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8-K - FORM 8-K - ADA-ES INC | d8k.htm |
NASDAQ:ADES A Leader in Clean Coal Technology Ingalls and Snyder Seminar for Specialty Chemical Companies November 17, 2009 New York, NY © Copyright 2009 ADA-ES, Inc. All rights reserved. Exhibit 99.1 |
-2- Please note that this presentation contains forward-looking statements within the meaning of U.S. securities laws, including statements relating to coal; future bids, contracts, projects, project funding, ownership, tax credits and revenues; statements regarding the new activated carbon (AC) facility ADA-CS is building; ADA-CS ability to supply AC; the likelihood, timing and impact of new laws, regulations and court rulings on our target markets; and anticipated sizes of and growth in our target markets. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from those anticipated, including changes in laws and regulations, government funding, prices, economic conditions and market demand; impact of competition and litigation; availability, cost of and demand for alternative energy sources and other technologies; operational difficulties; availability of skilled personnel; failure
to satisfy performance guaranties; risks related to ADA-CS such as changes in the costs and timing of construction of the AC facility, failure to raise additional financing or satisfy conditions in existing agreements and inability to sign or close acceptable coal supply and off-take agreements in a timely manner; availability of raw materials and equipment for our businesses; and other factors discussed in greater detail in our filings with the SEC. You are cautioned not to place undue reliance on our forward-looking statements. These statements are presented as of the date made, and we disclaim any duty to update them unless required by law to do so. |
-3- Clean Coal Technology Coal is an abundant, cheap, and secure fuel that provides over 50% of electricity in the US 1,100 coal-fired boilers in the U.S. ADA provides the technology to burn it cleaner Senior staff are industry recognized experts 30-year track record of developing and then commercializing technologies Positioned to take advantage of public and political support for Clean Coal Technologies |
-4- Major Steps Taken During Downturn: Mercury Control ADA Carbon Solutions (ADA-CS), ADAs JV with Energy Capital Partners: Built 60 million pound per year Activated Carbon (AC) processing and logistics facility in NW Louisiana - Began shipping AC to customers in July 2009 Currently building North Americas largest AC manufacturing facility - Financing $385 million facility through debt/equity split - Facility will start-up in Spring 2010 |
-5- Major Steps Taken During Downturn: Refined Coal and CO 2 Capture Building two CyClean systems for Refined Coal to place in service before year-end Could produce $0.50 to $1.00 in earnings per share in 2010 Scaling up carbon capture technology Working on a $3M DOE and Utility funded program Bidding on a $15M program |
-6- GROWTH AREA 1: Mercury Control |
-7- AC Market Drivers: Regulations for Mercury Control Existing rules create $200 - 300 million AC market |
-8- Activated Carbon Injection (ACI) Equipment Sales for Initial Market Contracts for ACI systems for over 130 boilers (55 GW) have been awarded by power companies to date ADA market share: approximately 30% The rest are split between 7 or 8 other companies An additional 15-20 contracts are expected for new power plants and current state regulations Working closely with largest utilities in the U.S. and Canada Key supplier of mercury control technology to major air pollution control companies |
ADA Commercial ACI Systems > 20 GW Plant burns PRB coal or lignite Plant burns bituminous coal ADA Clients -9- |
-10- Update on Expected Federal Laws U.S. EPA MACT for Coal-Fired Boilers Will cover all 189 Hazardous Air Pollutants (HAPs) Should result in 90 to 95% limit for mercury EPA has agreed to have a final rule in place by November 2011 with full implementation in 2014. U.S. EPA Industrial Boiler MACT Will cover larger number of boilers, smaller units Will require distribution for AC and simpler ACI systems U.S. EPA MACT for Cement AC needed for both mercury and volatiles U.S. Legislation 3-P Bill could be added to Climate bill by Sen. Carper (D-DE) which includes 90% Hg Canadian-wide mercury standard has been passed |
-11- ACI System for Mercury 90% Mercury Control at Approximately 1% of the Retail Cost of Electricity Emission Control Equipment (NO x , SO 2 , Particulate) |
Annual Market for ACI Equipment Expected from a Federal MACT Standard -12- |
AC
Production Supply / Demand |
ADA-CS New Activated Carbon Production Building largest AC plant(s) to date: 150 mm lbs/yr Capital cost: approx. $385 mm Plant designed to be low-cost producer 3-5 year development process: Under construction and on schedule Red River, LA plant startup target: April 2010 -14- |
-15- Low-Cost Producer Plant sited in the middle of lignite reserves Provides access to a long term supply of low-cost feedstock material Minimal transportation costs for lignite Plant design with four furnaces in a single production line minimizes labor requirements Modern, state-of-the-art equipment, reduces maintenance costs Production designed for large volume customers, minimizes material handling and labor Energy efficient design with extensive energy recovery Generates 19 MWs, 6 MW for internal use, 13 MWs to be sold on grid as revenue source |
-16- ADA-CS Interim AC Supply Facility Currently supplying AC to utilities prior to new plant start-up Sourcing high-quality AC AC processing and logistics facility Processing capacity up to 60 million pounds per year of Powdered AC Easy access to rail and barge transportation |
Ownership Structure after ECP Equity Investment ADA - ES Energy Capital Partners (ECP) Red River Environmental Products, LLC ADA Carbon Solutions, LLC * Parent Companies Development Company Project Companies 35% Owner -17- *Based upon estimates of final capital and financing costs upon closing of debt financing. 25%* 75%* Underwood Environmental Products, LLC Morton Environmental Products, LLC Crowfoot Supply Company, LLC |
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-19- Financing for AC Facilities Approximately $200 million spent on construction and related activities to date Plant remains on schedule with start expected April 2010 ECP has continued to fund construction beyond anticipated equity investment Continued funding by ECP likely to result in 25% ownership by ADA* Permanent debt anticipated to replace interim financing Last week, ADA received promising news on $245 mm in debt financing. Details to come later this week. * Based upon management estimates of debt sizing upon financial close and assuming closing of the Stock Purchase Agreement
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Total Solutions Provider Total Solutions Provider The ADA Advantage The ADA Advantage -20- |
GROWTH AREA #2: Control of Greenhouse Emissions: Carbon Dioxide -21- |
Carbon Capture and Storage (CCS) International, Federal, and State Regulations are being proposed requiring 50% to 80% reduction in CO 2 emissions Requires development of technology to capture carbon from existing plants -22- 0 100 200 300 400 1 50% CO2 Reduction New |
ADA-ES CO 2 Capture Technology Designed to capture CO 2 from flue gas in conventional coal- fired boilers Based on regenerable solid sorbents - advantages over competing technologies: For the customer: lower cost and less parasitic energy For ADA: continuous revenues from sale of proprietary chemical sorbents $3.2 million DOE R&D program with extensive industry support Southern Company, Luminant, American Electric Power, Xcel Energy There has been a significant increase in funding opportunities for CCS technology through DOE. -23- |
Next Steps for CCS Technology One more year on current DOE Program Field tests using slipstream device Bituminous Coal at Southern Company PRB at Xcel Lignite at Luminant Design of conceptual 500 MW system DOE has issued a Funding Opportunity Announcement for scale-up of solid-sorbent based carbon capture technology Up to $15 million per program Opportunities for DOE and industry funding for full- scale demonstrations are expected in the future -24- |
GROWTH AREA #3: Refined Coal Product ADA-ES opportunity through joint venture with an affiliate of NexGen Resources Corporation -25- |
Section 45 Refined Coal Tax Credit Clean Coals patented refined coal technology, CyClean, is designed to enhance combustion of PRB coals in cyclone boilers Tax credit incentive $6 ton/coal for ten years Example for 500 MW plant: 2 mm tons/yr will create a tax credit of $12 million per year for 10 years Tax credit qualifications Placed in service by January 1, 2010 Owned and operated by third party Reduces NOx by 20% Reduces Hg by 40% Window may be open for an extension -26- |
Opportunities and Challenges for CyClean Opportunity Attempting to get two facilities installed before year-end Produce approximately $3-6 million in earnings for ten years Monetizations will trigger $4 million from NexGen to maintain 50% of JV Challenges Equipment must be fabricated and installed by year-end Approximately $2.5 million in JV capital expenditures Waiting for explicit guidance from IRS Permits required prior to installation Complicated contracts with utility partners must be completed for each facility Agreements with monetizers must be secured -27- |
Lawsuits Calgon Suit based upon a contract Calgon signed with MidWest Generation for AC sales Calgon and ADA had an MOU that provided a commission on sales of AC bid while the MOU was in place ADA believes that it is entitled to >$8 million in commissions on this contract Discovery near complete, trial expected in July 2010 Norit In June, Norit tried to get an injunction to stop construction of the plant. This was summarily rejected by the Judge. On October 6, the Judge ruled in favor of a motion ADA filed requiring that the suit be addressed by binding arbitration in Atlanta, GA. We view this as a very positive development in the Case -28- |
Financial Highlights Cash flow positive on an annual basis 2003-2007 Revenue CAGR of 23%, 2003 - 2008 9M09 total revenues increased to $13.5 mm vs. $12.9 mm in 9M08 due to increased ACI system sales* As of 9/30/09: 7.0 mm diluted shares outstanding 50%+ held by institutions ~11% held by insiders and employees Balance sheet highlights (at 09/30/09): Working capital of $2.3 mm Shareholders equity of $25.3 mm Cash & equivalents of $800K Market cap: $14.6 mm (11/04/09) -29- * Nine months 2009 financial results do not consolidate the results of the subsidiary, ADA
Carbon Solutions, LLC, ADAs joint
venture with Energy Capital Partners and its affiliates. |
Michael Durham, Ph.D., MBA President and CEO, ADA Environmental Solutions miked@adaes.com (303) 734-1727 Creating a Future with Creating a Future with Cleaner Coal Cleaner Coal |