Leaf Resources (LER) is taking steps to commercialise its Glycell technology. This produces sugars from biomass for processing to high-value bio chemicals at a much lower cost than alternative technologies, providing the foundation for new projects based on ‘advantaged’ biomass. Glycell has the potential to transform the economics of global renewable chemicals.
For organisations that have access to low-cost biomass that would otherwise be disposed, burnt or used in a low-value application, Glycell provides a business opportunity for a high-value project producing a renewable chemical. LER has a proactive strategy to sponsor projects and has already negotiated three MOUs. The strong economics of such projects has created potential opportunities to negotiate a more valuable free carried interest rather than a royalty.
LER is pursuing project opportunities in the US, Europe, Asia and Australia. In the US, it is pursuing project scoping opportunities through a JV with ZeaChem, which has engineering expertise and a biorefinery. LER has also negotiated an MOU with the R&D arm of Monaghan Mushrooms, the second largest mushroom producer in the world, for a possible project in Europe. In Australia, LER has MOUs with Norske Skog Australia and a large international agricultural company. For Asia, LER conducted a joint evaluation with Andritz, a global supplier of plant, equipment and services for the pulp and paper and other industries, on Empty Fruit Bunch (EFB) with positive results. EFB is a readily available waste biomass derived from palm oil production in Indonesia, Malaysia and Thailand.
We have valued the potential free carried interest that LER would achieve through the creation of a project. Using the NPV10 approach, we assume a 210,000 bone dry tonne low-cost biomass project producing a standard renewable chemical using the Glycell process. At a ‘typical’ renewable chemical price of US$1,500/t at free carried interests of 5%, 10% and 15%, LER’s corresponding interests would be valued at A$0.37, A$0.73 and A$1.10/share for a single project. Given LER’s global proactive scoping activity, there is potential for many projects plus royalty agreements as the technology gains global momentum. The corresponding value for the first five projects would be A$1.83, A$3.65, and A$5.48/share.