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On 3 January 2019 – just as the fourth quarter had ended – we shipped the first PWR BLOK 400-F from Gothenburg. Destination: Afarak Mogale’s ferrochrome production facility in South Africa. This means that we have initiated the delivery of Ripasso Energy’s first commercial order of the PWR BLOK 400-F, marking the beginning of a new chapter in the company’s development. Installation and commissioning will take place in 1Q 2019. In 2Q 2019 we intend to commercially prove the PWR BLOK 400-F. Once this happens, we will have proven the product’s ability to convert industrial waste gases (residual gases) to climate-friendly electricity. This opens the way to customer financing and larger orders.
We can look back on an eventful quarter that began with the signing, on 1 October 2018, of a letter of intent with Glencore Operations South Africa (Pty) Ltd. Our intention and that of Glencore is to enter into binding agreements by no later than 31 March 2019 for the delivery and installation of at least 44 and no more than 136 PWR BLOK 400-F units, a deal valued at between SEK 240 and 740 million (EUR 22-68 million). It will also be the largest waste-toenergy (“WtE”) project of its kind ever implemented in Africa, and will reduce carbon dioxide emissions by between 154,000 and 476,000 tonnes/year.
During the quarter we also intensified series production of Stirling engines and assembly of the PWR BLOK 400-F in Sibbhult for the delivery to Afarak Mogale in 2019. The efforts have gone well, but we were able to ascertain early on that the manufacture of the container portion of the PWR BLOK was more expensive than forecast. This was attributable partly to the new functionality that needed to be integrated due to South African safety routines and functions, but above all to the rapid production rate required in order to deliver according to plan. Because we chose to finance the deal with Afarak Mogale ourselves and to be paid over a period of 3.5 years, liquidity has diminished faster than planned. On the positive side, the Stirling engines themselves have become 10% cheaper to manufacture than forecast. Now that we have been able to review how future generations of the PWR BLOK 400-F will be manufactured, we have confirmed that a gross margin of 30-40 percent can be expected.
In order to secure the company’s future working capital needs, at the end of the quarter the Board of Directors resolved to convene an Extraordinary General Assembly with a proposal for the issue of convertible bonds in the amount of just under SEK 80 million with preferential rights for existing shareholders. The proposal was adopted at the Extraordinary General Assembly of 16 January 2019.
On a closing note, I would like to point out that during Q4, we also performed an internal LCOE analysis (Levelized Cost Of Energy) of the PWR BLOK 400-F. It confirms that the cost of generating electricity using the PWR BLOK is approximately 20 EUR/MWh, which is a considerably lower generation cost than other types of energy are able to offer according to the recognised global studies published in this regard. In 2019 we will be receiving real-life operating data from the installation at Afarak Mogale, which can prove this.
In 2019 we also decided to have independent international verification bodies review, evaluate and certify the environmental impact of our technology.
Our ambition is firm: during the year to come we plan to prove the PWR BLOK-400F, both commercially and technically.
CEO and founder