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| 8-K - FORM 8-K - ADA-ES INC | d8k.htm |
 NASDAQ:ADES A Leader in Clean Coal Technology
Pritchard Capital Partners “Energize 2010” January 5, 2010 San Francisco, CA © Copyright 2010 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, projects, contracts, financing, ownership of ADA Carbon
Solutions (“ADA-CS”), tax credits, production and various financial measures; the likelihood, timing and impact of new laws, regulations and court rulings on our target markets; anticipated sizes of and growth in our target
markets; future supply and demand; the new activated carbon
(“AC”) facility ADA-CS is building; ADA- CS’
ability to supply AC; and litigation. 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; availability of raw materials and equipment;
specific 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, termination of agreements and actions of ACS’s other owner; Clean Coal Solutions’ (“CCS”) ability to negotiate acceptable contracts for sale of Refined Coal and to monetize the tax credits; 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. |
 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 -3-
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 -4- Investment Highlights Developing solid sorbent capture technology for greenhouse gas CO2 Started work under $3.2 MM DOE and utility funded program Proposal submitted for $14 MM scale-up funding Supported by major power generating companies CO 2 Control Refined Coal Patented technology designed to improve combustion of PRB Coals in Cyclone boilers while reducing emissions of mercury and NOx Clean Coal Solutions installed two production facilities in December 2009 capable of producing over 6 MM tons of Refined Coal per year Tests completed to qualify for Section 45 IRS tax credit of $6.20/ton for ten
years; monetization triggers payments to ADA-ES of up to $4 MM from JV
partner, NexGen Activated Carbon Injection (“ACI”) is deemed maximum achievable control
technology (“MACT”) for the removal of mercury ADA is a market leader for ACI equipment and engineering services Existing regulations create $200-300 MM market for activated carbon
(“AC”); Federal regulations likely to lead to $1 billion market
for AC ADA Carbon Solutions (“ADA-CS”) building new
energy-efficient AC manufacturing facility in LA; DOE awarded ADA-CS’ subsidiary, Red River Environmental Products, $245 MM conditional loan guarantee to finance the facility Mercury Control |
 -5- GROWTH AREA #1: Mercury Control |
 -6- AC Market Drivers: Regulations for Mercury Control Existing rules create $200 - 300 MM AC market |
 -7- 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 ADA Commercial ACI Systems > 20
GW Plant burns PRB coal or lignite Plant burns bituminous coal ADA Clients -8- |
 -9- 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 |
 -10- 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 -11- |
 AC Production Supply /
Demand |
 ADA-CS New
Activated Carbon Production 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 -13- |
 -14- Potential for Up to Six Production Lines Two lines permitted adjacent to Red River Mine in Louisiana Permits filed for two lines at a site near Bismarck, ND Developing additional site near coal sources to minimize feedstock costs
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 -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 MM pounds per year of Powdered AC – Easy access to rail and barge transportation |
 Provided by Energy Capital Partners -17- |
 -18- Financing for AC Plant $385 MM to be financed through 60% debt and 40% equity ADA ownership of the JV will depend upon equity contribution to project: – $20 MM in assets – $19 MM from ADA Stock Purchase Agreement with ECP for 3.6 MM preferred shares
– ECP has provided equity for project through direct investment in JV ACS Approximately $200 MM spent on construction and related activities to date; Plant remains on schedule with start expected April 2010 ECP has continued to provide bridge financing beyond equity investment – Continued funding by ECP likely to result in ~25% ownership by ADA* $245 MM conditional loan guarantee secured from DOE – Expected to replace ECP bridge financing and fund construction – Long-term loan provided through the Federal Financing Bank (“FFB”);
lower rate than borrowing in private credit markets – Subject to completion of due diligence and other customary closing conditions * Based upon management estimates of debt sizing upon financial close and assuming closing of the Stock Purchase Agreement with ECP |
 Ownership Structure after ECP Equity Investment Parent Companies Development Company Project Companies 35% Owner -19- *Based upon estimates of final capital and financing costs upon closing of debt financing. ~25%* ~75%* DOE Loan Guarantee ADA - ES Energy Capital Partners (ECP) ADA Carbon Solutions, LLC * Red River Environmental Products, LLC Underwood Environmental Products, LLC Morton Environmental Products, LLC Crowfoot Supply Company, LLC |
 Total Solutions
Provider Total Solutions Provider The ADA Advantage The ADA Advantage -20- |
 GROWTH AREA #2: Refined Coal Product ADA-ES’ opportunity through joint venture with an affiliate of NexGen Resources Corporation -21- |
 Section 45 Refined
Coal Tax Credit Clean Coal’s patented refined coal technology, CyClean, is designed to enhance combustion of PRB coals in cyclone boilers Two systems placed-in-service in December, meeting Section 45 tax credit deadline for – $6.20 ton/coal for ten years – Together, facilities are expected to produce greater than 6 MM tons of Refined Coal per year – Reduce NOx by >20% and Hg by >40% Monetized revenue expected to produce > $6 MM in operating income per year for ADA Monetization will trigger up to $4 MM from NexGen to maintain 50% of JV Working to obtain extension of the placed-in-service deadline for another year to expand business further in 2010 -22- |
 GROWTH AREA #3: Control of Greenhouse Emissions: Carbon Dioxide -23- |
 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 -24- 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 MM 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. -25- |
 Next Steps for CCS Technology 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 Responded in December to a DOE Funding Opportunity Announcement for scale-up of solid-sorbent based carbon capture technology – Up to $15 MM per program Opportunities for DOE and industry funding for full-scale demonstrations are expected in the future -26- |
 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 MM in commissions on this contract – Discovery near complete, trial expected in July 2010 Norit – In June, Norit sought 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 -27- |
 Financial Highlights Cash flow positive on an annual basis 2003-2007 Revenue CAGR of 23%, 2003 - 2008 9M’09 total revenues increased to $13.5 MM vs. $12.9 MM in 9M’08 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: $41.7 MM (12/30/09) -28- * Nine months 2009 financial results do not consolidate the results of the subsidiary, ADA
Carbon Solutions, LLC, ADA’s 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 |