Summit 05 Presentations 06c Letourneau

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Summit 05 Presentations 06c Letourneau

  1. 1. Advanced Gas Separation Systems using Polymeric Membrane Technology 5 th Annual Angel Investor Summit Ottawa, October 24, 2005
  2. 2. Investment Highlights <ul><li>If Vaperma Membrane technology was in place today it would save: </li></ul><ul><ul><li>Biofuel: ~ 2.5 cents/liter of ethanol or about 40% energy saving; </li></ul></ul><ul><ul><li>Sour Gas: ~ 160 $/ton of Sulfur or about 35% of operating cost; </li></ul></ul><ul><li>Now is the best time for this technology to hit the market: </li></ul><ul><ul><li>high cost of crude oil </li></ul></ul><ul><ul><li>need to reduce foreign energy dependence </li></ul></ul><ul><ul><li>Kyoto: promote renewable energy sources and reduce GHG emissions </li></ul></ul><ul><li>Major Federal Government support to lower the financial risk posed by the introduction of this new technology: </li></ul><ul><ul><li>$6,486,138 approved by SDTC and NRCan/TEAM; </li></ul></ul><ul><ul><li>75% of funds secured for initial 18-month demonstration phase (Phase 1A); </li></ul></ul><ul><ul><li>Enhanced the stature and credibility of Vaperma in the industry; </li></ul></ul><ul><li>Host demonstration site with largest Canadian Ethanol producer - CAI </li></ul><ul><li>Biofuel and Sour Gas markets are growing worldwide – clear value proposition </li></ul><ul><li>Protected ‘’Polymeric Membrane Separation Technology’’ </li></ul><ul><li>Clear path to profitability – commercial sales expected in 2008-09 </li></ul><ul><li>Exit Strategy – Merger or acquisition by Ethanol Technology Provider or Oil & Gas Company </li></ul>
  3. 3. Company Profile <ul><li>Vaperma is an early stage company developing ‘’Advanced Dehydration Systems’’ for the Ethanol & Natural Gas Markets using vapor-phase polymeric membrane separation technology. </li></ul><ul><li>Private, Quebec-based company founded in 2003 with Sovar financing. </li></ul><ul><li>Technology Spin-off from Laval University developed by founders Dr. Richard Cranford and Dr. Christian Roy. </li></ul><ul><li>Experienced Management Team: </li></ul><ul><ul><li>Chairman & CEO started 2 additional successful companies (angel investor); </li></ul></ul><ul><ul><li>Staffed with multi-disciplined PhDs and engineers (10 pers.) </li></ul></ul><ul><li>Early Customer Traction: </li></ul><ul><ul><li>Referenceable customers to validate business model and its assumptions; </li></ul></ul><ul><ul><li>Alpha product will be in field trial in 2006 with clear value proposition </li></ul></ul><ul><li>Large existing and emerging markets: </li></ul><ul><ul><li>BioFuel & Ethanol Production </li></ul></ul><ul><ul><li>Natural Gas & Biogas Production </li></ul></ul>
  4. 4. Vaperma’s Solution <ul><li>Vapor-phase polymeric hollow fibre membrane </li></ul><ul><li>Asymmetric integrally skinned morphology </li></ul><ul><li>More robust than conventional composite membranes </li></ul><ul><li>Lower fabrication and material production costs </li></ul>High Selectivity of Water and H2S
  5. 5. 50 kg/h Module and Dehydration System
  6. 6. Markets & Value Proposition Vaperma Technology Advanced Dehydration Process Solutions based on vapor-phase membranes Markets <ul><li>BioFuel </li></ul><ul><li>Ethanol </li></ul><ul><li>Methanol & Biodiesel </li></ul><ul><li>Natural Gas </li></ul><ul><li>Sour Gas </li></ul><ul><li>Biogas </li></ul><ul><li>Syngas </li></ul><ul><li>Coal </li></ul><ul><li>Natural Gas </li></ul>Value Proposition <ul><li>Energy Savings </li></ul><ul><li>High H2O Selectivity </li></ul><ul><li>High H2S Selectivity </li></ul><ul><li>Compact System </li></ul><ul><li>No Heat Regeneration </li></ul><ul><li>No Solvent Handling </li></ul>Enhanced Water Gas Shift Reaction
  7. 7. Fuel Ethanol Dehydration Solution: Vaperma membranes provide an attractive solution to traditional distillation/molecular sieve unit (MSU). In combination with mechanical vapor recompression units, Vaperma Advanced Ethanol Dehydration Process Solution save as much as 40% on operating costs. ($2.9M energy savings for a 160 ML/yr world-class plant) Problem: In a typical corn-based ethanol plant, the beer from the fermentation process contains 8 to 12 % ethanol. In a cellulose-based ethanol plant, the beer ethanol concentration is 4%. Cost: The capital investment required for the installation of a dehydration system in a 160 ML/yr plant is approximately $23M USD with annual energy expenses of $6.8M for a modern ethanol plant and up to $9.8M for conventional ethanol plant or 4.2 and 6.1 cents per liter respectively.
  8. 8. Traditional Distillation/MSU Process 40% ETHANOL 90% ETHANOL
  9. 9. Traditional Distillation/MSU Process 40% ETHANOL 90% ETHANOL
  10. 10. Sour Gas Treatment Problem: Water and H2S are common impurities in natural gas that must be removed to meet pipeline specifications and prevent hydrate formation. Solution: Vaperma membranes provide an attractive solution to traditional glycol systems based on simple process designs, lower costs, lightweight and compact assembly. Ideal for remote locations with limited utilities. The membranes are suitable for a variety of offshore and onshore applications. Advantages: Vaperma membranes offers higher water and H2S selectivity and higher temperature over existing PRISM membrane technology. Market Focus: Natural gas fields (sour gas) of 10,000 to 20,000 Nm3/h operated by small pipeline head operators (Large fields are 50,000 to 150,000 Nm3/h).
  11. 11. Financial & Strategic Partners VC’s & Angel Investors Private Industry Partners Institut français du pétrole
  12. 12. Experienced Management Team Senior R&D engineer, Pyrovac Senior Process Engineer Bruno de Caumia Senior R&D engineer, Pyrovac Senior Process Engineer Pierre Plante Polymer scientist, Polymer Research Institute, Chengdu, China R&D Scientist Jingui Huang Membrane specialist, Pyrovac & Laval University VP R&D Richard Cranford President & CEO, Kontron Communications & Avestor Chairman & CEO Claude Letourneau Prior Experience Title Name
  13. 14. Vaperma’s Vision <ul><li>Leading ‘’Integrated Solution Provider’’ for the dehydration of biofuels and sour gas </li></ul><ul><ul><li>Manufacturer of polymeric membrane cartridges </li></ul></ul><ul><ul><li>Process design & optimization </li></ul></ul><ul><ul><li>Application development </li></ul></ul><ul><ul><li>Pilot testing </li></ul></ul><ul><ul><li>Procurement, installation & commissioning of integrated systems </li></ul></ul><ul><ul><li>Maintenance and replacement of membrane cartridges </li></ul></ul>
  14. 15. Protected Technology <ul><li>Development of the vapor permeation membranes began in 1991 by the founders. The membranes were initially designed for the vapor phase separation of water from organic compounds produced in a vacuum pyrolysis process; </li></ul><ul><li>Led to the development of a solvent resistant asymmetric integrally skinned hollow tube membrane using two different polymers (polyimides and polyvinylpyrrolidone); </li></ul><ul><li>IP assigned by inventors (R. Cranford & C. Roy) to Laval University; </li></ul><ul><li>Vaperma has exclusive rights to exploit the technology via license from Laval University; </li></ul><ul><li>International patent filed in July 2004 (PCT/CA2004/001047); </li></ul><ul><li>Unique polymer formulation for the preparation of water permeable membranes that resist a high temperature and remain inert in presence of numerous powerful solvents (such as ethanol, methanol, higher alcohols); </li></ul><ul><li>Significant ‘’Know-how’’ related to the fabrication of hollow fiber bundles. </li></ul>
  15. 16. Fuel Grade Ethanol Value Chain <ul><ul><li>Channel to market strategy based on core competencies of Vaperma Inc. </li></ul></ul>Raw Material Supplier MSU or Membrane Supplier Dehydration Technology Provider Ethanol Technology Provider EPCM Ethanol Producer Fuel Producer Vaperma Business Licensee or Partner <ul><li>Molecular Sieve (MSU) </li></ul><ul><li>Pervaporation Membranes (Gen-X) </li></ul><ul><li>Vapor Permeation Membranes </li></ul><ul><li>Nanoporous Zeolite-Ceramic (Mitsui) </li></ul><ul><li>Composite Polymer </li></ul><ul><li>Polyimide Integrally Skinned (Vaperma) </li></ul><ul><li>Leading Grain-based: </li></ul><ul><li>ICM (USA) </li></ul><ul><li>Delta-T (USA) </li></ul><ul><li>Vogelbusch (Austria) </li></ul><ul><li>Dedini (Brazil) </li></ul><ul><li>Praj (India) </li></ul><ul><li>Leading Cellulose-based: </li></ul><ul><li>Iogen (Canada) </li></ul><ul><li>Cargill-Dow (USA) </li></ul><ul><li>Abengoa Bioenergy (USA/Spain) </li></ul><ul><li>Small Independent Producers </li></ul><ul><li>Brazil </li></ul><ul><li>North America </li></ul><ul><li>Target for consolidation by major Oil & Gas companies in the near future </li></ul><ul><li>Feedstocks </li></ul><ul><li>Grain (Corn) </li></ul><ul><li>Cellulose-based: </li></ul><ul><li>Wheat straw </li></ul><ul><li>Corn stalks </li></ul><ul><li>Hardwood chips </li></ul><ul><li>Enzymes </li></ul>Oil & Gas
  16. 17. Commercialization Strategy - Ethanol Membrane Cartridges & Dehydration Systems Turn-Key Plants Value-added $0.4M US $23M US $150M US Cartridges Membranes Modules Dehydration Plant Ethanol Plant $3M US Membranes Systems $6M US 160 ML/yr plant Newco MJV Ethanol Dehydration Membrane Technology Provider Ethanol Technology Provider Ethanol Producers EPCM
  17. 18. Business Strategy <ul><li>Demonstrate membrane field performance and life testing at a ‘’Host Site’’ with largest Canadian ethanol producer – Commercial Alcohols Inc. </li></ul><ul><li>Scale-up the membrane manufacturing process and product from 20 m2 to 100 m2 size module; </li></ul><ul><li>Demonstrate ‘’Integrated Dehydration Process Solution’’ using a novel combination of membrane – MVR technology at pilot plant scale using CAI host site; </li></ul><ul><li>Develop strategic partnership with leading ‘’Ethanol Technology Provider’’ as channel to market strategy; </li></ul><ul><li>Build first ‘’Commercial Manufacturing Plant’’ for the production of membrane cartridges. </li></ul>
  18. 19. Ethanol Dehydration Roll-out Plan Phase 2 : 1600 kg/h (40% Feed) Field Testing at CAI 2004 2008 Phase 1A : 50 kg/h (90% Feed) Field Testing at CAI 2005 2006 2007 2009 2010 Phase 1B : 100 kg/h (40% Feed) Field Testing at cellulose plant Field Testing Field Testing Field Testing Commercial Launch 15,000 - 20,000 kg/h 20 m2 per module 100 m2 per module Membrane module manufacturing development 100 m2 per module 50 kg/h Bench Unit 20 m2 (one cartridge) TEAM Project SDTC Project
  19. 20. Financing Plan
  20. 21. Funding Gaps Source: SDTC Innovation Chain Risk Profile Funding Intensity SDTC TEAM IRAP / CANMET
  21. 22. Seed Funding History <ul><li>Seed & Angel Investors: </li></ul><ul><ul><ul><li>Sovar: 360K$ (equity) </li></ul></ul></ul><ul><ul><ul><li>CQVB: 200K$ (debentures) </li></ul></ul></ul><ul><ul><ul><li>Founders & Angel: 200K$ (debentures) </li></ul></ul></ul><ul><li> 760K$ </li></ul><ul><ul><li>Government R&D Support: </li></ul></ul><ul><ul><li>CANMET: 300K$ (grant) </li></ul></ul><ul><ul><li>NRC-IRAP: 105K$ (grant) </li></ul></ul><ul><ul><li>CED (Quebec region): 100K$ (loan) </li></ul></ul><ul><ul><li>R&D Tax Credits: 150K$ (grant) </li></ul></ul><ul><ul><li>655K$ </li></ul></ul>$1.4 millions invested to date
  22. 23. TEAM Funding Experience <ul><li>Fast Application Process: </li></ul><ul><ul><li>4 month process (May 25 – Sept 29); </li></ul></ul><ul><ul><li>Efficiency & minimal bureaucracy; </li></ul></ul><ul><ul><li>Leverage past relationships with other Federal agencies for due diligence (CANMET, NRC-IRAP & CED); </li></ul></ul><ul><li>Fill the ‘’Pre-VC Gap’’: </li></ul><ul><ul><li>Excellent partner for angel investors; </li></ul></ul><ul><ul><li>Opportunity to leverage other Federal contributions up to 75% stacking; </li></ul></ul><ul><li>Project delivery through Technology Federal Agencies: </li></ul><ul><ul><li>NRCan (CANMET) </li></ul></ul><ul><ul><li>Release of funds expected in Dec. 2005 (2 months from project award notice date). </li></ul></ul>Enhanced the stature and credibility of Vaperma in the industry
  23. 24. Offering Summary <ul><li>Issuer: Vaperma Inc. </li></ul><ul><li>Amount Raising: $500K - $750K Can (Q4-2005) </li></ul><ul><li>$0.75M - $1.0M Can (Q1-2006) </li></ul><ul><li>Use of Proceeds: Product development </li></ul><ul><li>Process development </li></ul><ul><li>Alpha Product Field Testing </li></ul><ul><li>Working Capital and G&A </li></ul><ul><li>Current Investors: Sovar (25%) </li></ul><ul><li>Management (75%) </li></ul>

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