Quadrise Fuels International is well on-track to achieve its targets

Quadrise Fuels

Quadrise Fuels International plc (LON:QFI), the supplier of MSAR® and bioMSAR™ emulsion technology and fuels, providing innovative lower cost and lower carbon alternatives to fuel oil and biofuels, has presented an update following a board review of the Company’s projects, operations and business development activities.

Summary

·    The conclusion of the board review is that the Company is on track to achieve its commercialisation targets following positive engagement with counterparties during the past month. The Company therefore intends to progress with each of its core projects as well as with the development of bioMSAR™ fuel and its derivatives.

·    MSC – Quadrise recently met with MSC executive management in Cyprus and both parties are  now working to finalise an agreement covering the LONO trial programme aboard MSC container shipping vessels and the subsequent commercial framework. The conclusion of the board review is that the Company is on track to achieve its commercialisation targets following positive engagement with counterparties during the past month. The Company therefore intends to progress with each of its core projects as well as with the development of bioMSAR™ fuel and its derivatives.

·    Morocco – an updated Material Transfer and Cooperation Agreement with our international chemicals and mining client is now expected to be signed this month ahead of an MSAR® combustion trial that is expected to conclude early Q3 2022.

·    Utah – following signing of Commercial Development Agreement (“CDA”) in April 2022, Quadrise and Valkor have commenced preparatory steps under Phase 1 of the CDA to identify target consumers of MSAR® and bioMSAR™ fuel.

·    Testing with Aquafuel this quarter will conclude the bioMSAR™ engine efficiency optimisation work, with results expected in early Q3 2022.

·    Discussions are underway with several candidate sites in Panama and Honduras for MSAR® and bioMSAR™ power plant trials later in 2022.

MSC

Quadrise and MSC Shipmanagement continue to progress finalisation of an agreement covering the LONO trial programme aboard MSC container shipping vessels and the subsequent commercial framework, following a positive meeting recently with MSC executive management in Cyprus. 

In parallel, preparations for the 4,000-hour LONO trial continue, with the procurement process for the vessel fuel booster system now underway. The selection of suitable MSC LONO vessels and fuel production sites are also in progress, with a number of options being investigated to minimise cost, time and risk. 

The testing of MSAR® and bioMSAR™ on Wärtsilä’s optical combustion chamber is now scheduled for Q3 2022, followed by injector wear rig testing on bioMSAR™ in Q4 2022, due to unavailability of key resources at Wärtsilä and their testing partners. Quadrise and Wärtsilä are working together to ensure there are no further delays to this programme during 2022.

Assuming timely conclusion of this framework agreement, and associated agreements with other project stakeholders during 2022, the trials themselves are expected to commence before the end of this calendar year, and will take approximately 9 months to conclude. Commercial supply of bioMSAR™ to MSC would then be expected to commence in early Q4 2023, following receipt of a LONO from Wärtsilä.

Morocco

Quadrise continues to work with the client team to finalise terms on an updated Material Transfer and Cooperation Agreement with our international chemicals and mining client following the expiry of the prior agreement in December 2021. It is currently expected that this updated agreement will be entered into prior to the end of May 2022.

As previously announced by the Company, the first of the Moroccan site trials will be at “Site B”, which accounts for around one third of the client’s annual HFO consumption, where 60mt of MSAR® will be combusted on one of the client’s industrial units. A smaller trial of bioMSAR™ will also take place on the same unit after the MSAR® test. The Quadrise trial equipment is in Morocco, and production of the fuel will commence upon signature of the updated agreement. The Site B trial is expected to conclude in Q3 2022.

Assuming the successful conclusion of the Site B trial, the intention is then to negotiate and conclude a commercial supply agreement covering one or more of the client’s sites in Morocco.

A feasibility study for use of MSAR® at a second client site (“Site A”) is close to completion. This may lead to a further trial agreement, and if successful enhance the value and volume of the commercial supply agreement for MSAR®. 

Utah

As announced on 11 April 2022, Quadrise entered into a Commercial Development Agreement (“CDA”) with Valkor Technologies LLC (“Valkor”) to commercialise Quadrise’s MSAR® and bioMSAR™ technologies at their projects in Utah.

Quadrise awaits the delivery of a crude oil assay from a Valkor heavy oil asset (the ‘Primary Project’) in Utah. Following delivery, Quadrise will perform the envisaged analysis and, if required, will test a field sample to confirm that it is suitable as feedstock for the production of MSAR® and bioMSAR™.

In addition, Quadrise and Valkor have begun working together under Phase 1 of the CDA to identify target consumers of MSAR® and bioMSAR™ fuel to be produced by the Utah heavy oil asset in which Valkor has an equity interest (the “Primary Project”), following which supply agreements will be negotiated with these identified target consumers.

Under the terms of the CDA, both of these Phase 1 activities are to be completed prior to 30 June 2022, after which commercial terms for an MSAR® and/or bioMSAR™ License and Supply Agreement at the Primary Project would be concluded no later than October 2022. 

Latin America

Quadrise and its local agents, E&PC, are progressing discussions with several candidate sites in Panama and Honduras to trial MSAR® and bioMSAR™ later in 2022 at a power plant equipped with Wärtsilä diesel engines, as a precursor to potential commercial supply in 2023. 

In Mexico, the Company submitted a multi-site study to the National Oil Company supporting the implementation of MSAR® technology. Documentation is being prepared for one of the sites identified that could lead to a demonstration of MSAR® refinery refueling on a fuel oil consuming unit later in 2022.

bioMSAR™ & Transition Solutions

Following the positive results of bioMSAR™ testing on a Wärtsilä diesel engine at the VTT facility in Finland and on a high-speed 4-stroke Cummins diesel engine at Aquafuel, a final round of testing has been scheduled at Aquafuel to commence later in Q2. This will conclude the bioMSAR™ engine efficiency optimisation work, with results expected early in Q3 2022. 

During the period, Quadrise conducted a detailed analysis of the crude glycerine market and appointed a consultant to review global sourcing and partnerships for supply and refining. Commercial and supply discussions are underway with various biodiesel suppliers to secure the required volumes and quality of renewable, fuel-grade glycerine to support the forthcoming MSC trials and as a source for future bioMSAR™ commercialisation.

In addition, Quadrise continue to investigate alternative methods of sourcing renewable glycerine from non-conventional sources, including algal production.

An international patent application for bioMSAR™ and a UK patent for our novel blending technology has been submitted jointly with Nouryon and complements our existing MSAR® IP.

Our RDI team continue to test low-carbon future fuels, as part of our energy transition activities to offer a Net Zero solution for our clients by 2030.

Jason Miles, CEO of Quadrise Fuels, said:

“During the past month, the board and management have conducted an extensive review of the Company’s projects, operations and business development activities with key clients. This exercise was undertaken to ensure that our manpower and cash resources continue to be optimally deployed to achieve the Company’s revenue and shareholder value creation targets.

A number of very positive discussions and developments have taken place across our core projects over recent weeks. These, together with the outcome of the detailed review described above, re-confirmed that the Company is well on-track to achieve its targets. The Board is of the firm view that the best path to value creation is to progress each of our core projects to address the needs of the energy sector during the transition period, whilst continuing to develop our low carbon fuel options, including bioMSAR™ fuel and derivatives for a cleaner energy future.

We are delighted with the progress that the Company has made over the past month, with the Valkor CDA signed in April and an updated agreement with our Moroccan client expected to be signed this month as a result of positive and regular engagement with the client team. Preparations are underway for the bioMSAR™ LONO trial following a positive meeting with executive MSC management in Cyprus, and a new commercial framework agreement with MSC is being progressed at pace between the parties.

Market conditions and the economic climate for Quadrise are increasingly favourable, with potential customers under added pressure to reduce fuel costs, whilst also lowering emissions. Fuel oil-diesel product spreads are at very high levels due to the war in Ukraine and global supply constraints.

Given the developments described above, we expect to convert our projects to agreements soon, and on behalf of the team at Quadrise, I would once again like to thank our shareholders for their ongoing patience and support, and we look forward to being able to announce further material progress soon.”

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