Bergen Carbon Solutions AS (BCS) Earnings Call Transcript & Summary

Good morning, and welcome to third quarter 2025 of the Bergen Carbon Solutions presentation. My focus here today is to give you a status update of what we have achieved so far in 2025 with emphasis on a few main directions, which I will present to you here today. So my name is Odd Stromsnes and I'm the CEO of Bergen Carbon Solutions. First and foremost, we have done significant technical progress during the last quarter. We are now able to produce what we say it's a consistent and well-defined carbon powder, basically, meaning we now have an operational recipe of the process to produce CNT at a certain quality on a predictable basis. As we have previously been communicating, we have during the last 2 years, focused much more on the process itself than on the product. We need to establish and we need to control a stable process platform as a baseline. And this process platform enables a predictable production of larger volumes. And this is absolutely a prerequisite for all further communications, including external testing at institutes or with industrial partners. On the financial side, our strong cost control remains with a 50% reduction in burn rate compared to the same time last year. The headcount is pretty steady now on 21 full-time employees and our CapEx requirements going forward is very limited. We are all very well equipped, in particular with specialized characterization equipment. And of course, the recently announced grant from Innovation Norway will obviously further strengthen and derisk our operations and subsequently enable a faster development speed of our product portfolio. I'm also very pleased with the current lean and very competent organization we now have built up, which was further strengthened during last quarter with additional competence in our battery lab, and that is competence which is experienced and well educated. And in addition, reinforced with the establishment of an advisory board of senior members to support our strategy going forward. As one of very few through CCU companies, BCS continues to offer an attractive value proposition based on local development of sustainable carbon. This carbon is a key component into all batteries, which today is produced with massive greenhouse gas footprint and is produced primarily in China. Our core CO2 consuming technology leverages electrolyzers to convert capture CO2 emissions into conductive carbon powders for advanced battery applications. As a technology development company, our current business focus presented here today is obviously very technical, adapting the process window in order to be able to produce a consistent and well-defined carbon powder. Documenting precise repeatability, which we know are doing of the process window is paramount for further product development. And this is a sketch of the core of our pure-play CCU equity story. In my mind, it's a value proposition second to none in terms of a local circular and sustainable value chain. Local BCS carbon production from a nearby large CO2 point emitter by using direct or indirect flue gas as feeding stock for our CO2 consuming technology. Subsequently, the harvested BCS carbon powder are blended into batteries as conductive agents, making the batteries better and greener. And the geopolitical aspects of what we do is increasingly important. New regulations are implemented on traceability and on sourcing of strategic battery materials. Stricter control over critical raw materials are being implemented. Export bans, new trade tariffs and increased geopolitical uncertainty are all factors pointing towards increased competitiveness for local suppliers of critical material. EU is indeed pushing hard for a stronger autonomy in battery production with large financial stimulation packages. And this is in particular applicable for the growing European defense industry. Our CCU equity story is, in many ways, a perfect response to this. And then over to our financial highlights. And before I do that, I will say that we have already proven our ability to produce valuable carbon directly from a large CO2 point emitter during our Enova founded project a couple of years back. And this is indeed a true full-scale CCU project and shows that there are alternatives to a more typical CCS project where the need for costly infrastructure and long-distance transportation of CO2 is eliminated. And now over to the finances. And our financial numbers confirms that we continue to have a robust plan, a 52% reduced year-to-date cash burn compared with last year. And this gives a net cash burn last quarter of NOK 7 million, and we will maintain a cash burn in that order going forward. As I said, very limited CapEx is needed, and we have a solid cash position of NOK 140 million. And all in all, this gives us the runway we need to execute on our strategy. And of course, this is now further strengthened with the NOK 30 million grant from Innovation Norway. Then over to the status and technology development. We have, over the last years, built deep insight into the fundamentals of our technology in order to really grasp and understand the key drivers. And this work has now resulted in what we define as a process platform, a stable predictable foundation for our further development. It marks a clear breakthrough for Bergen Carbon Solutions and a turning point towards further industrialization and further development of our technology in order to achieve a controlled progress. Documentation of a stable process is absolutely key in order to enter into technology agreements with larger industrial companies. The technology we develop is called Molten Salt Carbon Capture Electrolysis Technology, MSCC-ET. This is a new and largely unexplored field with limited literature or existing references. And in this process, there are a number of parameters to understand and control, each with different influence on the quality and the characterization of the carbon powder. The potential of this technology is indeed very interesting, and we are confident that BCS is among the first in the world to understand and control these reactions. The fact that this is a complex technology with a high entry barrier makes it fair to assume it puts us in a favorable competitive solution as we consider ourselves as a world leader in this field. And this is as far as I can see, a good and a condensed illustration of our technological journey. The link between a number of process conditions such as temperature, time, current density, among many others, and the quality of the carbon powder itself. It's pretty essential. And for the quality, we basically mean the amount and the size of CNC described for all practical purposes by purity, diameter and surface. We have gone from a more random distribution of powder quality to a more consistent and well-defined powder quality. This is what we have said we will do and now we are doing it. This work is resting on deep process understanding through a systematic parameter control and it is a good documentation of the transition the company has taken during the last period. With a stable and predictable process shown on the previous slide, we are now entering a phase where we are planning to produce larger volumes of CNT for internal and external testing. Collaboration with external battery laboratories enables validation under real operating conditions. Our process platform provides the foundation to refine, scale and increase robustness, setting clear boundaries for consistency and quality. I would say this marks the start of our industrial development phase where we turn competence into performance and readiness for future applications. And then over to some very good and very recent news. We announced NOK 30.3 million grant from Innovation Norway will indeed strengthen our growth potential and reduce the risks in developing sustainable carbon materials for better batteries. The grant approved by the Board of Innovation Norway on the 4th of November is a strong recognition of our innovative and bold approach to converting CO2 into advanced carbon materials using electrolyzers as the basis. And we are indeed very grateful for the support, which will go over the 3 years. And the Innovation Norway project enabled us to expand faster towards our extended carbon powder portfolio, both for products but also for applications. With the support, we will increase our development speed towards additional opportunities. We will further develop our CMT and expand into other conductive carbon flakes or graphene-like powders. These material groups are critical in terms of giving batteries higher energy density, longer lifetime and improved fast charging performance. The technology has potential to play an important role in the development of next-generation lithium sulfur batteries. Testing will be carried out in collaboration with battery manufacturers and research laboratories across both the LFP chemistry as well as the sulfur chemistry. I think it's time for me to be more articulated towards where we believe we are positioned in the marketplace. The global battery demand is increasing dramatically, as we all know, and new battery technologies will be a prerequisite for this energy transition. This means there will be a lot of different battery chemistries for different applications, and these markets will all be massive. Competing head on with conventional Chinese CNT on price, it's probably not a good strategy. So we remain confident that our novel technology will define its relevance in particular niche markets where performance, sustainability and supply chain resilience are weighted more than conventional specifications. In our drive to appreciate and learn more about the very complex global battery value chain, we have established an advisory board with extensive industrial experience, in particular from the battery raw material side. Both Tom and Pierre have valuable insight into the dynamics of the commercial firms as well as a broad network. Their support are already bearing fruits to our ongoing strategy work. So for me, in order to summarize, a very good quarter. We have reached a technological breakthrough with a stable and repeatable process that marks a new level of control and understanding. Our cost levels remains low and predictable, supported by strong financial discipline and new funding from Innovation Norway to strengthen our robustness. The organization is stronger and more focused with new competence on board and the new advisory Board guiding our next phase of our development. Global trade tensions and new EU industrial initiatives continue to underline the importance of local sustainable carbon production, exactly where we have our offers a solution. And finally, looking ahead, we are building on a solid process platform, expanding into new products and chemistries and preparing for the next step of commercialization. This concludes my presentation of today, and now we are opening up for Q&A.

Today's Q&A session is moderated by Fredrik Oksnes. And with us here live, we have Petter Slyngstadli from Norne Securities. The first prerecorded question today will be regarding partners. You're not providing any updates today. Is it any news?

I mean we have a certain partner strategy, which we have already been informing and communicating the market with. I mean, in addition, which we have said for a long time that we are talking to many very interesting environments, companies. And of course, these are confidential processes. We are working under NDAs with most of these, and we cannot disclose it where we can disclose it. But I would say that we have -- in addition to the one we have had for some time, we are talking to also new and very interesting environments on a global basis.

Thank you. The second question is with regards to the Innovation Norway grant. Will the announced Innovation Norway grant extend BCS runway? Or will the overall project accelerate costs?

Yes. I hope I covered that in the presentation. I mean it basically makes what we do more robust. It derisks our operations. It enables us to do more on a wider platform, both on the process side, but on the product side. So all in all, it increases our product portfolio and increase our speed, I would say, is the largest sense of that grant we have got.

If 1 or 2 anchor partnerships are secured within the next 6 to 12 months, how would that affect 2026, 2027 capacity plans, CapEx, cash runway, et cetera?

Okay. I mean, again, we are talking to many different companies with a different portfolio and different strategy. So I would say that, that will vary very much on a case-to-case basis. So to have a general view of that, it's not possible and it's not something we want to do.

Okay. Yes, a new Innovation Norway question. How will support from Innovation Norway help accelerate commercialization and value creation?

I mean we will work on several battery chemistries. We will work on several products that what we call applications and products. So again, same answer as I had previously, increased speed, increased robustness, derisk our operations, shortening the period to commercialization in many ways.

And then a question about EU. How do you view the Euro 7 regulations as a potential growth driver for materials and electrification in the transport sector? Do you see opportunities for support or collaboration through EU programs such as Horizon Europe or the Innovation Fund?

I mean we have several initiatives ongoing. I mean, the fact that we are a CCU provider of local and sustainable carbon for batteries, it's spot on the geopolitical interest. So we are -- we get a lot of attention from EU. We are one of few CCU providers. We have an increasing important defense industry. So I would say that we are very well positioned in this geopolitical landscape to continue our work and provide the funds we need.

Okay. The last question here, are there any applications in the defense industry where BCS could be relevant?