Cielo cements its 1st significant sale of renewable diesel with CAD$1.5M purchase commitment
Cielo Waste Solutions announced its first significant sale with a purchase commitment for 900,000 liters (238,000 gallons) of renewable diesel at CAD$1.67/liter (USD$5.03/gallon) for an aggregate purchase price of CAD$1.5 million (USD$1.19 million). The purchaser will also have an option to buy another 600,000 liters (159,000 gallons) of renewable diesel at the same price for a period of six months.
The fuel will be produced at the company’s waste-to-fuel facility in Aldersyde, Alberta, Canada, and is expected to be produced over the next three to five months. The fuel will be held on-site in storage tanks until Cielo reduces the sulfur content down to less than 15 parts per million (ppm) by treating it with a proprietary process being fabricated now. Once the desulfurization process is completed, the treated renewable fuels will be shipped as directed by the purchaser. Management believes the premium price per liter being paid by the purchaser confirms their confidence in Cielo to deliver desulfurized renewable diesel, which commands a higher price.
Upon payment of the aggregate purchase price, anticipated on or around Feb. 26, Cielo will issue 3.75 million share purchase warrants to the third party that brokered the deal. The warrants will be exercisable at 13.5 cents for 24 months, subject to acceleration at the option of the company, whereby the term of the warrants may be reduced to 30 days following notice to the purchaser. The company will be entitled to accelerate the term of the warrants in the event that the closing price of the company’s common shares is 25 cents per share or higher for a period of at least 10 consecutive trading days. The broker will also receive a 5 percent cash commission.
“After several years of advancing our waste to high-grade renewable fuel technology, we are finally in a position to start reaping the rewards of our efforts,” said Don Allan, president and CEO of Cielo. “These revenues are expected to put Cielo into immediate positive cash flow and may also open up additional nondilutive financing opportunities for Cielo should they be required. We are very excited to share with the world our lucrative way to convert multiple waste streams, including all plastics, into high-grade renewable fuels, that we believe can command a premium price to both conventional diesel and biodiesel. Our anticipated cost of approximately 90 cents per liter would allow for healthy margins and we are confident that we can reduce costs even further as a result of our commitment to increasing production levels as we progress. This is truly a milestone in the long journey for Cielo and its shareholders and we are pleased to prove to the world that we are here to stay and make a serious effort to help with the world garbage crises.”