Cielo Waste Solutions Corp. (CMC.V) Earnings Call Transcript & Summary

This meeting is being recorded.

Hi, everyone, and welcome to Cielo Waste Solutions Live Corporate webinar. This is Will Maze with RB Milestone. Cielo Waste Solutions is a waste to fuel environmental technology company whose goal is to transform waste materials into fuel without harmful emissions. Cielo's shares are listed on TSXV under the symbol CMC and on the OTCQB as CWSFF and in Germany under WKN as the symbol C36. Joining us today is the company's CEO, Ryan Jackson; and CFO Jasdeep Dhaliwal, who will be discussing current operations, recent achievements and upcoming milestones. [Operator Instructions] Please note, this presentation is being recorded today, August 16, 2022 and will soon be made available on the company's website at clos.com (sic) [ cielows.com ], cielows.com. Today's call may contain forward-looking statements that are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements and are not guarantees of future performance of the company. No assurance can be given that any of the events anticipated by forward-looking statements will occur, or if they do occur, what benefits the company will obtain from them. Also some risks and uncertainties may be out of control of the company. Cielo has a full disclaimer contained in their presentation on Page 2. Lastly, RBMG is not a registered investment adviser or broker-dealer. For more information, please visit rbmilestone.com. And now it's my pleasure to introduce Mr. Ryan Jackson and Ms. Jasdeep Dhaliwal. Ryan and Jas, the stage is yours.

Thanks, Will, and thanks, everybody, for joining us today. It's been indeed a pleasure over the last number of, I guess, we -- so Jas and I have gone into the roles that we're currently in, and of course, still retain our directorship as far as the Board of Directors is concerned. But wanted to just start with a quick overall discussion about the PR yesterday. And I just wanted to let everyone know that we view this as significantly positive. We significantly reduced the corporate burn rate at the Fort Saska by holding the Fort Saskatchewan property by having a lease to a third party. And of course, by relocating our R&D facility at Aldersyde rather than Fort Saskatchewan, it will dramatically reduce the overall build costs and accelerate time lines to commission the facility. And of course, the Aldersyde facility that I just mentioned also -- we have 80,000 liters distillate in the tanks to further proof of concept [ with around ] the Aldersyde facility and its viability. So we do -- are very grateful to team to have been able to operate the facility, and we're going to move forward to -- on the path of commercialization. So we'll discuss a little bit more about that and other things as we move forward. But I just wanted to start things off there. And we're very, very pleased with the progress that we've made over the past number of weeks, months and even over the past year. So I just wanted to do that before I throw up the corporate presentation slide and I will -- while I'm doing that, I'll hand it over to Jas.

Thank you. And to build on what Ryan was saying, we've attained significant learnings and when we think learnings, we think something that can be defined. But a lot of good learnings have occurred at an input, reaction or reactor level and also the output level, which we'll be sharing with you today throughout the Q&A as it comes up and also through this presentation. So thank you again for being here. And Ryan, the floor is yours.

Yes. Thanks, Jas. So moving through, Will, of course, read not this entire deck, but it's in there. And this deck can be found actually on the corporate website as it relates to what our presentation is today. So this deck is going to be there for you to download as well. So we certainly don't have to do screen shots, don't worry about that. You can just watch and enjoy as we move forward. So forward-looking statements and cautionary statements notwithstanding, we'll move into what our purpose is. Jas?

Perfect. Let's start with -- I want to read it out because very important internally to Cielo management, our employees and the Board that we are here as our purpose to be fueling the sustainable energy transition. We hope we are a possible tool in the global toolkit to mitigate climate change. For myself, I come from Punjab, I was born to a family of farmers. And you're taught that with the environment, we have a symbiotic relationship, and it's very forward to my husband and I and our family that we are able to recalibrate that relationship. And within Cielo itself to our employees, this is also very important. Our EVP, Ryan Carruthers, leading our engineering team [ Jason Gilbertson ], supported by [ Curt Petterson ], [ Norman Wilkinson ]. And last but not least, Terry and Anna here, all of us believe that we can possibly have a global impact as we are supported by the Board in our belief. Ryan?

Certainly, it does seem that way, [ I'm being ] a Saskatchewan farm boy myself, I know that we did put a few things in the dirt. So thanks, Jas. We're going to move into now discussing, I guess, a little bit historically around Cielo Waste Solutions. So the brainchild of the acquisition of the Biodiesel facility, or the former Biodiesel facility that was located at Aldersyde was done a few years back by previous management and by our founder. And since that period of time, there has been a number of different iterative processes that have gone through as they move forward with respect to proof of concept that I mentioned earlier. One of the things that we have been approved to do was to take wood biomass from Alberta Environment and Parks -- rather, that we were approved to do, not that the wood biomass is from there. And we needed to achieve or demonstrate that we can turn it into a distillate and then into a diesel, naphtha or kerosene. We were able to do that through proof-of-concept, and we also wanted to make sure that as we move forward, we were going to build a full-scale commercial facility that wasn't just based on the former Biofuels facility at Aldersyde. It's going to look like the R&D facility is. So as much as we all want to enjoy the Aldersyde experience, we did. We certainly learned a lot, but we also learned that it's not going to look anything like it. So moving forward, the R&D facility is going to give us specific data to allow us to build the full-scale facility. And that facility is already partially designed, but we need some additional information and data to be able to support that. Of course, when we discuss those sort of things and the difference between us and other companies, the difference primarily is around our waste feedstock. The feedstock doesn't cost us money. The feedstock will either be through tipping fees or some other form of input that will be cost control to Cielo. And that's important to realize, because a lot of biofuel companies out there have to pay for their feedstock. That's really what sets Cielo apart. Of course, others are doing the same thing with other processes. We'd like to think our process is better, and we'd like to be able to prove that through our R&D facility, which is exactly what we plan to do. So I'm not going to read the slide to you, but suffice to say that we're extremely excited about being able to leverage what is at Aldersyde to move quicker to commercialization. Jas?

Thank you, Ryan. As Ryan mentioned, the goal going forward with R&D facility is the economical data to ensure we can find feedstock that doesn't cost us money, but is also beneficial to the economic process within what we're doing at the R&D facility, but going forward for the full-scale facility. So speaking of proof of concept, as noted in our September 27 PR, we have proven our concept better. And what we mean by proof of concept is the ability to take biomass and convert it into distillate. We were able to do that over the course of the last year and press release that. Where we are today is we take our proprietary IP technology, which we now own, which was essential in fall -- that we completed in fall 2021 -- is now build up margins. Revenue alone doesn't help in economic data when looking at our income statement. So where we're headed in our journey is to take the tangible learnings, quantify them, apply them in the R&D facility and thereafter build out a full scale facility that allows us to apply the process at a larger scale. Ryan?

So further to Jas's comment and here I go, saying thermal catalytic polymerization technology. We have patents and continue to revise these patents and apply for additional ones in both Canada and U.S. Plans to take it beyond those borders certainly are in the works. And we want to be able to make sure that we have a patent that not only is able to demonstrate the process but also that we have something that we can defend. As it relates to patents, you have to defend them. What are the 3 things? There are 3 of the things that we want to highlight is that, of course, we don't have harmful emissions or GHGs. We also maintain a low carbon footprint, and waste to fuels, which is different than renewable fuels, is what we also want to make sure that we are clear about, even though renewable fuel certainly has an opportunity as well of -- around a green premium. We want to make sure that we have an understanding with the marketplace that we can take waste and turn it into fuel, period. So the process below that you see takes the waste feedstock and our carrier fluid, known as used motor oil or [ u m oil ] and we break it down, distill it into a cleaner fuel. These fuels will be demonstrated out through the R&D process as well as to the -- whether it's a highway grade diesel or whether it's a jet fuel that can be used commercially, all of those things we know to be true today and what's a matter of commercializing the technology so that we can produce them and cash flow the business. Jas?

Thank you, Ryan. And to build a little bit on what Ryan was saying, if you think input, reaction, output, our input is our feedstock. Our reactor is where the catalyst comes in to allow the conversion to happen and our output, which we'll get into a little bit more detail later, is the distillate and the waste product. The distillate through a distillation process is further creates the naphtha, kerosene and diesel. Subsequently, that's where the desulfurization unit comes in, is to refine the diesel further to less than 15 parts per million to become certified road diesel in North America. So I just wanted to highlight that sometimes there's a question on what is the process. The process that Cielo focuses on is input, reaction, output, where subsequent parts where the distillation process comes in is something that's already been established out of the industry, and then desulfurization, which we can touch on later. So I just wanted to highlight the process piece. What's -- 2021 was a pivotal year. We moved more from an entrepreneurial ad hoc problem-solving approach to more processes, enhancing our health and safety, purchasing our IP company and really developing the business and the company around Cielo. And all of that has built the foundations for where Cielo's headed with the R&D facility this coming year. And various pieces have come into play from a strategic standpoint, from the Board's vision, to having key individuals be part of the organization to ensure the foundations are laid out, to make the right decisions that ensure investor dollars are applied practically with between the R&D facility and what is now -- was the Aldersyde demonstration facility. Ryan, do you want to speak to where we're headed?

So thanks, Jas. So understanding and certainly, we had already gone down the path of design and construction of the R&D facility prior to Jas and I arriving on the scene. And we want to take a moment to really understand that, that is -- it is R&D, research and development. I always look at it as a capital D as a development because we're developing commercial scale facilities off of this facility, which mimics the larger scale. So -- moving forward, with respect to Aldersyde and the transition of that to the R&D facility, it really is important for us to maintain perspective on what Aldersyde gave us, but what it's going to give us into the future. So Phase 1, as we like to affectionately call it, [ glessos ] is going to move from a, what we'll call a batch process type facility that did achieve steady state into something that is going to allow us to accelerate our plans certainly into commercialization. Something that we really struggled with, as far as being able to demonstrate the ability to be in 2 places at once, wasn't feasible for us. Fort Saskatchewan did make sense on paper, but so did the Edmonton Oilers last year. So I guess the whole thing is that we want to make sure we understand that all of our human capital, all of our infrastructure is in Aldersyde. For us to replicate that in another location while still trying to operate or still trying to move Aldersyde forward didn't make either economic sense -- or business sense, quite frankly, which is the same thing in certain cases -- but also logistical sense. So what we've done, we've taken a portion of the R&D or the facility in Fort Saskatchewan and made it cost neutral. That allows us to really focus on the commercialization going forward, which you'll see is planned for early 2023 as far as the R&D facility is concerned, but also moving into the commercial facility design build drawings into later in the year. Jas, anything to add?

Yes. What I'd like to add is when we talk about learnings, so let's just focus on the waste management system itself. What we've learned is that we've improved the output by 50%. And what that means is the used motor oil that is the carrier fluid for the reaction that's happening, input, reaction, output approach, is being reused in the process. How that impacts the economics is there's no new input that is required or minimal for the UMO and also the disposal cost for the UMO or the waste system. So those learnings are tangible and will impact the full scale facility and impact our learnings at the R&D facility. What the R&D facility allows, is at a smaller sale, you can manipulate more variables. You can manipulate more variables, you impact the economic data of the input, reaction, output. Ryan? Everything I just said that we've established our proof of concept, I just get really excited, Ryan ...

Move -- I could move the slide. I'm the 1 driving...

No, no, it's me, I just get really excited. So that proof of concept has been established using biomass is very important. Where we're headed first is with railroad ties and pen shavings. Subsequent to that, there will be subsequent AEP applications, modifications to our permits that AEP will require approval and modifications to the unit itself, because each feedstock is unique in its composition. So therefore, if modifications are required to the unit, this further helps us facilitate the best learnings and economic data. Construction of the R&D facility at Aldersyde commenced in July 2022, we're very excited for the journey that leaves ahead. As far as -- sorry, fabrication commencement has started in July 2022. Operations, which is dependent on the AEP approvals, starts calendar Q1 2023. So just want to make sure we understand the difference between the time lines there. Ryan?

Further to that, too, Jas, with respect to what we chose to test first, railway ties, clearly, we understand wood waste really, really well. And railroad ties are essentially that. It's a hard wood, and it has creosote of course, soaked in it as well. But creosote is what was created or what's created when you -- through the pyrolysis of wood anyway. So it's a very short journey to understand how that feedstock is. And quite frankly, it's low-hanging fruit. We have a number of other things. Plastics is a hot button topic right now, of course, because what do we do with plastics? There's a number of companies that are pursuing that, and quite frankly, this is [ as ] much a feedstock conversation as it is converging conversation. So we want to make sure we understand that. Speaking of conversion, what a great segue into -- so we want to understand, and I've already mentioned this once already, we're going to be mimicking the full-scale facility process. The R&D facility is set up to do just that. Aldersyde in its current form, Phase 1, as we like to call it formally, isn't set up to mimic a full-scale process. So what learnings we got, we got. Moving forward, looking forward to getting data. The other thing, and it's critical to understand, is that a lot of the control systems that we did have in place in Aldersyde did not give us data. We talked about capturing data. It's important to realize we could only capture data through both anecdotal and visual inspections. We didn't have the control systems that we needed in place to be able to really provide assurance around the system design and the reactions inside the system. So that's important to understand as far as the full-time research facility is concerned. And you can see in the picture, for those of you that are playing at home, the tanks that are there. These are not small tanks. These are going to be -- allow us and I talked to you about infrastructure. You see the pipes. You see the tanks, and see the building. A lot of that is there ready to go. So it's important for us to -- I don't want to understate how important that was from a speed-to-market perspective. And of course, and I've already mentioned the process control. So the objectives that you see below, it's important to understand that we want to improve our CIs for our carbon intensity score. This is something that -- and I mentioned earlier from a waste to fuels or renewables standpoint, the carbon intensity score informs that specific designation, or more the ability for us to declare it as renewable or green or what have you. And that might inform the green premium that we can get for the fuel as well. Outside of that, there are some -- a lot of operational best practices that we already learned from, but we're going to learn more. And another key part of this and this is, of course, subject to AEP and their approval, is that our testing of multiple feedstocks, we can actually understand way better with data, how they react and what the opportunity is to be able to go after the low-hanging fruit feedstock that is out there. We want to go and look at railway ties because we already have an agreement in principle with CP Rail. It's clear we have a feedstock process set up for that. And then pen shavings initially, because it mimics the wood in pen shavings as well. So you see that the logic behind what we're doing in the approach. And of course, rubbers, organics and plastics down the road. We have to ensure, though, that we have the feedstock not just 1 or 2 years out, but several years out, because we're playing chess here, not checkers. So we have to make sure that we understand what the moves of the market or anticipate the moves in the market in advance of them actually happening.

And to build a little bit on that also is that at Aldersyde, not having the ability to collect comprehensive data really hindered our ability to collect the economical data to look at the financial impact. I mean as CFO, that's my primary concern, not just revenue generation, but net income, gross margin. Those are the languages that are most important to ensure that Cielo's is a sustainable business. Moving away just from an operational target of certain liters per hour, because revenue alone isn't a measure. And that's where this R&D facility is so crucial that it's minimal CapEx spending at a smaller scale to attain that data, the refinement as -- I don't know if I have mentioned this before, but as Mr. Ryan Carruthers, our EVP mentions it, instead of taking being Michelangelo and taking a hammer to create David, we get to take a chisel. We get to get in there and manipulate the variables we can at a finite level, which gets us the output and the maximum data we can to build a full-scale facility. So it's essential that Cielo made that brave decision to step away from Aldersyde. The CapEx is going to be a smaller amount, but the economical data at a finer level is essential. And that's where we transition from the R&D facility into designing and then subsequently constructing a full-scale commercial facility in the future. And it's important to understand that what Aldersyde gave us, again between input, reaction, output does translate into the R&D facility because it's still the same process: input, reaction, output. We don't focus on the distillation towers and creating the naphtha, kerosene and diesel at this stage because that's not the essential process. Desulfurization itself, we established that in our October press release in 2021 that the desulfurization unit is functioning. Again, not the most essential process because what that does is takes diesel, refines it further to less than 15 parts per million, which we did. I believe the data indicated in that press release is 800 parts per million, and we refined it to less than 15, meeting that threshold for highway diesel. Again, that's not our central business. Our central business is input, reaction, output, feedstock, the reaction of the catalyst and the output and that output part of that is the distillate and the waste management system, which the better we can utilize that used UMO or the waste of the spent biomass or whatever the feedstock is, the better the economic data. So R&D is essential for the full-scale facility, and we are more than excited, right, Ryan?

Absolutely, which leads us to us, and I didn't want this slide. I don't like talking about me. And I know Jas doesn't like talking about her either, but I guess what we're doing is we're building a business. We're building a company. We are looking to make money. This is -- we've gone through the various processes. It's a journey that took a lot longer than we had expected it to. Certainly we don't -- we learned along the way. And we're going through -- what we went through informs what we're going to go through in the future, and we're not going to forget what we learned, and that's important as we move forward. So I mentioned to Jas earlier I'm a Saskatchewan farm boy from Swift Current, but have grown up building companies and continue to do it here with Cielo, along with other business interests. But we want to understand that this isn't our first rodeo at all, and we are -- we know what we need to do, and we're certainly looking forward to doing it. And we are not going to leave -- there are aides at stage left early -- until the job is done, until we get to a point, an inflection point in every company happens where the right skill set needs to meet the right company. And we're not -- we're certainly not devoid of that understanding. We also understand that all of the things that we're doing leads the company to be set up for success. So it's important for us to do that, and Jas and I are aligned on that as well. Jas?

We'll also align that sometimes we do feel that -- the Bulls in the '90s had Michael Jordan and Pippin. Cielo right now has Jas and Ryan, and we're grateful to be here at the request of the Board. And for myself, my background is in risk management. And for those of us who have strategy experience, understand that strategy can't be formed without risk. They go hand-in-hand, it's a hand-in-glove relationship. And that's part of the skill set that I bring. In addition to that, I do have an assurance or audit background from the big 4 accounting firms. But the most important thing to note where Cielo is at this juncture is a conversation that Anna Chung, our controller, and I frequently have, which is we are here to be of service to operations: to Mr. Ryan Carruthers, our EVP and to Ryan Jackson. We are here to ensure that the funds are available and to help build those economic and those financial forecasts to move the company forward. So we are not independent. None of the departments are independent of each other, but my function and Anna's function for sure, are to ensure that as things are changing, again, we are in the game of innovation. So factors are changing all the time. It is to be of service in constant communication. It's a 2-way road to ensure as changes develop operationally, whether it's from Ryan Carruthers or from Jason Gilbertson on the fabrication of the facility, we are available and the funds are available. And that's where -- what Cielo needs at this time, and we're happy to be of service.

And speaking of service, here's the rest of what I like to affectionately refer to as Rogues' Gallery. So of course, Larry Shafran is our Chair of the Board, along with our now newly minted audit chair Sheila Liggett. Of course, Jas and myself are there, as well as the right honorable Peter MacKay. And Don Allan, who is, of course, our founder and still remains on the Board as a director. So I have to say, and Jas will probably chime in as well, but the Board is aligned. We have a strong purpose of governance. We understand what it means to be the stewards of shareholder resources and shareholder money, and we're very mindful of that. We don't take that responsibility lightly at all. So all of the directors that you see pictured here, and of course, you can go to the Cielo website, you can see the same thing. But I just wanted to let you know that the directors that we have are certainly all with the same mindset, that we are building a company for the future. And what that future holds is economic prosperity for all. Jas?

And building a tool, a possible tool to mitigate climate change, which is important to all of us, that we do understand this technology can be transformational in the arena it's in. And we're very excited for where it's headed. Speaking of the -- I always say Ryan and Ryan, Ryan Jackson, Ryan Carruthers have the exciting job of talking about everything we're developing. My job is to record everything they're doing. That said, our capital structure at April 30 was 662 million outstanding shares. Please note that subsequent to year-end, we had a very successful capital raise with overallotment, which raised $9.775 million. Additional shares were issued, which is not reflected in this table because it's for April 30. There were executive level changes so that RSU values will be falling off, and you'll see this by the end of the month, when year-end financial statements are filed. Ryan?

Now I'll bounce it straight over to Will, our host. Will, it's back to you.

Well, thank you, Ryan and Jasmine (sic) [ Jasdeep ], for a very thorough and insightful presentation. We're now going to move to the Q&A portion of the webinar. [Operator Instructions] We have had several questions come in prior to the call as well as during the call. So why don't we just go right ahead. I think there are several questions that have come in that have asked about the strategy over the past year: where you've been and how we've got to this point. So I think we'll start with that question.

I can take that one.

Yes. Yes, Jas, you go ahead.

Okay. I -- just to let you -- over the last year prior to being asked to be CFO, I was the Audit Chair. So again, strategy and risk go hand-in-hand as Audit Chair. We focused a lot on risk in the Audit Committee and brought several of those topics to the Board's attention along with management. Early 2021, if we were to speak of that, the approach within Cielo, the strategy was more an ad hoc strategy. As operational needs arose, financing was secured, it was more of a problem-solving ad hoc approach. Into fall 2021, it was noted that this approach was no longer working. And it was a step back. As noted in our November 12 press release, what we called a comprehensive analysis of Aldersyde, which is operational in itself, but also company-wise. We focused in the fall on enhancing health and safety standards, enhancing our governance standards, standards and processes, brought our IP technology in-house. Subsequent to that, what we did is there was a Phase 1 Aldersyde and a Phase II Aldersyde. Phase 1 was enhancing Aldersyde. So again, input -- this is just the best way to explain it -- input, reactor, output. Within that, what you will see if you refer back to some of those press releases, the input is an inlet system where the feedstock is going in, enhancements were made there, understanding the reaction itself. The reaction within the reactor is happening with the catalyst, the biomass that we were putting in, and the carrier fluid, which allows that reaction to occur with the UMO, the used motor oil. What was happening in the output level was we were producing distillate, and we were also producing the waste system, the waste, which was the UMO and the spent biomass. A lot of work went in, in the Phase I to understand improvements of that for Phase II. We were all, I would say, victims of the inflationary changes, the geopolitical situation that had occurred into early 2022. As a result of that, if we were to continue with Phase II, there was a 50% escalation in the quota that would be required to go ahead with Phase II. We decided it was prudent that we didn't go ahead with that. What we did is transitioned only to the R&D facility. And to be honest, again, using that hammer and chisel approach that Mr. Ryan Carruthers has mentioned in the past, gets us to the same level, if not better because now we're in the details of attaining that economic data and then building at a larger scale, versus only having revenue and trying to hit an operational target. And we're excited where that takes us into the future. And Ryan, you can maybe speak to that?

I mean really moving forward, we're going to obtain the process and economic data from the R&D facility using different feedstocks, but primarily railroad ties to start with, along with pen shavings, and design our first scale full -- scale facility. And that was always what we had intended to do. And now that we're able to focus solely on that purpose without -- I don't want to call it the distraction of Aldersyde as it relates to this back and forth, but we really have now got a clear focus on what that future holds. And it works, the process itself. We were now making it clearer, so that it works on a larger scale.

And we've been building on prior work, Cielo is a ladder approach. The work that was completed early 2021 was built on in the fall. The work completed in fall into early 2022, we're building on now. It is an evolutionary journey, as everyone can attest who has been in the game of innovation. It is a challenging journey but it's a journey nonetheless. I do once again want to highlight being the CFO, but also the risk mindset and a risk background, we have to keep in mind we are subject to AE approval in all of our plans. We are confident in our ability to fabricate, but to operate going into Q1 2023, we will be requiring that AEP permit. And AEP is our provincial or state governing body, for those in the U.S., Alberta Environment and Parks, that requires that permit. Not to fabricate again, but to operate that as planned for Q1 2023.

That's a long answer to a short question, Will. How is that?

Very good. And also, I think, encompass the follow-on question, which is what is the strategy going forward. So that was very thorough. Someone else is asking that they'd appreciate an update on how the different facilities and sites are progressing? How the research into improving engineering and refining process is going, a time line? Well, why don't we start there and then we can ask the follow-on from there.

Sure. I mean we've provided an update. I guess, everyone now knows through the different press releases and whatnot, that the Fort Saskatchewan facility, we haven't subdivided it formally, but we've taken the site and leased it out to eliminate our carry on the facility itself. And that goes with respect to not just op cost, but also the debt costs associated with it. The vote of confidence that FCF gave us by converting $2 million essentially provides us with that neutral that I was just discussing. So cash burn management there was significant for us to achieve. And we're certainly looking forward to then moving from that facility down to Aldersyde like we've discussed already. So I don't know how much more -- I mean, we are improving and refining the process through the R&D facility once it's operational. So that in and of itself is not just from a savings financially, but accelerating the time line to commercialization. Does that make sense?

Fantastic. Next question. What is the plan for the Aldersyde facility? At this point, it's been announced it's having a difficult time achieving continuous flow. As mentioned in the last update, the heater is supposed to be repaired in June.

Yes. I mean, look, we didn't suffer any setbacks that were process related. It was all ancillary systems, which means to say -- and that's a word I'm borrowing, by the way, from our EVP of Op -- so that is ancillary things like controllers, there's certain items that are not related to the process that were failing. And that wasn't anything that was planned for. Clearly, the improvements that we've made in the distillate quality, the particulate matter that used to appear in the liquid has gone away, the paper production line that was coking and plugging is now clear and clean. And the most important one, the reactor waste system was also a big learning that we just did with respect to the Aldersyde Phase I. So moving forward, we did succeed in a 7-day run time, and that's not nothing. That's something that's of significance. And quite frankly, there was nothing more to learn from that. So we've made a business decision to move forward with the R&D facility and not continue to try and distract ourselves, quite frankly. In moving towards the -- by moving towards the R&D facility, again, Capital D, Development, is what we're really focused on now.

And we need to remember that Aldersyde was a retrofit, right? We were going -- it was an old biodiesel facility that we were trying to retrofit. We have attained the learnings that we could from it. The key from Aldersyde to learn is from March until August, we produced 80,000 meters of distillate that we can sell to a third party. Where we had with the learnings applied from there is now we get to alter temperature, pressure and other run times, which allow us to give additional data. We had press released in June that we were aiming for 10 days, as in July 2021, we had shared data that was consistent on a 10-day period. So that was the aim; 7 days, we are confident, but we have to make the decision that's right for the business. The R&D facility CapEx at a lower rate with additional beta detailed data is the essential and necessary [ goash ] in Cielo going forward.