Quadrise Plc (QED) Earnings Call Transcript & Summary

Good morning, and welcome to the Quadrise Plc investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged [Operator Instructions]. The company may not be in a position to answer every question received during the meeting. However, the company will review all questions submitted today and publish responses where appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Andy Morrison, Non-Executive Chair. Good morning.

Thanks so much, and welcome, everyone, to our presentation and business update today. We're going to use a presentation here to take you through. Some of it will be familiar to you. And because you're already investors in the company. So we're good as fast as we can concentrate on the project, which I know that you're -- from the questions you've submitted, you're particularly interested and always do to update and we'll try and leave as much time as we can for questions and answers. It's a considerable number of questions to come through pre-asked and we will attempt to address those both through the presentation and also afterwards. So we'll leave as much time as we can for debate. Of course, I'm joined here today by Jason, the two of us on, I'm afraid my broadband link isn't good enough for you to be able to see me, but I can see you, everything that's going on in the webinar and I'll be working it with Jason. So the purpose of our presentation today is to give you the update and explain about the open offer, which we just recently launched. And you see the third slide there. If I move over, we have our regular disclaimer, which you can look at your leisure, and then I will move on to the summary. And as you know, as investors, what we're doing at Quadrise is we're using advanced technologies and an increasingly focus on its sustainable biofuels to provide low carbon energy solutions for our customers. And hard to be me saying about the scale of the market, the global imperative, all that is very familiar to you. And we are at the point now where we are getting ready to commercialize the offerings, which have been such a long time in the making. I know many of you have been involved, much longer than I have as Chairman. And what we're here for today is to, aside from explaining the update is to explain why we're rating up to GBP 3.3 million, GBP 1.1 million of that is already done through a placing which has been announced. And then there'll be an open offer, which you're eligible for as investors, which I will explain today. And we hope that you'll feel encouraged to participate to the extent that you can. And so with that, Jason, I'm going to hand it over to you to take us through it, and I'll be back later.

Sure. Yes, the next few slides really give an overview, I guess, of the technology and then more importantly, where we are in terms of the projects and then Andy will finish off in terms of, I guess, the placing and the open offer. So what we have is -- what Quadrise have as a technology, which is unique to us, is basically, we're deploying proven technology that's used in the asphalt industry today to make road emulsions, which are a blend of bitumen or water, normally sprayed as a top coat on roads. We are modifying those to produce stable emulsion fuels, which are essentially, oil suspended in water, and we use the heavy end of the barrel in the refinery suspend that in water, produce a cheaper version of fuel oil, called MSAR and then we've been adapted that technology to then also incorporate renewable biofuels such as incorporating the use of glycerin to make essentially both the cheaper versions of the alternatives. So they offer a 10% saving. The systems are very simple to deploy in refineries or terminals, et cetera. And we also have an in-situ vending solution now where essentially you can put a miniaturized version of the technology into a ship or next to a power station. And in terms of the installations, they're modular and format, they are installed typically in containers of about 40 to 20-foot in size. You can see a picture of the inside of one of the units on the left-hand side there. And the silver disc is actually the colloid mill, which mills up the oil drop that's into very small particles of 5 to 10 microns. The systems are basically sort of drag-and-drop, plug-and-play in terms of the refinery itself. So the system in the middle is, the units we put together in Cepsa to produce 1,000 tonnes a day of product. And that's similar to a setup that will obviously be using for MSC and in Valkor. And then the key thing is we then plug in to existing infrastructure. So it's a relatively straightforward implementation. The cost of doing so is several orders of magnitude less for the refinery. And similarly, for the end user, it's pretty much a drop-in solution. The systems -- so the fuel itself are water -- the fuel itself is water-based. So if you take a glass of water, drop the fuel inside, there's a nice video on our website that you're welcome to look at, this is unfortunately it's a PDF, so you can't see this video. But what happens is the oil naturally disburses in the water. You can have that the much lower temperatures as well. So it means that the fuels are inherently safer to use than conventional oil-based fuels. And importantly, in terms of the legislation coming forward, they burn a lot better and more efficiently as well. So you get fewer emissions of things like nitrogen oxides, NOx, which could forms a smog, particular to black carbon which obviously get inside the lungs or deposit on the Arctic Circle. But most importantly, in diesel engines, you get a much higher efficiency, which leads to a reduction typically of 5% to 10% in diesel engines. And that's really fitting the landscape that we're in today. So obviously, there's lots of challenges for the energy sectors in which we're dealing. And we're involved in the marine sector. We're involved in the power sector, the industrial sectors. All of these, different markets, we are under a lot of pressure to start to decarbonize at different rates, obviously. And they will have their own features in terms of the environmental drivers are really driven by legislation to reduce greenhouse gas emissions. But there's also a lot of consumer pressure now for some of the customers we're dealing with, the consumers are forcing our clients to actually to start. I think about reducing the greenhouse gas emissions. The cost of doing this is expensive for some of the options, not only is energy more expensive, as we all know. But some of these clean alternatives are really hugely expensive and require massive infrastructure. New infrastructure to actually be delivered, including renewable power for greenfields. So operationally, that requires also a lot of land to be utilized as well, which obviously availability is key. And then some of the drop-in biofuels that are being used today in certain sectors like marine will be poached by other sectors that can pay more in terms of -- for the aviation sector and the transportation sectors. And it's very important, whilst obviously delivering biofuel solutions to make sure you're not taking food off people's plates. So the focus today is looking at waste-based solutions, which are potentially challenging to blend with oil. And that's really where our systems come into play. We offer a very clean solution, which reduces emissions, as I mentioned before, we have plans in place to essentially reduce the oil or the fossil fuel component of our product over time. So we have a 2030 solution, which is completely net zero, and we're well on -- well on our way to actually delivering that as well. As I mentioned before, energy cost is expensive. So 10% energy savings is tangible. There's an example coming up in terms of what that means for a typical ship owner to provide you some context there. But they're also very simple to deliver. So within 6 to 12 months, you can install the unit, they're scalable for each of the units that you saw earlier, they produce about 350,000 tonnes a year, so you can produce a million tonnes a year with just 3 units and you can just install additional units as you require. They are also less hazardous to use. And also in terms of the crew that will be used in the fuel because it's a water-based inherently safer fuel that we're delivering, they're a lot safer than conventional fuels as well and also some of the future fuel options, especially things like ammonia, methanol. In terms of the company, we've got a very strong team. Myself and others have been involved in emulsion and fuels for many, many years, in my case since I left university and also taking this all the way through to the commercial phase with previous endeavors in this field. So we have a lot of experience, not only at management level, but also at the Board as well. A lot of Senior Executives, Michelle on the Board. But importantly, we also have a very good IP platform. So we've developed -- we have our own patent, not only for MSAR but for also for bioMSAR now coming through and also some of our new solutions like blend-on-board is going through the patent process at the moment. So our patents are jointly held in most cases with Nouryon who is our technology partner. They supply the additives that we use for the emulsification process. Nouryon were formally part of AkzoNobel before they get taken over by Carlyle. So they were a very large entity that help our -- protect our IP. And internally, within the company, we will buy into these cleaner sustainable options going forward. So we're looking to deliver a net zero solution by 2030, but also appreciating that the transition solution is also needed an MSAR and bioMSAR, we'll cover that transition period in the next decade or so. In terms of the advantages of the technology, it has -- obviously be cheaper to make for the producer. So in this particular case, because the refinement would normally have to blend -- to make fuel, they normally have to blend distillates with heavy residues by not using those distillates in the refinery and using the residues on their own. Then that increase -- that provides an increased margin in the refinery, which can then be shared with the end users to produce a lower cost fuel. So if that margin is split roughly 50-50 between the producers and the consumers in this case, for a typical 100,000 barrel a day refinery. Then that's a tangible margin for the refinery in this example, that would be essentially doubling their refinery margin from $2 a barrel up to $4 a barrel. So for the refinery, it's a worthwhile investment. For this example, which is basically for 4 MMUs, 4 MSAR units, that would cost typically less than $20 million, and it will pay itself back with a margin above in less than 12 months, as you can see. And similarly, on the end user side, and this example, this quantum of sort of fuel or replacement, would feed about 40 large container ships. So that's about 6% of the MSC fleet as an example. That dual fuel conversion would cost less than $20 million. And with savings of sort of GBP 1 million to GBP 2 million per year per container ship or 40 container ships. You can see that again, the cost of conversion is paid back much less than 12 months today. So not only is it an economic investment to do, but it also reduces the CO2 emissions as well for the consumer, which is obviously increasing importance now. Obviously, that has to turn to margins for us. And for this example, for 4 MMUs, obviously, there are considerable sales. We offer 2 business models, licensing model, which we've just recently signed with Valkor is one example. And then we also have a tolling model, which is essentially a build out and operate type model where we capitalize equipment, we'll supply it, and then we'll operate it on behalf of the client and get it fixed to variable fee. So obviously, the margin -- the sales revenues and the margins are slightly higher, but tolling model to recover our cost of capital. And in terms of the projects that we're working on, really we're working in 4 different sectors to make sure, obviously, we can develop each of these in parallel. With Valkor, we have a technology that's going into a heavy oil site, the Asphalt Ridge in Utah really to -- this is, I guess, a very large reserve of extra heavy oil, which is also very low in sulfur. Our client that's developing the fields there are using a very low carbon means of extraction which means that the oil itself is essentially the CO2 neutral at the point as it comes out of the ground. And then if you can get that direct to the market, it means that for Valkor and the developers there instead of having to get a WTI price for the crude oil, they can essentially access the fuel oil market with the low sulfur products and get a -- potentially a $20 per barrel uplift on the product. And not only that, the fuel itself is also lowering carbon, the conventional low sulfur fuel. So we're pretty excited about that development. There is also some interim solutions in terms of applications there, more local to the actual field itself. But ultimately, given the fuel out by LA or Houston to the marine sector is the ultimate prize there. And that's also obviously where MSC containership project comes in. They are large consumers of fuel oil. They run now the largest containership fleet in the world of over 750 vessels, I think to date, it's getting bigger. They consume about 10 million tonnes a year of fuel every year. So that's a considerable saving for them. If you think fuel oil is roughly $500 a tonne today. That's -- if I can say, 10%, that's a huge number for them. So with MSC, obviously, we're looking as a marine replacement, not only the conventional fuel oil they used today, but also biofuel, quite large users of biofuel as well. And our BioMSAR product is a particular interest to them. In Morocco, we have an industrial client that's using fuel oil for drawing purposes. And that drawing application uses quite a considerable amount of fuel in the order of about 250,000 tonnes a year. And we're currently in the middle of a trial there, and we can tell you a bit more about that. And then in the Americas, we're looking at diesel fire power stations specifically around sort of Panama and Honduras, where these diesel engines today are running on fuel oil, and we're offering a lower cost version of -- obviously, fuel oil MSAR and then the future opportunities to bioMSAR to decarbonize. In terms of the status of these projects, with Valkor, we signed a site license agreement very recently and a heads of agreement with them for a sublicense in the future as well. That's conditional on them getting their permitting in August, which will basically release their project finance. But on the basis of that, essentially what we'll receive is $1 million, will flow from the receipt of project finance to us. And then which we expect -- after the permitting decisions made in August. We expect to get the funds through in December -- sorry, September time. And then before the end of the year, once we deliver the equipment to site, we get another $0.5 million. And then there's a continual payment thereafter under technology transfer agreement of $75,000 every quarter plus a profit share. So for every barrel of oil we supply that comes through the MSAR or bioMSAR products, then essentially, we share in the uplift of any increased value that we might get from high value applications going into the fuel of application rather than it going to a crude oil or asphalt application at the gate. So it's a very exciting project for us, obviously Valkor involved in a number of different facilities there. But the first project with heavy sweet oil is a very interesting one, but there are other projects that could develop on the back of that, also linked with the growth in these types of green projects in the U.S. as a result of the Inflation Reduction Act is there's a lot of excitement in the U.S. at the moment on these types of green projects. In terms of MSC, where we are is that the MSC Leandra has gone to dry dock. It's had a scrubber installed. They made some efficiency modifications including a new bow. So they made some modifications to the vessel. And it's now ready for -- essentially ready for MSAR and bioMSAR deployment. And it's now coming -- it's basically on a route that's back in Europe and circling Europe and the U.S. at the moment. So the vessel is ready. We're in the process of finalizing the fuel supply agreements in terms of the supply of obviously, the glycerin, the fuel oil that we need to actually blend to make the fuel and also the installation. And there's some questions, I think, associated with that coming up that we can answer that in a bit more detail. So we need to conclude those fuel supply agreements to be ready to start supplying the vessel early in Q -- in the first half of 2024. And the plan there is for the trial that the MSC Leandra has previously run on MSAR for quite a long period of time, but because they made the changes to the vessel, the plan is to do a short proof of concept on MSAR and then do a back-to-back trial with bioMSAR, the bioMSAR has never been used on the 2-stroke engine. All the testing so far has been a 4-stroke engine. So the MSC, Leandra will run briefly on bioMSAR, assuming all goes well as we expect, and that will continue operating on bioMSAR for the first half of next year with a view to getting 4,000 hours of operation under its belt so that we can get a letter of no objection from Wärtsilä, assuming all goes well. In Morocco, we're in literally mid-trial at the moment. We got the kiln that we were testing. You can see the picture on the right. We got that up to full load. And unfortunately, we had a very unexpected failure in one of the parts of kits on our units, which are the first time we've ever seen a failure, but it's due to a default -- sorry, faulty part that was installed on the unit. So we replaced that very quickly. That's now -- the system is now ready to run again, and we're literally waiting to hear with the client as to when we'll be on site, hopefully this month, but obviously shareholders know as to how that progresses and we've got a meeting later this week to discuss that. And then in the Americas, we signed an LOI with the client in Panama early this year with the intention of getting the trial agreement signed. In Panama at the moment, there's almost a state of emergency where they've had an extended dry period in Panama, where they would normally -- there's normally a wet period by now, and the hydro plants are starting to run again which then reduces the load all the fuel oil plants. But at the moment, all the fuel oil units have been running pretty much on base load, which is very unusual. So we need a spare engine to do the trial which is holding up the signature of the trial agreement and getting started there, but that's expected to change soon, but they've had rainfall recently. So once that progresses, then we should obviously then get the trial agreement signed off and then deploy our equipment to site. And the intention there is to initially do a blend on site sort of production of the fuel using the fuel oil to justify the emissions and efficiency benefits, but then with a view of commercial supply of more of a rigid-based MSAR going forward. And there are multiple clients there, but one of the clients that we're dealing with is also involved in a larger power station in Honduras as well. In terms of the resources we have to hand, at the end of last year, at the end of 2022, we had a cash, as in our interims, we basically had cash at GBP 2.6 million. We're spending about GBP 240,000 a month, which excludes our project costs, which if we don't spend anything on projects takes us through to Q4, and we -- obviously, we expect revenue generation from the end of sort of Q3 or Q4, obviously subject to the approval of the Valkor project moving ahead. And then obviously we have tax losses to offset against future profits as we progress. And in terms of the team, it's essentially the same as we discussed during the interims. We've got an excellent bunch of people working under us. 3 of us are -- about 3 of them are based in Essex and you see Bernard on the right-hand side. He's based there with a couple of chemists doing a great job in terms of the R&D work that we're doing. And then we've had additional support from consultants as well that we bring in. And we have experts from ]. For instance, who look at burner, we have a couple of consultants who previously worked with us on a diesel engine application. So among others, we're able to have chemists that we bring in, who are sort of specialist, PhD chemists in surfactant and surface behavior. I'll back to you, Andy?

Yes. Thanks very much, Jason. And just to make it a little bit interesting seeing some of the questions that are coming up, and I'll just maybe address a couple of those before I go into this slide. So Ross asked, are their properties of MSAR that are transferable to sustainable aviation fuel, does the company has plans to emerge or participate, I guess you mean, Ross, in this market. And the short answer to that is no, we're not going to go into aviation fuels. But I think the question is interesting because what we are doing is something quite parallel. We are very much in the market for sustainable marine fuels. And I think that's one of the things which we found has resonated with investors during the placing process that they really do -- they're really keen for us to push harder and pass that on the net zero products. So the answer to the direct question is no, we're not going to go into aviation, but we are very much into that area and into the marine area. And then I'll also take on the next question from Mark. A recent poll on a well-known forms, so that 70% of voters would not contribute to the open offer. This suggests to meet with the Board's credibility has been totally short. How do you see the Board credibility? Well, I'm not going to comment on how we see the credibility that's for others to say. But I do think that this question is at the heart. I'm hoping that the people who are on this call are amongst the 30% who are very much considering that they would contribute or in any event. But I think the -- where we're at, and we're trying to be completely open and honest with people, both the AGM and now is, there's a huge potential in this business and that potential hasn't gone away. And we're balancing that all the time against our ability to deliver on those projects and promises that we are making and that is the key thing. Now where we've got to now is that we believe that we can get the Morocco business done. We can get revenues from Valkor. We can get the MSC trial underway with the money that we're now raising. And that is what we're saying, and that is what I think will generate real value for the shareholders. And we're trying to balance that. So the interest in our sector is increasing. It's not reducing, it's getting up and faster and people want us to do more. But each project has got lots of moving parts, and we have, even though you might say GBP 240,000 a month is quite a bit of money. We have limited resources at the end of the day. And we are always in the business, so putting our best foot forward. So we have to say, this is what we think it's going to be. And we don't disclose every single challenge that we face in that. There are a lot of moving parts on these projects. As many of you understand. So -- but I do think -- what's the choice? The choice is to press on and see the job through or give up. And I think, overwhelmingly, the situations we should be pressing on to see the job through. And so what we're doing and going back to the slides now that raising GBP 3.3 million in total, up to which is enough to see us through to profitability according to our own calculations. We've got GBP 1.1 million of that in the bank to date, and we're now making an open offer of up to GBP 2.2 million to existing shareholders. And as I just said in my preamble there, we're answering the question, that will see us through to commencing the LONO trial, commercial revenue generation in Morocco and Utah. And so we're very much encouraged shareholders to take up their allocations within this and if you are able to apply for the excess because we do believe we're on the customer that it's much better than the alternative of not doing this. Let's move forward. What we're aiming for is -- with the current position, we've got the proven solutions in the energy market -- in the large energy markets, meet the portfolio of projects, which Jason has been explaining to you and the IP behind that, we've got a funding plan and we're aiming to produce sustainable revenues, NG decarbonization solutions by -- a net zero solution by 2030, and that gives us a much broader value proposition. So we will be in a much better position, says Andy. And that's -- we strongly believe that this alone only will get us there and is much better, as I say, than the alternative. There's another question, which I'll take now is kind of related. Bob says this, there's much here that appears positive, I'm therefore surprised that given we are on or seem to be on the cusp of good things that the support for the open offer from most closest to events are frankly underwhelming with the exception of Andy and the placing why teammates was not making meaningful investments at this time. And I think -- yes, thanks for commenting on my contribution. And I hope my intention is that it will be the last contribution that I would make over time. But I think there's no reason to question the dedication of the team members here. I think a lot of people have put money in that much higher prices than I've been putting it in, in the past, and a lot of people are putting, a lot of our -- into this business. And as Jason, et cetera, himself earlier on, for example, he's been involved in the emulsion fuel business since he left University. So you don't really get much more dedication than that. Everyone has their own financial circumstances. And there's only so much one can question that I think we probably -- what we shouldn't question is the commitment of the team to see this job through as we want. There are a couple of questions pre-issued, pre-advice and also on the chat forum, which relate to individual salary commentary and so on. And I don't think we will be answering those. But there is -- we do look at all those -- the compensation committee is very active in assessing what should and shouldn't be done, on basis of the performance that we see in front of us. So we won't be answering individual questions on that, but that is something which we are very much focused on. And so here we are there with the summary. Our energy decarbonization strategy is -- the externally forum is very much moving in our direction. We know as our shareholders do, that we're well positioned to serve these. You can see the projects that we've got. We are focused very much on those projects, and we'll come on to some questions later on around, are we doing this, are we doing that. And actually, the answer to most of that is no, we're focusing on the project, and we'll answer some of those questions more specifically because what we're trying to do is to get these use cases or these projects over the line so that we can then attract serious partners to scale them up. That's what we want to do. We want to get to a point where we've created real value and then we can scale from there. And that's what we're seeking your help for as investors at this point. Okay. Let me hand back, now Jason, do you have any final points before we go into the Q&A.

No, I think you covered it very well. I mean just coming back to, I guess, participation in the open offer, in my particular case, that's all I have to put in. I haven't got any investments anywhere else. Actually, that's all my savings going in, due to my own personal circumstances. So yes, if I had more to put in, I would do, unfortunately, I don't.

That's fantastic. Andy and Jason, thank you very much indeed for the presentation. [Operator Instructions] As you can see, we've obviously received a number of questions throughout today's presentation and pre-submitted, as you said, Andy. If I may, could I just hand over to you just to read out the question where appropriate to do so. We either take the question, I'll pass it over to Jason, and I'll pick up from you guys at the end.

Thanks very much, Paul. So we'll start on some of the pre-asked questions, and we'll do a bit of mix and match here, perhaps. The first question number one, it always feels as those Quadrise is going to turn the corner, but yet another placing and no real business coming in. What's different now for us to ever think this company will make money?

Yes. And I guess in terms of -- hopefully, we covered that in the presentation, but the combination of making tangible progress across the key projects and an increasingly supportive sort of macro environment as well, including the legislation that's coming in, in the ship, the industry, in the marine industry is putting us in a much stronger position today. So we're expecting the Utah project to deliver revenue from Q4 this year, and I think there's some questions around where the status of that. So we can cover that specifically maybe in another question. But also then the more recent legislation coming in Europe and also the legislation that's being muted by the IMO, which is increasing the rate of decarbonization in the marine sector will definitely help the delivery of our lower carbon, lower emitting fuels basically for the marine sector, especially.

And there's a few questions around the supply of fuel for MSC. Question 2, for example, are MSC involved in finding a fuel supplier? Do provide any details if you can.

Yes. In terms of MSC, we have been very supportive in introducing us to the current bunker fuel suppliers, we're obviously supplying with a very large commercial volumes of fuel to them to the tune of 10 million tonnes. It's their requirements annually. And actually MSC are promoting that collaboration with us as well as getting some of the shareholders picked up in the recent sustainability report in 2022. So MSC are providing all the support they can. The reality is to put together a trial requires a different approach to potentially to commercial supply because essentially what we're doing is we're supplying the MSC Leandra with fuel on an intermittent basis, right? So every -- it will be every month to once a month, sort of 4 weeks to 6 weeks depending on the route that the vessel is ultimately on. So that's -- to do the trial requires a different approach to potentially doing commercial supply in the future. So we've had to be very creative in terms of bringing in other parties into that arrangement as well to try and get this delivery of the trial volumes underway in the shortest period of time.

And let's try and continue on the MSC for a minute. Take Jake's question from the Q&A. How many ships are being targeted for any initial rollout in MSC and then how many ultimately you run on the MSAR of bioMSAR?

Yes. So in terms of the number of ships that obviously being targeted initially, we have the MSC Leandra, which is a trial vessel. And then potentially another vessel will come into play during the first half of next year, but that's yet to be scheduled for that other vessels. But with the MSC Leandra, the advantage of that ship is that it's previously run on emulsion fuel and has a booster unit already installed. Any new vessel will require a booster unit required, which needs to be ordered and delivered to the vessel. And that order is yet to be placed, but that takes typically 3 to 6 months to get that vessel up, up to speed and running on MSAR after that. So the initial focus is only the Leandra to get it up and running and getting supply systems in place there. And then in terms of the ultimate scope for the MSC fleet, that's in excess of 25% of their fleet today. Have got electronic engines, and they're obviously buying vessels all the time. But yes, initially 25% is the ultimate goal of the MSC fleet. And they also obviously have the cruise ships as well, which doesn't -- we don't include those at the moment.

And Mark asked specifically about the HAZOP test. I don't know the answers myself, but maybe you do, Jason. Has it taken place, will it take place, what can you update mark on that?

Yes, absolutely. The HAZOP is done independently of the vessel. So that's basically a paper exercise. So it doesn't need the vessel to be in a particular position to actually do the HAZOP. So it can be done essentially remotely. So we expect that to be done sort of early this quarter. But once we -- obviously, once we've completed it, we'll let our shareholders know. But it's essentially a paper exercise evolving Lloyd's Register, MSC, the OEM, which is -- and ourselves to get that done. And it's a similar process we did before with MSAR. And obviously, the vessel was going through the modifications and changes until quite recently. So that delayed the exercise being completed, but we expect that to happen very soon.

I'm going to go back to the pre-asked one question 5, which is also on MSC, but also addresses Mark's further question about the MSC trial. Question 5 is asked, as per the placing and open offer RNS on July 7, the MSC, the proof-of-concept and LONO is now set to start in half 1 2024. It was quarter 4 2023 in the mid-May business update RNS. I would like to understand better what circumstances caused this additional delay of 6 months, the original window for the trial provided was quarter 4 2021. Also, what is your confidence that you'll actually be able to meet the revised time line?

Yes, good question. Well, the key thing is really now is the fuel supply, okay? So the reason for the delay is we don't expect it to be 6 months, we expect to be supply in the early part of Q1, sort of 2024 is the current plan. But obviously, we have to prepare for particular delays if there are any. But the current plan is to supply the vessel during the first half of the year, as you saw in the presentation. And the early part of 2024 is a scheduled window, obviously, to do that, we need to secure the supply of glycerin, which we've done now. We have a supplier of glycerin. He's able to supply not only trial volumes, but he is interested in commercial volumes going forward. And then the complication is really around pulling together the suppliers of glycerin and the fuel oil and find your particular location, with the permitting that's already there to actually be able to blend biofuels and then deliver those biofuels to the vessel. Those biofuels, if you look at marine biofuels today, if you can supply those from the Netherlands, then you also get credits, HB credits are called which basically subsidizes the use of biofuels in the marine industry. So obviously, we need to qualify for that as well. So all these things need to be pulled together. I don't want to sound patronizing, but there's a lot of pull together to actually get these trials done. But we are actually in the terminal this week. So we're looking at -- we've looked at a number of terminals, and we're coming now to sort of narrowing down exactly where we want to be. And putting together all the agreements that need to be done to get the trial volumes delivered to the vessel in the first half of next year and sort of early H1.

I think you've probably answered most of the following question, but let me just ask that in any way if you got any further comment on it. I've reviewed all RNS over the last year, and there appears there have been no substantial progress in negotiations with LONO fuel suppliers. What's the specific area of contention? And how much longer is it going to take?

Yes. I mean it's -- again, a very good question. I can imagine the frustration of shareholders. I mean, basically, the main area we've been working on over that period have been the commercial partners for glycerin. All of which have their own glycerin supply. So we've had to test a lot of samples as well to demonstrate their glycerin. Derivant is working properly in our particular mixture. So that's involved obviously QRF and feedback there. For those commercial partner discussions are pretty much complete now. And then the next bid is in selection of bunker partners and specifically -- particularly terminals availability where can you do this and where are the licensed premises to do this biofuel blending because it's that -- in the marine sector, it's a relevant infancy. So that actually the number of terminals doing this is more limited than they will be in the future. So obviously, that's taken a bit of time to find those out and work together with the biofuel partners. We've been very supportive in basically bringing these terminals into the discussions. So obviously, these things are slightly more complicated than we first believed. But we're now coming to a point where we've got very detailed plans being put together to actually implement the delivery, obviously, the best to the fuel and deliver the fuel vessel in the beginning of next year. But the first -- the next milestone in terms of shareholders -- for shareholders is the signature of the agreements for the trial supply and that's our immediate focus as a matter of priority now.

And then going to move on to question 8. I have a question regarding the following paragraph in the July 7 placing RNS, you can read as MSC starts to doubt using MSC, concerns about supply question mark for their fleet into route to commercialization with MSC is taking longer than they originally envisioned by Quadrise. Basically, to paraphrase the question a little bit, it's saying -- it's asking about the motivation of MSC as we see it. Are you able to comment on that, Jason?

Well, I think the support from MSC is fairly evident for the fact when they purchased the MSC Leandra, as an example, and obviously they spent money on upgrading it and getting it ready for the MSAR trial and the bioMSAR trial. Really their focus is on making sure the vessel can run on both products. Obviously, it's run on MSAR before. So that have a short test there. Given they made modifications to the vessel. And they've also deployed that to Europe right, in readiness for the trial. So in terms of their commitment, I think MSC is doing all that they can. Obviously, and the collaboration is evident through the sustainability report as well. Really the MSC and Quadrise to make sure that we bring in some sizable partners in terms of the delivery of the fuels for the future for them.

we may well come back to MSC because it's such a -- obviously such as a key part of the business in the future. But I'm just going to move to question 12, which is a kind of leading question. If we're struggling to get a fuel supply agreement for MSC. How are we going to supply the Morocco client at a competitive price on the back of a commercial agreement?

In terms of the requirements, they're sort of quite different. So for MSC, we're looking at essentially the first priority is to try to supply for the trial volumes. So obviously, we're focused on that at the moment. And with MSC, predominantly it's going to be bioMSAR, so it involves different parties. And also in terms of the location, we're talking about Northwest Europe ideally to take advantage of the tax credits in the Netherlands for the biofuel. So the delivery for the Morocco clients is quite different, and that's obviously a residue-based MSAR, which we see we have potential suppliers that we've used before or spoken you before for supply of MSAR for the Maersk project. And on the back of completing the Maersk -- the Morocco trial successfully, then we expect to obviously progress to commercial discussions and have a commercial agreement in place for supply, which will greatly assist the discussions with those particular refiners. But having said that, those refiners will also be interested in the future for a bioMSAR as well because a lot of these refineries are converting to buy refineries or expecting to supply biofuels from their locations as well. So the rise of bioMSAR definitely help, but the discussions are quite different and being held separately from MSC.

And just move over to the Atlantic to ask another question. Number 13, what exactly is holding up the agreement to progress in the America power company project. Do we have a debt up here similar to the Esmeralda's refinery project?

No, really, the delay of the agreement is really due to the situation in Panama at the moment where the fuel oil power stations are running flat out a baseload and they don't have any scope or availability to take an engine out of service and actually run it for a trial. So before they -- obviously, I want say resolve that situation in Panama, which we expect to do imminently, then we expect the trial agreement to be signed.

And then there are -- there's a series of pre-asked questions around effect of the other projects. And for example, where exactly are we with the Mexico project, about Saudi Arabia, about synergies with the Carlyle Group, about Kuwait, Merlin Energy, JGC, for example. What are you have to say, Jason, about these other projects?

I mean the other projects, we are progressing sort of as a lower priority. I would say that our experience with the Middle East is that -- ideally, what we need to do is get MSC or one of the other projects up and running before we spend a lot of effort again in those particular regions. If shareholders remember, really, the Saudi project was due to commence after the Maersk project. And then as a result of Maersk delaying their implementation of MSAR indefinitely then the Southeast basically cut the trial that we have planned. So I think evidence of progress in some of these other areas in terms of the core projects is really our main focus. And once we demonstrate that, and we have actually fuel flowing and something for them for the Middle Eastern clients and others to see then I will accelerate potentially the implementation or at least the discussions in those other areas in which we can really much pick up on the work we did previously because the energy situation hasn't changed remarkably since we talked with them a few years back. So yes, these other discussions are ongoing, but as a lower priority, really, we are a small team, and we have to be very focused on delivering the core projects now to get revenues into the company as we expect to get from Valkor.

And I probably should have asked this one before that. But back to Morocco for a second. Question 20, when exactly is the next slot for the Morocco test?

So we actually have people on site next week, making sure that we're ready to go at any of -- sort of the earliest opportunity. The reality is in Morocco, the site that we're doing the trial basically produces products to order. That's got a very large capacity there, but it essentially runs on a campaign basis. And that's really -- we only know when we'll actually be carrying out the trial 1 or 2 weeks in advance. So we have a -- we have to make sure that we're ready. So we have people going out to site as an example next week. But yes, we expect it to be imminent, but we can't say exactly when at this moment in time. But what I would say is in terms of the client, the Moroccan client and the people on the particular site that we're operating at, they're extremely supportive in making sure that this trial is success because they see that as a real sort of fill up for them as well. And they've run test before this particular facility. So they're very well geared up and very supportive of these types of endeavors that we're embarking on now.

What about -- going back to the questions on the Q&A just for a second. Vic asked a question about how genuinely confident are you drilling license the Utah would be granted, considering the possible legal challenges from Hoodoo?

Yes. So I guess to explain to others, you may not be fully aware there was a challenge to the approval of the license, the drilling licenses and the underground injection permits to Valkor from a company called Hoodoo. Hoodoo have an existing license on some of the same territory for conventional oil and gas. So some of the objections were around the validity of that. The latest is that obviously, Hoodoo have been allowed to continue participation in the hearings, but the reality is that the permit, the decision made in December 22, granting the drilling licenses about the Valkor has been upheld. They still require underground injection permits, which they expect to get through in August. But feedback we have from Valkor is essentially the objections from Hoodoo have been thrown out now. They can participate in the hearings, but they can only comment on technicalities of any submission by Valkor. In terms of the fundamental basis behind the Valkor businesses is looking at nonconventional oil in that particular area. And the area is called the Asphalt Ridge essentially. So it's full of nonconventional oil and there's very little convention oil and gas, which is I think what Hoodoo are trying to get as well as take advantage from. But in terms of the definition of nonconventional oil in terms of all of the samples that have been taken from the fields of Valkor plant on heavy sweet oil and others plants that we extract. It's definitely nonconventional oil. All the samples we've seen are definitely bitumen. And that's really -- that essentially underwrites the decision that's already been made and will continue to be made by the Utah, department of Oil and Gas and Mining. And really there's a lot of economic incentives for that particular region to develop these projects because there's very little being done on the conventional side anyway, there's very little there. So yes, we're very confident that a lot of the -- but that comes from feedback from Valkor that the decisions will be granted in August. And obviously, then that will progress to the drilling be -- drilling commencing and funds flowing obviously into us as well.

We're starting to -- need to look at the clock a little bit here. We've got time for some more questions. But I'm going to just take -- maybe take one for future-looking question here, question 21. The Toldo relationship is a new technology -- sorry, when is the crude sugar or bioMSAR going for further testing?

Yes. So the crude sugar oil comes from, obviously, is extracted from sustainable biomass, so from wood chip. One of the projects we're working on with Vertoro, who have basically a C5, C6 type product, which looks for all intents and purposes is like honey. Actually smells a bit like honey is well, we're going when testing it. But essentially, where we are with that is we've done the Aquafuel testing already with up to 20% of the CSO product in bioMSAR and obviously, the remainder being glycerin. But now we're pushing that up to 40% of CSO only. So basically, with zero glycerin and to see if that works as well. Testing the lab is going well. It looks like it's performing well. So the next plan is to run that fuel on the diesel engine that we own in -- that's installed actually currently in Aquafuel. And then assuming that goes well, then the plan after that is to do a larger scale testing at VTT in Finland on a Wärtsilä engine, which is basically a 32 4-stroke engine. And that was very, very useful then to do -- present the data to MSC and also to demonstrate the performance of the fuel is quite similar to their experience with MSAR before. So that's the next steps we expect due in Q3 to get the actual testing done and published. Q4, we should be able to embark on the VTT testing if all goes well, and then with a view, potentially to incorporating some of the CSO product maybe in the later stage in 2024. And there's some other work going on beyond -- if there's not other question, there's some other work going on beyond that, both on the existing C5, C6 suppliers, but also with produces oil suppliers as well. And we've just signed an agreement with VTT bioliquid on their wood-based process, all of which they have, 3 plants producing 75,000 tonnes a year of this type of product and looking for a high-value market in the marine sector to find a home for it. So we have a means of blending these types of products into marine biofuel going forward, which is obviously an advantage of our technology platform, which is unique to us.

I have just a couple of questions that I'm going to answer, from the 3 answer, I'll ask myself. Question 24. Where are we with the strategy to partner up with a bunker supplier. This has gone quite, it seems to me like a very sensible plan that may have passed aside. And the next question, given the seriousness of progress, has there any further thought being given to selling the technology on to a larger entity. And I think absolutely, we see the potential benefits of strategic partners to accelerate the growth and address the whole scale of opportunity, let alone Quadrise, it's not going to decarbonize shipping on its own, for example, of that sector. And we will be exploring that more actively. In the sense, what's holding us back is we want to get to a point where we've got something truly of value. That's why we're so keen to get these use cases, done and dusted. So then we've got something which will give better value to shareholders when we come to -- trying to do those kinds of deals. So we don't necessarily -- we don't want to sell the technology in a sense, but we're willing to do deals to make sure that we can scale it. And so that's very much on our minds. And we, like everyone else, we're really keen to get the use cases done. That's what we're really raising this money for. And we are very much aware and this is a whole similar question around, you've had this money before and you didn't do it last time kind of this. We're very much aware of that. And we're not immune from further delay. We could have them, but we're confident where we stand that we will be into revenues and that we open Morocco, Utah, and we'll be into the trial with MSC. We have confidence we can be on that. And as I said before, the alternative of not being confident and just giving up, it's not attractive either. So I'm just going to try and move back to the questions of the day, there are a lot of them. It's hard to answer some of these in a few sort of 50 words. So Vic said, Andy, you say we are on the cusp, as we have been for the last 2 placing. What makes this cusp different? I think what's different is that we have a little bit more control over our own destiny on this, in the sense that, for example, that with Morocco, we've got a -- the trial is now happening, we're going to finish it and then we can talk about the supply with MSC, it's up to us to come up with the supply. So I think that a lot of the moving parts have been nailed down. And I think that's what makes it different or makes it feel different at this point in time and makes it worthwhile seeing this job through. So that's where I see it as different. And Alister ask a question, what was the thinking behind raising money in advance of the conclusion of the Morocco trial, which is imminent and successful, will presumably have results in cash being rates at a materially higher share price. And I think that's -- the rub is there is in the conditionality of the question. As we've explained -- as Jason said, we had enough money to last in the beginning of the fourth quarter. So yes, we could have waited until September, October to try to do a fund raise. But we consider whether that was in the best interest, and we felt taking it to the wire was not in the best interest and some of the very professional investors that we talked to in the placing process, they said, Andy and Jason, you're doing the right thing, you needed to do that now. We think that the market conditions are horrible now, but they could get worse. They don't necessarily get better. And I think this is the time to shore that up. David says, it's our money that's going to fund salaries. So why can't you comment? And all I would say -- it's a fair challenge. Again, it's hard to make things -- make it clear in a few words. We -- of course, we will report on salaries. But what I was saying was we're not going to comment on individual salaries during the course of this presentation. So -- but we will -- we've look at the conversations which is already talking to me about what are the parameters for the -- what we achieve, what we not achieved. And that will all be reflected. It's a different conversation when you're talking about Executive Directors, then if you talk about other staff. When you're talking about other staff, the question then is a little bit -- it's more specifically around retention comes into it in more of a way because people have other opportunities. So if you give junior staff a hedge, then there's a risk that they'll move on. So we are very much on the case of that. No money is spent that we don't need to spend.

There's a question from Paul, Andy. Just why has all mentioned of using standard MSAR with MSC suddenly gone dead? It certainly hasn't gone dead Paul. That's not the case. Obviously, the intention of doing the MSAR proof of concept is to repeat the work that we did before on the -- the investment previously was the SEAGO ISTANBUL. So depending on the results of that, then we expect to see the validity of the interim loan that we got on that engine, same engine to be valid to, which may accelerate the use of MSAR going forward as well. And certainly, in terms of -- if you speak to their traders, they're using -- or you look at their sustainability report, the predominant use today is a fuel oil. So if they can find a cheaper version of fuel oil, which is lowering carbon as well and carbon intensity, then that provides a very interesting opportunity for them going forward. But the trial, getting the trial done and getting the agreement signed, that's -- it's all around the bioMSAR supplier because that's the bulk of the fuel initially. But for the future in terms of their demand, MSAR is definitely much in scope.

And I was just going to just step in there very quickly. We are coming up to the hour mark, and I know you have covered off a lot of questions and we've come through today. And of course, you will have the ability to review all those questions submitted and we can publish responses and answers or appropriately do so on the Investor Meet Company platform. So Jason, if I may, just before we direct investors to provide you their feedback, I'll just ask you for a few closing comments.

Yes, absolutely. Thank you, Paul. Yes, I mean, obviously, investors have been very patient with us so far and really now as much as at any time, it's all about delivery of projects. And certainly, we -- the delivery of the Valkor project is extremely important to us and the early revenues from that. Obviously, that's key to the planning going forward. But most importantly, in terms of the funds that we're looking to raise, they're extremely important for us to be able to contract with the third parties needed to carry on the MSC trial and other activities. So obviously, we have -- the placing is now done, but the open offer fund strategy is extremely important to make sure that we can deliver on getting these projects to the final phase of commercialization. So thank you, investors, for your patience, but I appreciate the -- it's wearing thin, but we are fully committed to getting this done.

That's fantastic. Jason, Andy. Thanks indeed for updating investors today. Can I please ask investors not to close the session, you'd be automatically redirected to provide your feedback so the team can better understand your views and expectations. Take a few moments to complete and they're greatly valued by the company. On behalf of the management Quadrise Plc, we would like to thank you for attending today's presentation and good afternoon to you all.