcome the same inertia in the industry before widespread acceptance.

P.S. I also passed on investing in Bellamy when it was <$2 so I am wrong often.

 

[basilio]

Re: EDE - Eden Energy

Another significant announcement by EDE today. The highlights are

EDENCRETE TM US UPDATE
Contract for EdenCrete
TM for Heavy Duty Wear andHighly Abrasive Applicationin Georgia Completed
HIGHLIGHTS
•Eden has completed the replacement of a high strength concrete slab that is subject to extreme heavy duty wear and abrasion

•The EdenCreteTM replacement slab replaced only the upper 70% of the original cracked concrete slab at greatly reduced costs.

•The replacement EdenCreteTM slab delivered a total project cost saving of 45% compared with an alternative ultra high strength slab design was 50% thinner than the ultra high strength slab design, used only fiberglass fibres and carbon nanotube reinforcement in lieu of traditional steel mesh or rebar, required almost no sub-base preparation, and is intended to provide at least a comparable 5-year service life

•The slab replacement used the same EdenCrete enriched concrete mix that was approved by GDOT for use in its 24-hour concrete repair mix and B Class concrete mix

http://www.asx.com.au/asxpdf/20160418/pdf/436l6bqwdkm9x1.pdf

As I understand it they have already trialled the product last year and the Edencrete slab has proved far more durable than the normal ultra high strength concrete. Perhaps this will be the practical test that proves how well it works, how cheap it is and how simple to install.

SP has jumped by 30% but I suspect the last 3 days of steady increase reflect some smart money holding a longer term position.

There is also some additional technical information on the Eden website on te product.

http://www.edenenergy.com.au/pdfs/af60878d...431dd15d637.pdf Brochure
http://www.edenenergy.com.au/pdfs/3f30e5f7...6836739a206.pdf Comparison Matrix

____________________________________________________________

By the way SKC is there a gremlin in your calculations ? I don't think this much concrete can produce this amount of road

50m gallons = 190m litres of additive. I think in one presentation they mentioned applying 4gal/ cubic yard of additive... so working to metics it is about 20 litres per cubic metre. In other words, 190m litres of the additive = 9.5m cubic metres of concrete.

To put in some perspective...9.5m cubic metres of concrete is enough to build 1520km of 8 lane motorway (say 25m wide) with 250mm think concrete pavement. I am sure the world's concrete market is much much larger than that, but it'd take some effort to win enough projects to take up the volume.

.

 

[skc]

Re: EDE - Eden Energy

By the way SKC is there a gremlin in your calculations ? I don't think this much concrete can produce this amount of road.

I don't know... I hope not. While I don't work as an engineer anymore I still make a living with numbers!

50m gallons = 190m litres of additive. I think in one presentation they mentioned applying 4gal/ cubic yard of additive... so working to metics it is about 20 litres per cubic metre. In other words, 190m litres of the additive = 9.5m cubic metres of concrete.

To put in some perspective...9.5m cubic metres of concrete is enough to build 1520km of 8 lane motorway (say 25m wide) with 250mm think concrete pavement. I am sure the world's concrete market is much much larger than that, but it'd take some effort to win enough projects to take up the volume.

Concrete per m length of 8 lane motorway = 25m x 0.25m x 1m = 6.25m3 per m of motorway
1520km of 8 lane motorway = 1,520,1000m x 6.25m3 per m of motorway = 9,500,000 m3 = 9.5million cubic metres.

FWIW, Hoover dam used ~2.5m cubic metres of concrete. And it's one solid mass.

https://en.wikipedia.org/wiki/Hoover_Dam

If we agree that the numbers are correct, then the useful observation is that 50m gallons is a LOT of product.

 

[basilio]

Re: EDE - Eden Energy

Oops SKC !! My mistake. Just completely misread your calculations. Makes good sense.

One point though. One of the major advantages of Edencrete is it is far stronger and therefore one can use around 40% less concrete to achieve the same result.

So ball park it looks as if one years production of the additive, say 50m gallons, would would/resurface say 2200 Klms of 8 lane Highway. (I'm allowing for the claimed effectiveness)

That does put a perspective on the market.

 

[jbocker]

Re: EDE - Eden Energy

skc and basilio, enjoying you contribution and can you help me here. I sense caution being expressed but the numbers still excite me.
2200km of US highway doesn't seem much road (albeit you are talking 8 lanes), and 50Million gallons x $25 is a lot of money (don't know what it costs to produce mind you).

Is it more the effort and time to influence and take up market share that is the real concern for the company?

 

[basilio]

Re: EDE - Eden Energy

This is undoubtedly a game changing product. It will revolutionise the use of concrete around the world. But in my mind there are many questions between successful production in a pilot plant and Eden Energy (and especially the non Board shareholders !) making a good dollar. In no particular order I see the following issues.

1) How easy will it be to replicate the process? I suspect this won't be rocket science. On memory it was not a particularly costly or difficult process. So who is to say a competitor won't get into the market quite quickly

2) At present there is no indication that Eden Energy can actually run a business. Many posters including myself have noted how effective the Solomon brothers have been in capturing value from the operations. Basically they charged Eden big licks for their various services and then took the money in scrip at very low prices. It is hard to see these lawyer brothers as industrial tycoons.

3) What will be the response of the cement industry and in particular companies that already have a range of additives? My guess is a very quick buyout. Frankly if the price is very good this may be an excellent immediate result for shareholders.

4) The suggestion that the industrial plant will start at 50 million gallons a year in the first phase with a potential extra eight extensions is pipe dreaming. In particular I don't think we have seen any analysis of how big the market could be to justify such dreams. On the other hand of course this technology may make concrete so strong, versatile and cost effective that production does expand.

I have an interest in EDE and (naturally) would love to see it succeed. How that will be achieved I'm not quite sure. I have been burnt so many times with other seemingly brilliant products I hesitate to say too much.

 

[basilio]

Re: EDE - Eden Energy

Todays story in the Australian. Note that Greg Solomon is looking at more equity funding. Not a peep about sales from the pilot plant which on the Boards calculations should produce 2.4m gallons by early next year with a potential gross of $50m plus.

Surely if this stuff is so good and there is so much interest sales of product through the pilot plant would be welcome assistance to funding the factory development ?

Eden chief Greg Solomon says it wasn’t easy to convince the conservative industry of EdenCrete’s virtues. Eventually, the Georgia Department of Transportation became convinced after its tests showed a 45 per cent rise in compressive strength and a 56 per cent reduction in abrasion.

The facility is planned to have a 190 million litre capacity, but with an initial output of 47ml while Eden gauges demand for the additive, which currently sells for about $US6 a litre. Eden has canvassed debt funding from US sources, but Solomon says initial equity funding is more likely unless management has a “high degree of confidence” about orders.

Eden shares vaulted 20 per cent yesterday and bear little resemblance to the 1c value ascribed to February’s rights and options raising. The real intrigue lies in the value of Tasman, which is also chaired by Solomon and owns 44.5 per cent of Eden’s ordinary shares and options collectively worth $175m, or 46c per Tasman share.

http://www.theaustralian.com.au/bus...l/news-story/ad6a3aeb34773808487b4a53b4977254

 

[pixel]

Re: EDE - Eden Energy

Basilio,
could it be that the Solomons kept it deliberately vague, and could it be that they threw in the bit about potential expansion to 8-fold size on purpose to cause you to think the way you do?
Read the disclaimer about "forward looking" ...

I am certainly not the only trader who looks for - and often finds - ulterior motives of directors. They say past performance is not always a reliable predictor of future performance. But observation of human nature does give some clues. Let's leave it at that.

I remain cautious.

Having traded mainly TAS and TASO - still under speccie rules, predominantly by the charts - I sold the last position yesterday and am now completely out of EDE-TAS-TASO. Although some buyers seemed to return early today, I don't believe support will be strong enough after just one day of profit taking.
Sure, not all gaps must be closed, but the one down to 19.5c looks now a sufficiently serious threat. Therefore, I'll stay clear for the time being

.

 

[nioka]

Re: EDE - Eden Energy

Having traded mainly TAS and TASO - still under speccie rules, predominantly by the charts - I sold the last position yesterday and am now completely out of EDE-TAS-TASO. Although some buyers seemed to return early today, I don't believe support will be strong enough after just one day of profit taking.
Sure, not all gaps must be closed, but the one down to 19.5c looks now a sufficiently serious threat. Therefore, I'll stay clear for the time being

View attachment 66340.

Some thing may have been left vague but what is not vague is the performance of Edencrete. The possibilities with this product are mind blowing to say the least. Panic selling and Share Price manipulation has caused a lemming rush with stop loss settings triggered. A storm in a teacup but one which created plenty of action for relative value trades. Make hay while the sun shines and the volatility creates opportunity.

 

[jbocker]

Re: EDE - Eden Energy

Just looked at the numbers in the presentation today, can someone else have a look at them and confirm my very simple maths*. Does it look like earnings / share being somewhere between $1 - $2 per annum in 2022/23 from those numbers. I know it is a long way to go and a lot of things to go right but ..I like those numbers.



*:1zhelpme teachers all ways says maffs and inglish are me worst three subjects)

 

[skc]

Re: EDE - Eden Energy

Just looked at the numbers in the presentation today, can someone else have a look at them and confirm my very simple maths*. Does it look like earnings / share being somewhere between $1 - $2 per annum in 2022/23 from those numbers. I know it is a long way to go and a lot of things to go right but ..I like those numbers.

NO.

That is at best the revenue per share....

The profits will be a much smaller number, assuming there are costs involved in producing the stuff.

 

[jbocker]

Re: EDE - Eden Energy

NO.

That is at best the revenue per share....

The profits will be a much smaller number, assuming there are costs involved in producing the stuff.

Thanks SKC you are right. I have now read up on the difference between EPS and Revenue and appreciate the difference now.
Apologies all for the using 'Earnings' in the former note.

 

[Mad Mel]

Re: EDE - Eden Energy

That does lead to a key question... What are the operating expenses in production? The capital expense estimates are laid out, but once the facilities are built, what will it cost per gallon to produce?

 

[basilio]

Re: EDE - Eden Energy

That does lead to a key question... What are the operating expenses in production? The capital expense estimates are laid out, but once the facilities are built, what will it cost per gallon to produce?

I believe the costs of production will not be high. I base that on original comments when the first reactor was built. At that time once they had sorted out the process it seemed a simple, straightforward process. Most of the costs of production will be in Directors fees I think...

On paper the potential profits for EDE are very high. I wonder how well the intellectual property around the process has been protected.
________________________________________________________________________________

Last Thursdays report noted that it would only cost $2.4m to bring the Colarado pilot plant to full production by early next year with an income stream of $50-62m. If that isn't enough to largely fund the first stage of the Georgia plant ($37m) what's the point of having the business ?