Robin Eves - President and CEO
Igancio Ponce de Leon - COO
Clean Coal Technologies Inc. (OTCQB:CCTC) Shareholder Analyst Day Conference Call March 27, 2013 11:00 AM ET
Greetings ladies and gentlemen and welcome to the Clean Coal Technologies first quarter 2013 conference call. At this time all participant are in a listen-only mode. For the Q&A session today please email any questions that you may have. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Robin Eves, President and CEO of Clean Coal Technologies. Thank you, sir you may begin.
Good morning everyone and thank you very much for joining us today for Clean Coal’s first quarter 2013 conference call. Before I begin, I just want to remind everyone again that questions are being collected via email for this conference call. Please submit any questions that email@example.com and we will answer them in real time. I'll now take a brief moment to read the Safe Harbor statement regarding today's conference.
This conference call will contain forward-looking statements within the meaning of the US Federal Securities laws concerning Clean Coal Technologies, Inc. Forward-looking statements can be identified by words such as estimates, expect, project, guidance, intend, believe, anticipate, seek, and other words of similar meaning in connection with any discussion of future events. Listeners are cautioned that Clean Coal’s actual results may differ materially or even substantially from what is stated in the forward-looking statements depending on a number of risk factors. Such risk factors include but not limited to the timeframe of the construction of the product launch, the timeframe for the production of revenue, the impact of the price of raw materials and rapid technological change in the industry as well as compensation in the energy markets and the various and certain other factors many of which are beyond the company's controls.
All forward-looking statements are expressly qualified in the entirety by this cautioned statement and the holistic and risk factors detailing Clean Coal’s filings with the SEC. Except as required by applicable law Clean Coal undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.
With that behind us, good morning and thanks all for joining us. I would like to start by just quoting Edison. Vision without execution is a hallucination and so now when we are focused totally and utterly on execution, we have reached the stage now with this company where we’ve currently placed ourselves in a leading position in the Clean Coal Technology space and we intend the management will tend to focus in probably the next few months on executing potentially.
The outlook for coal on a global basis is extremely strong. Coal is set to replace oil as the number one energy in the energy space in 2013. Even in the US with natural gas going at $4, we are now seeing a lot of interest from both the large utilities and some of the small municipal bonds all face the closure in 2015 and after. We've actually had tight dialogues with two or three of these utilities all who are interested in how our technology is progressing. The size of the market opportunity for Clean Coal Technology and [drawing] the technology is extremely powerful at the moment.
Let me address a couple of immediate concerns from the shareholders. We have at the moment, we have reached now a stage with the pilot plant, and I am going to let Ignacio give you more detail. The pilot plant whereby we're in execution mode and SAIC and our utility where we are going commission the pilot plant are in full dialog with us. We have hired in the recent one month ago or six weeks ago, two gentlemen who are experts in coal engineering and the coal space in the United States. They are fronting a final push with SAIC and the utility to bring our pilot plant to commissioning stage.
The overall competitive landscape for this technology, and I think it's important to address this on a global basis; our technology and any of the competitors who have come before us; we match up much, much better fall all global clients in any of these technologies that come and failed. We've been on a road show recently and one of our main points in this road show has been to emphasize, the failures wherever you have that technologies have not met the market expectation.
Primarily, this has been a cause of either failing to scale up efficiently, failing to meet the economic that were promised to the market and producing a stable product at the end. Of the last year or 18 months, we have been with SAIC really focusing on making sure that our technology when it comes to market has fully addressed all those concerns. Right now, we're very, very confident as our contractors that we have found the right solution to each of these problems. In the market out there today, we see only probably one other technology that has any real basis to claim that it has a position in the drying of coal.
However that technology is also one that [buckets] at the end of the process. It has already been proven in the market many; many times that bucketing is not a valuable solution for a stable product that we transport well. So we believe right that CCTI technology is well ahead of development curve than any of the technology out there, and that providing we again, we execute to perfection we will be the first viable technology in the market place today.
We have I think it’s also important for us that because of this, we are getting a lot of interest from overseas in our technology. We have been not out there marketing this technology, this unsolicited interest coming via Indonesia and as a result of some of the exposure we’ve given to our selves at conferences.
We have got interest from as we know Australia, South Africa, more recently Korea, China, Russia, Serbia and of course more from Indonesia. We are in dialogue with all the companies in the [SAIC] franchise; however we will owning these dialogs at certain level until the pilot plant is fully commissioned and we have satisfied that moving forward we can fully execute on each of these projects. However the pipeline of business is extremely strong for us at the moment.
As I have already said the utilities in United States are now also extremely interested for the first time, I mean two years ago we could not really enter into dialogue with any utilities big or small here in United States; that has substantially changed for the last 12 months, which is quite a very exciting for us as it opens a completely new market for us. We have as I stated earlier, been on some road shows. I want to bring in here the reason why we are really focusing on the road shows and the timing for these road shows.
Up till the last year we really were not in the position to go out and really go on an awareness campaign to let people CCTI was, what technology was all about, and the full capabilities of this technology. Now the engineering work has been finished and we are very, very confident that we can now bring this out to a larger market of investors both in the [relative] retail institutional and high network places.
We believe the company is in very good shape, the company is debt free and we are ready to move to the next level. To help us do this we have a company called ProActive. Now ProActive will replace Trilogy. We are at Trilogy’s office right now, and I want to take this opportunity to say what a great job Trilogy has done, they have been superb for us. But ProActive has a far impressive presence in the capital market which is where we have to [search] for the moment.
In the last week we had probably done 8 to 10 road shows. We already have a page on Twitter, Facebook and Linkedin and we are having a great presence in the social media side. So we are moving forward and as of the end of this month you will see a very, very friendly and efficient handover from Trilogy to ProActive, and I want to take this opportunity to thank Trilogy for all the work they have done, they have really helped us during the last year and brought us to the next level of which we thank them very much for.
At this point I am going to pass over to Igancio and at the end of the conversation I'll come back and answer any questions from shareholders.
Ignacio Ponce de Leon
Good morning. First of all let me thank all of you for your participation this morning and I also especially want to thank many shareholders who have written to us of late especially as part of what we are doing and sharing their thoughts and expressing confidence that will there's light at the end of the tunnel. This type of reinforcement is important to us and I do thank you sincerely for it.
My comments this morning will be brief. I will start up by saying that while Robin and I are definitely a bit battle-weary, we remain highly optimistic. We absolutely see the light at the end of the tunnel and while the rug has been so [deep] we are very confident in the partners we've made to-date.
So let me just put some incontrovertible facts in front of you because I believe that as we move forward I want to just in part be use the same level of confidence that we have and what we are doing. The incontrovertible facts are first of all you know the market opportunity; the forces that are driving the growth of the global coal markets are strong and likely to remain so.
I'm referring here to the expansion we are witnessing in the Asian power industry where India and China installed entered electric power capacity has in fact doubled within decades. Coal remains the cheapest and most abundant source of energy on a unit basis; coal by generation is growing rapidly in Asia.
Over the past 10 to 15 years we've been witnessing extraordinary economic expansion in the region. However, if you look at basic development metric, [savings] per capita consumption of electric power many countries still have a long way to go before they reach levels obtained in the more developed western economies. It’s very important that you all bear in mind especially our US shareholders who are exposed to a conversation about coal in this country that's quite a contrast to what is sold and seen outside of the United States.
The second incontrovertible fact is that global coal industry has clearly identified at least two technology priorities that could not be ignored. In fact, future priorities that should have been attended to before now, I'd say that now if there's some urgency to address them.
The technology priorities are firstly that if the world plans to consume ever growing amounts of coal, it quite simply has to be cleaned up. In this we are confident that pre-combustion solutions will prove effective and in the end far cheaper than the current emissions scrubbing, the post combustion solutions.
Second, as coal consumption grows, the presence of low rank coals in the total mix is rising. By low ranks, we mean coal that contains high moisture, high moisture coals are becoming increasingly abundant; we are talking here about coals that contain 35 to 40, even higher than 50% moisture content.
These are very common now in the overall mix and we are hoping to address large segments of the Indonesian reserve base that are in fact high moisture coal. So it is a high priority for us as a company, to deflect the moisture problem is our low-hanging fruit. This is where we are focusing our attention.
The use of such coal greatly diminishes boiler efficiency, it represents a loss from the standpoint of transportation economics and because it contains high moisture more coal to combustor to generation an equal amount of power. So clearly from an environmental standpoint this is a non-starter. CCTI has the solution to both problems and here another incontrovertible fact and that is that SAIC is one of the best engineering companies in the world and in their own words are unlikely to encounter an engineering challenge that they cannot overcome.
And so far there happens to be a concern. We are very confident that they have addressed all the big issues involved in successful technology we're extremely confident that we're going to get it right. As we look around the world at the numerous companies that have entered the coal space, we see a few if any companies that have had a highly qualified engineering support as [near] technology for (inaudible).
Everything we've been shown has been to reinforce our confidence, we believe that the technology has the potential to become best of breed and by best of breed there are three things that are clearly important to mention. One of them is that the scale of risk that has been experienced by competitors is not a big issue for us because we're going from the small [hungered] plant to a very small module of 1 to 15 scale up which is considered very reasonable, very manageable, I don't think anybody is scare of that scale up.
We have a process which has extremely strong plant economics. The plant economics will support the financial instrument that will help to fund the build out and we also have an end product which is probably second to none. Our end product has essentially overcome the challenge of reabsorption of moisture and of the breaking down of the coal in transportation producing clients that are actually subject to spontaneous combustion.
The other and contributable fact is that we're an early entrant. Right now the market penetration in this space is very low, lower than 1%. So we feel that even though we had a long period getting to where we are today, we're fortunate that we're still among the very early entrants here and we will be able to capture some important economics based on that.
We're in the final phase of our pilot plant construction. We are at this stage going to be I guess subjective to the scheduling and all of the different commitments that the (inaudible) will make and so far as delivery time is concerned, we already anticipate. We had hoped that we would have a Q2 delay. It’ll probably go into Q3.
But we can't really comment on that until SAIC gets back all of the commitments from vendors, all of the [RFCs] has been received, they are all now being - they have been sent back to the actual quarter that took place.
While it's a setback you might say that we may not make of the second quarter, at the same time the silver lining is that we are going to use this time to ensure that the engineering of the best we can get and we have more time to select the site for a permanent location for the pilot plant, once the pilot plant is commissioned at the site of the major utility that we have mentioned in the past, it will be transported to a permanent location where it will serve as a test utility for coals from all over the world and the United States.
So we are in that process now. This is one of the assignments that Al Knapp and [Dan] have taken on and have already made very significant progress in that area. We already have identified potential locations. We know what the needs are of each one and we are basically evaluating things as we speak.
In summary, I would say that the market dynamics just to summarize why we are so optimistic? The market dynamics are powerful and likely to be (inaudible). The technology part of the industry are clear and we have the solution, we have a world class engineering firm, who has essentially put together a process that I think will become clearly best of breed and we are in the position now to bringing commercial clients.
We already have of course as you all know has a signed TLA, Technology License Agreement with Jindal Power and Steel. They have recently acquired very significant capacity in South Africa and also in Botswana to add to their reserves driver in Indonesia. So we are hopeful that they will be able to be the first [TCC] contract with SAIC.
And on the corporate side, we have found the capital that we need to take us through our pre-revenue period. The big picture is that, if all over was in hand, we would be applying for right through the pre-revenue stage. In practice because these are the payments of times, there is very likely going to be some need for interim funding but nothing to derail.
Our balance sheet is clean as Robin mentioned, we have no debt, we have no complicated financial devices on our balance sheet. All of our investors are straight common equity holders. We have no outside ventures to divert revenues from the corporation to the third-party, our Indonesian equity partners are strong and able to position the company advantageous in Asian market and although we are not fully build out as far as our study goes, we have added very, very best people to address the immediate needs, the most important needs that we have now to get our pilot plant executed and commissioned.
At this point, we are in a position to transition out of OTC market onto a national exchange and we intent to do so. We are transitioning out of OTC, it’s something that will require our stock price to be significantly higher as you know the NYSE requires a $3 stock price and NASDAQ requires 4. We are doing our level best to get this stock price tag to move ahead of any reverse split but a reverse split will be a part of the solution unfortunately for some people to look at it that way. But we also have way too many shares if we wanted to anyhow. We need to get out of the OTC for lots of reasons.
As the pending stock especially one with limited liquidity, we most definitely hamstrung in our ability to secure full IB support, and by this I mean that because we are a stock that trades under $0.10 there are many clearing houses that won't handle it, as it just frustrates the effort to get any investment bank to really support us. However having said that, given our specific story and a promise that people can share with us, we are working with investment bankers to actually be given the opportunity to have research coverage ahead of what we would normally obtain in this kind of situation.
Secondly it is doubtful that the CCTC can obtain full value of what remain in the OTC. As you all know the OTC markets are ripe with people who are on the boards and there’s manipulation in the rest and we are addressing all these issues of present size, all options are on the table. We are most definitely concerned about it and are addressing it now. And finally I would say that we are moving toward a position in the global industry. In the future we are going to need the support in the public market beyond what's possible in the OTC.
For all of these reasons we really must transition as payable as it might be to something that we really don’t have an option it has to be done. And as Robin mentioned, we will do a reverse at the right time. We will not do it before it’s done. And again we will do it intelligently.
And with that I conclude and we can move on to Q&A.
Yeah thank you Igancio. Yeah let me just address a couple of quick issues that Igancio covered, primarily on the reverse. As Igancio said reverse is essential for many reasons and not least that we want the company to be probably valued. However we have a timeline right now which we are following, which basically is this, finalizing the contract with the major utility for the commission of the pilot plant and the commissioning of the pilot plant; I was asked a question about that. What we mean by commissioning is that pilot plant is installed, coal is run too, tested, and we have a technology that we can license throughout the world.
So that's the first of our data point to finalize that contract, which we expect to be done in the next week or 10 days something like that. Then the final timetable from SAIC which is dependent on the commitment coming back; and as Igancio said really right now we are focused on proper execution, getting this right, and if it takes a week or two longer so be it. Our objective is coming out at the end of this with a technology which is a global leader and that can justify all the interest, all around the world and the United States which is coming into our office daily.
The third part of the data point is the commissioning of the pilot plant. Obviously that is the major focus for everyone, not only the management, the shareholders and also some of the investors that have invested in the company and for the multiple companies that are interested in finding a solution to their coal operating needs. In that timeframe as we’ve also indicated, we are talking and in very in-depth discussions with a number of potential technology licensing agreement partners.
We will announce if any significant [NOI or MNR] are signed, but at the same time it is not in the corporate interest to take these discussions to contract level until we finalize the commission of pilot plant. We have Jindal in place. We have our Indonesian partners in place; all have the capability of technology licensing agreement covering millions of tons of coal. So it's not an urgent consideration for us to get these signed, but we want to bring each of these potential contracts to a level whereby directly it has been – directly with the commission we are able to execute on those. And of course the -- of the commissioning of pilot plant, that will generate the next payment from Ventrillion to us.
So that’s the base of the pipeline which we have and where we look to see the company over the next say four to six months. Then also that we hope the market will then be in a position to start valuing the company properly, and once we see the proper valuation in the market and we got the coverage, analytic coverage and research coverage I think that we will then be in a position to chose an intelligent time to take this company up to the next level as far as uplifting is concerned. But we are very cognizant of all the issues and concerns and we will only do this at the right time and in the best interest of our shareholders and the company.
So that’s the one to suggest that. Now we get to the question which we’ve received.
We've been asked about Ventrillion and why we have not declared who is behind it?
But pure and simply the joints from our investor, it is a major corporation in the coal business. They have restructuring going on, when that restructuring is finished; they will tell us which entity that these shares will go into. But it is a major coal corporation, very, very major corporation behind us.
And the timing of that we just don't know. I mean that is up to them, they are funding us, they are a huge supporter of us and we have to respect that part of the equation as far as they are concerned.
We have question about Mr. Perdamaian coming to New York.
He is a Board of Director. Yes and Mr. Perdamaian is in New York, has been with us for the last six to eight weeks. He will be going back to Chicago this weekend to reassess where is the best place and what's the best position for him to do once he’s had a chance that this here in US. He has been part of all the awareness program and road shows we’ve done over last four, five weeks. So he has a very good understanding of where the company is, and the potential of the company? So he will be going back.
You asked why we haven’t yet hired a CFO.
The simple answer to that is we are meeting immediate requirement of the company. The immediate requirement of the company is to bring in the coal, engineering experts and we chose to do that, bringing Al Knapp and [Dan] who are just doing a tremendous job for us and that is the primary objective. Let’s execute on the pilot plant, let’s get the pilot plant fully commissioned and we have time to bring on the CFO.
Our company is in good hands at the moment as you know by fully reporting with good auditors and so it’s not an immediate need. It is something we have on the radar and if we found the right person, we would probably take him on. But right now we have not found the right person and its far better to focus our resources on the execution of the pilot plant. And I am just looking down the question as they come in here; give me a little bit of time.
Has SAIC begun the process of sending material outside.
No they haven't, but I talked to the vendors, they are not all send back all the material yet and so we are in the hand of the vendors and so we can get everything back then that will be assembled. The actual assemble time is really not that long; it’s the fixed rate we access, it’s a very rapid progress once we are out of the hands of the vendors.
After the blackout of use and why some of [use] is not coming out in the market?
As I initially said when we first came on board here, we weren’t going to do what the last management did, manage this company by press releases. There is no blackout, but at the same time any news we put out has to be relevant and has to be fully, fully supportable. So we will be putting out; obviously once all the vendors are back that will be a significant milestone for us. So we will put best of the new guys in to the market. But really there is nothing to put in the market, because we don't want to update every week saying we’ve had another conversation with SAIC, but it’s not relevant. So you can be as pretty sure that every single major data point that we hit successfully or negatively, as I hope there won’t be any, we will put in to the market.
How much control does SAIC have over the process?
We are SAIC’s clients. They are the engineering response behind the process patents. They would take instructions from us. However, we have our team in place now and everything we do as a team with SAIC and eventually the utility will all be involved in each decision going forward and SAIC has no more control over the process than anything else, but as management we will manage it responsibly and as and when there are proper announcements to be made we will make them.
The road shows, we've been asked about that. Over the last week, 10 days we've had several but probably eight or nine organized by ProActive and before that we had about 10 or 15 organized by Maxim. So we've had probably 25 to 30 road shows that’s encompassing a fair sector of the financial capital markets going from small firms, small institutions, retail, high net worth individuals.
I believe and I hope that a lot of the people that we've been talking around this call. I believe that the story has been received extremely well where the company is, just recap that which obviously has done very nicely for us. In the last year, we raised nearly $20 million. We have two technologies, a dry and a cleaning technology.
We have one of the top if not the top engineering firm in the world behind us. We have excellent legal coverage, we have excellent IR coverage, we have good banking coverage, we have good accounts coverage. So we are not the normal pink sheet [fixing] company and that has been recognized and I think that is quite an excitement out there about this company and the potential of this company and where we stand as a (inaudible) curve of the clean coal technology.
We've been asked about the analyst and the research and I think Ignacio has explained that it is very difficult for banks of any kind to cover companies on the pink sheet especially one of the $0.10 that we believe our bank is working to sell this for us. Whether any analysts from this call, I can't answer that question, I think no.
Pipeline business, we've covered that. I think they --- why don't we put out our press releases on conferences, etcetera. It is really nothing to put out. I mean we announced that we went to the conference and that was it and anyone that wants the results of the conference or the scripts from the conference, they are all available there and they can be downloaded. So there's nothing, not a lot for us to say on that. I was going over the press release again.
What's the capacity to build out?
That's actually a very good question; because we will, because of the module design is about technology, our clients and this is something that really does ahead of on the development curve and the expansion to build out, our clients can literally buy 130 ton under our module and put it on site and start cleaning, drying that coal and getting revenue from that.
So we will be in a position to probably sign multiple contracts and SDIC have already committed to clearing vendors around the world so that they can produce the required parts for each of these modules. So we believe that in conjunction with SDIC that we will be able to supply and commission multiple plants very, very quickly. Let’s say the big difference here is we're not, we don’t have to go out there all over the world and go 1 million, 2 million [comprised] facilities. We can start with one module and then they can build out from those modules.
It is a tremendous sort of advantage for us to have. Just for anything else here. Well, there is one question about, Ignacio mentioned the financial vehicle. That can be put in place at any time but obviously it's not something we're in a focus now until we actually have a technology out there that we can put into the market and we can license but that is something that we guess, we can do, we discussed it, we discussed it with various banks and financial institutions, all have a very, very big interest in helping us all supporting that part of the build out.
Obviously by having that financial module in place, it will help us expand further and farther because it means that we can finance lesser, smaller coal mines or power plants or whatever it might be providing there is a good stake for the end product.
So just to reiterate, we feel we're in an extremely strong position now globally. A year ago, I don't think we were getting much interest from abroad and certainly not from the United States. We have multiple calls from people and emails from major corporations saying they started clean coal technology around the world and this one seems to be the only one with credibility out there and so far enough down the development curve for them to start (inaudible) and trade in it.
So we are excited. SAIC is extremely confident and I think that we will be able to give you, give the shareholders tremendous confidence that we are going to perform, we are going to have a technology in the market this year which is the world global winner and that coming into the shareholders meeting, we are hoping to have a big support from the shareholders just to bring this thing home.
We are very, very nearly there. We thank everyone for their support. We are hoping to get a lot of support from our road shows and from the banking and retail community soon and any problems that Ignacio has mentioned, we have being a pink sheet company, we are daily addressing, we are concerned as everyone else is. We do not like seeing manipulation of our stock, causes any, there is any limited things they can do about it and everything that we can do about it, we are trying to do to about it. I suppose this company is probably valued and people can buy and sell the stock as they should be able to. And I think that’s about it and I thank everyone very much for your support.
We are very grateful to our shareholders and that the management is dedicated now that to the final execution. It's been a long road, been a hard road, but we definitely see the light now at the end of the tunnel. And I think 2013 we can all be very, very confident that patience will be rewarded. Thank you very much.
Ladies and gentlemen this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation. And have a wonderful day.
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