ADA-ES, Inc. (NASDAQ:ADES) (“ADA”) today provided an update on the progress of Clean Coal Solutions, LLC (“Clean Coal”), its joint venture with an affiliate of NexGen Resources Corporation and an affiliate of The Goldman Sachs Group, Inc. Clean Coal is marketing two different technologies, CyClean and M45, both of which reduce emissions of NOx and mercury, and qualify for IRS Section 45 tax credits of over $6.33 per ton of coal.

To date, Clean Coal has installed and operated 15 Refined Coal (“RC”) facilities, consisting of both CyClean and M45 technologies, at various utility sites, with three more RC facilities scheduled to be qualified by the end of next week. ADA expects that each of these 18 facilities will satisfy the “placed-in-service” requirements from initial operations, which would make these facilities available for full-time operation in 2012 and qualify for the IRS Section 45 tax credits for a ten-year period. Clean Coal’s goal is to install and operate up to eight additional RC facilities by year-end, for a total of 26 facilities installed in 2011.

After initial operation, it takes an average of approximately six months to obtain permits for full-time operation, secure necessary approvals from Public Utility Commissions and complete all necessary contracts. If all planned RC facilities become fully operational, which we expect to occur throughout 2012, they should produce a total of more than 40 million tons of RC per year. At this level of production, ADA expects to generate pre-tax income of approximately $50 million per year after payments to minority partners for the 10-year life of the tax credits. Based on continued progress with permitting and contract negotiations between the lessees of the facilities and the utilities where the facilities are sited, ADA hopes to have several of these additional facilities processing more than 15 million tons of coal per year in routine operations within the next two months.

Clean Coal is financing the construction and installation of the new RC facilities with a $15 million line of credit with a commercial bank, internal cash flows of approximately $20 million per year from the first two RC facilities in operation since June 2010, and deposits received to secure participation in the facilities. To date, Clean Coal has received $11 million in deposits from the likely lessees.

Success with M45 Technology

Included in the 26 new facilities expected to be installed by year-end are six facilities designed to operate using ADA’s new patent-pending M45 technology. In September, ADA announced it had successfully demonstrated this new technology for producing RC that complements and expands Clean Coal’s market for RC beyond the patented and currently operating CyClean technology, which is limited to cyclone boilers. In November, ADA signed a non-binding term sheet granting an exclusive license of M45 to Clean Coal. The exclusive license that would result from the expected definitive agreement will include a royalty based on a percent of operating income on future production of M45 RC and prepaid royalties up to $10 million, in addition to ADA’s 42.5% distributions from the JV.

Over the past few weeks, ADA has successfully placed-in-service three RC facilities based upon the M45 technology. This includes the first system off the line designed exclusively for M45 and two facilities originally built for CyClean. In the full-scale operation of these facilities, the M45 technology demonstrated mercury removal over 40% and up to 70%, and NOx reductions over 20% and up to 30%. The capability of using CyClean facilities with the M45 technology gives Clean Coal greater flexibility in deciding where to locate the plants, increasing the potential RC production.

Dr. Michael Durham, President and CEO, stated, “We have established a very aggressive schedule for optimizing RC opportunities and are making great progress getting these facilities installed and operating. These business opportunities do not depend upon any new environmental or tax regulations. The current 10-year tax credits do not require any additional approval by Congress, which provides us with confidence that CyClean and the M45 technologies will generate long-term cash flows.”

The Company will be presenting this update at the 2011 Baird Clean Technology Conference at 2:15 pm Pacific Time on Wednesday, November 30, 2020 at the Four Seasons Hotel in San Francisco, CA. A copy of the slides will be available via the Investor Information section of ADA’s website at www.adaes.com. The presentation slides will also be filed as a Current Report on Form 8-K with the U.S. Securities and Exchange Commission on or before November 30, 2020.

Source: Business Wire