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Debra Fiakas, CFA's  Instablog

Debra Fiakas, CFA
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Ms. Fiakas is a seasoned, credentialed investment professional with a diversified and successful track record as a research analyst and as an investment banker. Her career includes experience in all aspects of the equity capital markets with particular emphasis on emerging growth companies... More
My company:
Crystal Equity Research
My blog:
Small Cap Strategist
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  • Fuel Innovations

    There are few alternatives to resolve the conflict between providing jobs and prosperity for China’s 1.3 billion citizens and protecting the environment in which they live.  Since coal is China most abundant energy source policy makers and China’s enterprise alike are hard at work developing ways to reduce pollution from burning coal.  AuraSource, Inc. (ARAO:  OTC/BB) believes it is developing a technology that could tilt the scales in favor of environmentally friendly growth.

     

    AuroSource recently applied for China Patent Protections for its AuraFuel process that uses shock waves to pulverize coal aggregate into fine particle sizes.  The coal material can be mixed with water and chemicals to make coal water slurry, an alternative fuel for industrial and commercial boilers.   Burning pulverized coal suspended in water produces fewer particulates and toxic gases than burning coal aggregate.  It is easily transported in tanks or pipelines.  Coal water slurry has been included on the lists of acceptable alternative green fuels in several China municipalities that are prohibiting burning coal aggregate in the future.

     

    The technology was originally developed by China-based Beijing Penchuang Technology Development Co., Ltd.  The use of shock waves produces finer particle sizes compared to ball mill processes, improving fluidity.  AuraSource has also found that the fine coal material helps accelerate chemical reaction processes.

     

    AuraSource plans to license its AuraCoal technology, but has yet to record any license revenue.  The shock wave technology could be applied in other material grinding processes such as those used in making solid lubricants.

     

    As a developmental stage company AuraSource is still burning cash to support operations  -  $1.0 million in the year 2010.  The company has just over $900,000 in cash on its balance sheet, suggesting that without a change in fortunes, AuraSource could run out of fuel itself by the end of 2011.  The company is not entirely dependent upon its AuraCoal to earn its living.  AuraSource is also working on technologies to extract fuel or dry gas from shale. 

     

    AuraSource has plans for a plant near Qinzhou in the southern province of Guangxi.  Using low-cost oil shale from Indonesia, the company plans to use its AuraFuel technology to produe lightweight fuel oil and dry gas.  The carbon-rich waste can then be used as feedstock to produce coal-water slurry.  The project could cost as much as $80 million and management has been actively talking to investors in China and the U.S.

     

     

    Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.  ARAO is included in the Crystal Equity Research Beach Boys Index in the Alternative Oil and Gas Group.

     

     



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    May 12 4:33 PM | Link | Comment!
  • China's Dark Skies

    Last month flying into Xian, China for a due diligence trip, I was impressed first by the immensity of the agricultural and industrial enterprise spread out for miles below us.  My attention was immediately diverted to the thick haze enveloping the city.

     

    As the world’s foremost emitter of greenhouse gases in the world, China has a serious air pollution problem.  In Xian coal-burning power plants, aluminum and other industrial producers spew out noxious gases and particulates.  The sky is a matrix of building cranes below which construction sites churn up clouds of dust as new buildings take shape.  The many roads in the area are filled with cars and motorbikes as Xian’s 8.0 million residents hustle between home, school and job.

     

    What few trees and shrubs there are along the streets in Xian proper are wilted and shriveled, suggesting a losing battle against acid rain.  Indeed, a recent report from China’s Ministry of Environmental Protection indicates that 200 of the 440 cities in the country with year-round monitoring have serious acid rain issues.

     

    A couple of days around Xian visiting companies and attending lunch meetings provides insight into the dilemma China’s decision makers are facing.  Drive forward with economic development plans to provide employment for China’s ample population or hold back for a measured, environmentally sound strategy. 

     

    So far the Central Government has chosen a “no holds barred,” full throttle approach.  Until recently The People appeared to be content with the gloomy atmosphere because they are enjoying unprecedented prosperity.  New homes, new appliances, new cell phones, and new cars are offering a lifestyle most had known only from Western magazines.

     

    A recent article in the New York Times provides just a sampling of the high price being paid for those personal gains.  Sick children, ruined food crops, fouled water sources are finally giving China a wake up call.

     

    We expect to see more action by government authorities in China to curb the rampant air pollution.  It follows that companies with pollution abatement solutions would be fertile for investment.  The still unfinished story of RINO International (RINO:  PK) makes it clear that investors will need to be discriminating.  RINO’s wastewater treatment solutions are compelling as a business model but management appears to have been less than honest in their dealings with customers and shareholders.

     

     

    Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.  Crystal Equity Research has a hold rating on RINO.

     

     



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    May 12 4:20 PM | Link | Comment!
  • Teslar Teaser

    At my daughter’s urging I accompanied her to the New York City showroom of Tesla Motors (TSLA:  Nasdaq).  A budding environmentalist she is intrigued by the idea of an all-electric car.  Tesla has made much of the performance of its sporty all-electric cars.  I will admit that the cars have some appeal even if slightly squat in appearance.  My daughter was impressed by the sleek aero-dynamic contours of the Roadster and had her picture snapped by a very red “teaser” near the showroom window. 

     

    Tesla boasts the Roadster can achieve 60 miles per hour in 3.7 seconds and reach speeds as high as 125 miles per hour.  The Roadster is powered by a custom lithium-ion battery that take three and a half hours to charge from empty to full using the Tesla High Power Wall Connector at 240 Volts and 70 Amps.  The smaller Roadster is expected to have a range of 245 miles on one charge.

     

    The Model S comes standard with the 160-mile range lithium-ion battery system that charges overnight with a 220 outlet.  A 110 outlet would take longer.   Tesla expects the battery to last up to 100,000 miles before needing replacement, although with no history of actual use by consumers, this is as much wishful thinking as anything.  Tesla is planning 230-mile and 300-mile range batteries as optional upgrades.  Even the smaller battery pack is daunting in size, so only long distance travelers may opt for the bulky upgrade.

     

    Tesla is busy promoting its cars and expects to begin delivering on orders in 2012.  Holders of TSLA shares are waiting with bated breath for the surge in revenue and hoping they are not being teased by Tesla's shiny cars.  The Company recorded $116.7 million in total sales in the twelve months ending December 2010.  Unfortunately, the net loss was $154.3 million.  Tesla has $100 million in cash on its balance sheet to support operations until production gets into full swing.  Considering the Company used $127.8 million in cash during 2010 that cannot be too soon.

     

     

    Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. TSLA is included in Crystal Equity Research’s The Mothers of Invention Index in the Electric Vehicles Group.

     



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Tags: TSLA
    Mar 22 4:39 PM | Link | Comment!
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