The market for sustainable technologies and solutions is flourishing on the back of strong demand from consumers, corporates and governments worldwide. It is expected that the global market for green chemistry will grow to almost $100 billion by the year 2020. One company that is very well positioned to take advantage of this growing market opportunity is Leaf Resources Limited (ASX: LER), one of the world’s leading companies in converting non-food plant biomass into useful, sustainable, renewable products.
With both its Glycell™ and LeafCOAT technologies, Leaf Resources has established itself as a global green chemistry leader, building a global business centred on sustainable and renewable carbon.
A quick look at Glycell™ technology: Glycell™ process converts plant biomass into industrial sugars, lignin and refined glycerol and also reduces the cost of the main feedstock for bio-based production.
(Source: Company Reports)
Key Benefits of The Glycell™ Process:
- Cost effective, high-purity cellulosic sugars
- Uses industrially available equipment
- Continuous process design
- Versatile scale of operation
- Low capital and operating costs
- Highly accessible cellulose
- Enables new world of biological transformation (where microbial cells replace current industrial manufacturing approaches)
With its LeafCOATTM product, the company delivers an unmet demand for sustainable coatings which are biodegradable, renewable and can be recycled in traditional waste collection systems.
Leaf is pursuing a disciplined business plan and continues to meet key milestones as it progresses towards commercialisation of the Glycell™ technology and LeafCOAT™, both of which address significant and growing global markets. The company has been collaborating with leading global partners and Government agencies to build a company centred around the pillars of sustainability – social impact, environmental responsibility and economic return.
Update on Malaysian Biorefinery Project: Leaf Resources is also progressing well on the path of establishing the first Malaysian biorefinery project using Leaf’s proprietary GlycellTM technology. The proposed biorefinery will be located at Segamat and will convert plant waste into valuable industrial sugars and other chemicals. The company has received great support from the Malaysian Government. Moreover, Malaysian Investment Development Authority (MIDA) offered various potential incentives to companies, which meet the Government’s objectives in terms of sustainability, technology development and employment generation.
The CEO of Malaysia’s National Innovation Agency, Agensi Inovasi Malaysia (AIM) believes that this project is a game changer for Malaysia as it would help unlock the potential of biomass resources and realise high value downstream industries.
The company is working in tandem with MIDA and AIM to identify and secure additional assistance, including the establishment of a taskforce to assist with the implementation of the project and coordination of other Government agencies.
The project is progressing through its final engineering feasibility study, which will provide critical input to the bankable feasibility study. The study will support final due diligence and project financing for the proposed biorefinery. It is expected that the FEL3 study (Front-End Loading) will be completed in the third quarter of 2019. During the 2019 March quarter, a significant work associated with the final integrated demonstration study was conducted in Holland. Furthermore, the data generated from the study will be used to support FEL3 program.
Recent Updates: Recently in May 2019, the company completed a prefeasibility study on a second-generation commercial biorefinery in Queensland, which is an attractive investment location for companies looking to produce sustainable chemicals, fuels and plastics. Queensland has abundant feedstocks, such as agricultural and forestry by-products due to which the company is eager to investigate in the next phase of a proposed biorefinery project in the state.
As part of the prefeasibility study, the company evaluated two regions for its biorefinery, which includes one brownfield site and one greenfield site in the North Queensland region. After conducting the prefeasibility study, it was observed that both these sites present similar risks and opportunities for the company. Besides, the study also found that there is an economically attractive proposition for the development of a biorefinery based on Glycell™ technology using biomass from the sugarcane industry.
In March 2019, IP Australia (the Australian Patent Office) has granted Leaf patents, which will protect the core intellectual property associated with Leaf’s GlycellTM technology, covering methods for producing the hydrolysing lignocellulosic material, which is a central part of the technology in the production of cellulosic products.
The company currently is pursuing the grant of corresponding patent applications in other key territories, including Malaysia, USA and Europe.
During the March quarter, the company’s two Directors provided working capital funding via promissory notes. At the end of the March quarter, the company had cash of $173k, with the expectation to secure additional funds in the near term and has already taken measures to minimise outgoings in the interim period. The company has access to an additional $400k of funding through R&D financing.
The company is in a dialogue with potential Malaysian investors that may result in an investment and ownership structure, which provides a more beneficial position for Leaf Malaysia and its shareholders.
During the March quarter, the company spent $415k on research and development, $311k on administration and corporate costs and $333k on staff costs. The net cash used in the operating activities was $1,059k in the March quarter.
At the time of the release of March quarter cash flow report, the company forecasted cash outflow of around $109k on research and development activities, $136k on staff costs and $89k on administration and corporate costs.
At market close on 12th July 2019, LER’s stock was trading at a price of $0.033, with a market capitalisation of circa $10.68 million.
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