Leaf Resources (LER) has entered into agreements with US-based Claeris, LLC to establish a JV entity, Leaf Development, to develop up to five renewable chemical projects using LER’s proprietary Glycell process. Claeris provides connections to a global network of organisations and professionals involved in the development of renewable chemical projects.
LER has proactively been seeking opportunities to commercialise its Glycell technology. Glycell breaks down biomass to cellulosic sugars, a feedstock for biochemicals, at a significantly lower cost than traditional processes. It has entered into binding agreements with Claeris, LLC of Dallas, Texas, US to establish a joint venture (JV) entity, Leaf Development, LLC. Claeris will also invest US$500,000 in LER. Leaf Development will develop up to five renewable chemical projects using the Glycell process. Claeris and LER will employ the develop, license and own (DLO) model, which leads to development and licence-related revenues and equity in each operating project. Under this ownership and structure, LER anticipates a greater ability to negotiate transactions and achieve favourable commercial terms.
Claeris has a proven track record of developing successful, large-scale renewable production facilities. It has partnered with global companies to develop and operate state of the art facilities. It aims to be innovative and best in class and develop, implement and manage proprietary strategic initiatives. Its managing partners have over 80 years of development, capital markets and operational expertise. Claeris has stated that it has “not seen anything quite as revolutionary and potentially profitable as LER’s Glycell process.” It believes it is “the best process on which to base a platform company of renewable chemical projects.”
We have valued a project that converts a low-cost biomass source to a standard chemical with mainstream applications. Using the NPV10 approach, we assume a 100,000 bone dry tonnes per annum biomass project that incorporates the Glycell process. At a ‘typical’ renewable chemical price of US$1,500/t at free carried interests of 5%, 10%, 15% and 20%, LER’s corresponding interests would be valued at A$0.12, A$0.25, A$0.37 and A$0.50/share for a single project. Under the JV with Claeris, the indicative value of LER’s corresponding interests in the five proposed operating projects would be A$112m, A$224m, A$336m and A$448m.