Quadrise Plc (QED) Earnings Call Transcript & Summary

Quadrise, the supplier of innovative energy solutions for a cleaner planet, has announced the signature of a collaboration agreement with Cargill and MAC2 Solutions with regard to the production of MSAR and bioMSAR fuels for the company's forthcoming marine vessel trials. Joining me today to discuss the news is Quadrise CEO Jason Miles. Jason, good morning to you.

Good morning, Giles.

Jason, it's great to welcome you back to DirectorsTalk.

Quadrise have clearly had a busy start to the year, behind the scenes. Let's start with the recent agreement with Cargill and MAC2. Could you bring us up to speed?

Absolutely. Yes, it's a pleasure to speak again. And yes, the Quadrise team have certainly been busy this year. The collaboration agreement that we have with -- announced this morning with Cargill and MAC2 relates to our marine decarbonization projects to trial our emulsion fuels at a commercial scale with MSC ship management. They manage the largest containership fleet globally. And so to complete the trial we -- that we're planning to take on the -- or take on the MSC Leandra requires basically a bit of a Quadrise blending system to be deployed near a bunker hub to supply the vessel, the MSC vessel. And we also need a reliable supplier of quality feedstocks to manufacture the fuels, so Quadrise started discussions with the European division of Cargill over a year ago now regarding the potential supply of glycerin for bioMSAR supply to MSC. And as well as obviously being one of the largest suppliers of food globally, Cargill are also a major supplier of biofuels and derivatives such as glycerin. Hence, they can understand the bioMSAR opportunity and what we were looking to do in terms of our marine fuel -- sustainable marine fuel program. Cargill also operate obviously themselves -- a very sizable marine fleet themselves, so they understand the sector very well. Cargill very kindly introduced us to MAC2 in this process. And they operate a terminal in the port of Antwerp [indiscernible]; and also interested in widening their business portfolio from what they're doing today to also include the supply of sustainable marine fuels in the future to decarbonize shipping, obviously. So MAC2 are part of the larger Machiels group. And they also have interest in the renewable energy sector as well as environmental services, so a very good fit, so this agreement therefore brings together 3 parties with complementary interests really in supporting the MSC bioMSAR initiative, from vessel trials all the way through to commercial supply upon success, so we are very excited about collaborating with these reputable players in the space, frankly, Giles.

I can imagine. What more is required to commence the MSC vessel trial in Q2?

Yes. The first is an operating permit. And to support this, MAC2 have very kindly been progressing the permit process for the supply and -- production and supply of Quadrise fuels, in parallel, by submitting an application last year that is expected to be included in the coming months. And a similar 3-way agreement to the one announced today is also being progressed with MSC and Cargill, together then with further detailed agreements that we alluded to in the announcement relating to the toll manufacture of emulsion fuels by Quadrise and the supply of these fuels by Cargill to MSC.

Just moving to the company's other projects in Utah and Morocco. Do you have any updates that you can share?

Yes. Our low-carbon, low-sulfur fuel project in the U.S. is with Valkor. Since our AGM back in November, they've since inked agreements with a couple of listed entities, Ecoteq of Norway and Trio Petroleum in the U.S., to progress their oil sands and drilling initiatives, respectively, so our current expectations are that the drilling permits will be approved in the next few months to allow them to commence drilling in Q2. And we also expect that they will be raising the project finance required for at least one of their projects, to kick-start the site license and supply agreement that we have already in place with them during sort of the second quarter of this year. And then in terms of our trials in Morocco last year: We submitted the technical report to the client at the end of 2023, and that was well received. And we are now progressing an agreement covering the wider testing of our emulsion fuels at their main industrial sites throughout Morocco; and commercial supply for their site B, where we successfully completed the trial last year. So the client is now planning to visit the Quadrise facilities during the next few months for reference purposes; and to progress, obviously, the agreement that we need in place before we start.

Of course. What are the next project milestones that investors should be looking out for?

So as mentioned, further agreements will be announced, obviously, relating to the sustainable marine fuel project with MSC and Cargill to enable the vessel trials to commence in Q2 as planned. And in parallel, project activities in Utah and Morocco should provide a good source of news flow as activities basically progress and agreements are signed. We've been quite prudent with our cash during [indiscernible] during this period whilst minimizing any scheduled delays. Hence, our project expenditures are well below the original budget that we prepared early in the year -- or [ in the ] financial year, rather. And I should also mention the pioneering work that's ongoing at our research facility at QRF as well to manufacture sustainable biofuel feedstocks into bioMSAR using both water- and oil-soluble biofuel products. And we're doing that together with an increasing number of biofuel suppliers, following obviously today's announcement with Cargill. Ultimately we are planning to supply lower-cost zero -- net zero biofuel that's tailored for the decarbonization of the marine fuel market, so it's going to be unique in that regard. This sector today consumes over 250 million tons of fossil fuel and produces nearly 3% of greenhouse gas emissions, so it's quite a large producer of greenhouse gases, which -- obviously an aim to reduce that. So this environmental challenge keeps us all at Quadrise motivated, frankly; and provides us with a great, sustainable business if we continue to meet our targets. So we think we are perfectly positioned to make a material difference in this, in a vital market, at exactly the right time.

Sounds great. Okay, joining me today was Jason Miles, the CEO at Quadrise. Jason, thanks for joining DirectorsTalk today.

Thank you.