http://www.afcenergy.com/

Dawnay, Day Corporate Broking Research Note

Aim Admission Document

http://www.independent.co.uk/news/uk/home-news/exclusive-pioneering-scientists-turn-fresh-air-into-petrol-in-massive-boost-in-fight-against-energy-crisis-8217382.html

http://wikisend.com/download/811664/AFC.pdf


MC PEAT & Co Booklet - Page 1

FC Energy aims to become one of the lowest cost generators of electricity on an industrial scale. Its proprietary ‘alkaline fuel cell’ technology is currently undergoing trials that, when successfully onc1uded, should open the route to its commercialisation. We initiate coverage with an 80p TP.

Low cost electricity producer:

AFC Energy’s main focus when developing its fuel cell technology, was to make sure that its ‘system’ could produce electricity on an industrial scale (ie MW class) at a very low cost — such that it would be competitive against mainstream electricity generators which use ‘old fashioned’ technology to turn heat energy (steam) into electricity using ‘engines’ and ‘turbines’ (inherently less efficient processes). We believe that AFC is on track to produce electricity at 4p/kWh (or lower) once commercial volumes are achieved (in FY’16).

Enormous market potential:

The production of electricity at such a cost would generate enormous interest from many industrial sectors. We believe that AFC will initially concentrate its resources to service a few key sectors such as the chlor-alkali market, the waste to energy market, the distributed power market and the Korean market. The provision of a service to just these markets could see AFC installing 3OMW+ of capacity pa in FY’16 onwards.

Pilot production plant:

The company has recently opened a new production facility at its UK HQ to enable it to produce up to 20,000 electrodes pa. This will give the company sufficient capacity to meet its anticipated levels of demand over the next 18 months. We take this as a good signal on the part of management of its confidence in the near term technical and commercial success of its fuel cells.


AkzoNobel trials:

AFC Energy has installed some of its fuel cells for trial purposes into a chlor-alkali plant owned by AkzoNobel in Germany. Many different parameters are currently being tested, including longevity. We believe that the successful conclusion of these tests will send a huge signal to other potential partners to accelerate their commercial discussions with AFC.
I - fantastic value opportunity: Using a DCF based valuation approach (based on our ‘central case’ revenue assumptions) we derive a 12 month ‘fair value’ for the stock of 1 15p (with a WACC of 15%). We have then applied a 30% market discount to arrive at our 12 month Target Price of 80p.

a very good critique, but of course and as outlined in the preamble it does presuppose that the trials are every bit as successful as expected or even promised

EU grant for UK fuel cell energy facility

Up to Euro 6 million grant award for UK's largest fuel cell energy facility

AFC Energy (AIM: AFC), the industrial fuel cell power company, and Industrial Chemicals Limited ("ICL") are pleased to announce that they have received notification that they have been awarded a European Union grant of up to Euro 6 million (£4.9 million) for the installation of the world's largest alkaline fuel cell energy generation system at ICL's chlor-alkaline chemical plant in Essex, UK.

The award is being funded by the Fuel Cells and Hydrogen Joint Undertaking (FCH-JU), through the EU's Seventh Framework Programme (FP7). It will provide AFC Energy and ICL and their European project partners with more than four years' financial support for the project, which was first announced on 25 June 2012. The grant is subject to final negotiation and, subject to agreement, is expected to be in place to enable the project to commence during Spring 2013. If concluded satisfactorily, AFC Energy will coordinate the project and expects its direct share of the project funding to be up to Euro 3 million (£2.45 million) with the balance to be received by the other project partners.

Great news, and not just for the grant, but for the publicity, which could easily be the best part of this RNS.

The bit that loomed large for me is the publicity which be more important to AFC than the actual monetary value of the grant.
I also like the following estimate statement, 'the stationary fuel cell industry is forecast to create 500,000 jobs globally over the next decade.
As AFC will soon have the the largest fuel cell system installation in the UK and it is believed to be the largest alkaline fuel cell system announced anywhere in the world, the future looks fantastic.

No doubt the sp will rise significantly today, with profit takers stepping in to knock it down a bit.
What we need now is a steady news flow, to keep any gains from todays RNS, from slipping down pre spring of next year.
AFC definitely have a strong lead in their field, and I can't see the present management team letting this slip.

Greek - it bodes well doesn't it - I'm quiet happy to have purchased recently and hopefully not have to look at them too often.

Hi Skinny,

My problem is that as investing is one of my main hobbies (I'm retired), when I'm at home I tend to have my computer on all day, so whenever I walk past it, I am tempted to glance at share prices.
I accept that your not looking at the AFC share price too often, is a better strategy!

Good job I'm a keep fit fanatic otherwise I would end up a computer potato (a bit like a couch potato, but more stressful).

Greekman - in case you hadn't noticed, I spend quite a bit of time on the computer :-)

Greekman,
You could probably use iPad and have it with you all the time.

Anyway, I prefer laptops or a proper PC as they are fully compatible with everything.

Hi Ahoj,

I have considered an ipad, problem is it would probably lead to a divorce, as my wife already refers to herself as a PC widow.

Hahaha,
Yes, the same problem here. I steer at my computer screen 100 times more, so the consequence can be a divorce ...

This is the new life, we are satisfied this way!!

GREAT NEWS
now lets hope some are more interested than just because the " AMO " is in

Issue of Share Options and

Exercise of Share Options and Warrants

Total Voting Rights

AFC Energy is pleased to announce that on 7 November 2012 the board of AFC Energy agreed to grant options over a total of 810,000 new ordinary shares of 0.1p each in the Company ("Ordinary Shares") (the "Options").

The Options have been granted to employees under the rules of the AFC Energy Plc Enterprise Management Incentive Share Option Scheme. The purpose of the Options is to recognize individuals' performance and to provide further incentivisation.

The Options are exercisable at a price of 35.75 pence per Ordinary Share, being the closing price on 6 November 2012 and are exercisable between 3 and 10 years following the date of issue. The exercise of the Options is not conditional.

The Company also announces that application has been made for 1,050,000 Ordinary Shares to be admitted to trading on AIM pursuant to the exercise of 500,000 options under the Company's EMI Share Option Scheme (the "Option Exercise") and 550,000 warrants (the "Warrant Exercise"). The options and warrants were originally issued in 2009 and have an exercise price of 3.1 pence per ordinary share.

The 1,050,000 Ordinary Shares issued pursuant to the Option Exercise and the Warrant Exercise will rank pari passu with the Company's existing Ordinary Shares and admission to trading on AIM is expected to take place on 14 November 2012.

Total Voting Rights

The total enlarged share capital of the Company following admission of the 1,050,000 Ordinary Shares will be 218,348,544 Ordinary Shares with no shares held in treasury. This figure may be used by shareholders as the denominator for the calculations by which they can determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the Disclosure Rules and Transparency Rules of the UK Financial Services Authority.

Following the issue and the exercise of the Options and Warrants there will be 11,140,000 options in issue and 11,006,000 warrants in issue, representing 9.21 per cent of the fully diluted share capital of the Company.

Ends

GM just cakme across thi,hope it helps?


beeezzz, 1MW of power from a fuel cell system operating at 60% efficiency is:

1 / 60 x 100 = 1.666666MW of fuel cells required

To check:

1.666666MW - 40% loss = 1MW output

----------------

1kg of Hydrogen contains 39.4kWh of energy
1.4m metric tonnes = 1,400,000,000Kg
1,400,000,000Kg x 39.4kWh = 55,160,000,000kWh
55,160,000,000kWh / 8760 (hours in a year) = 6,296,804kW
6,296,804kW / 1000 = 6,297MW of fuel cells required
Output would be 6,297MW - 40% loss = 3,778MW
3,778MW x 8760 = 33,095,280MWh a year of revenue
4p/kWh = £40/MWh (target price)
33,095,280MWh x £40 = £1,323,811,200 per annum (£6.09 per share)

Add waste Hydrogen from other industries like Chlorate, Ethylene, refineries. Add revenues from Waste-to-Energy, UCG and DG.

Now you can see why Ervington are piling in and why you won't find me selling any AFC stock for years. Might as well wait for the bidding war to maximise my gains.

and this

http://afr.com/p/national/abramovich_ponders_deal_with_linc_Uz3QmX8qyNwI5zYxBMKt7L

http://www.businessspectator.com.au/bs.nsf/Article/Macquarie-Mark-Bouris-Yellow-Brick-Road-BHP-Echo-pd20121108-ZTRWJ?OpenDocument&src=mp

http://www.proactiveinvestors.co.uk/companies/stocktube/1432/afc-energy-working-on-scaling-up-the-business-1432.html

Report from 3i on investor day.

Thu 16:39
Re: Investor day

polterlooser
19UP
Having attended now 3 investor days and the afternoon session to-day I think I can add a little more.
The new skid mounted unit is for ICL. It will be much easier to have a test unit un the UK near AFC's main base.
I found that there was more of an air of confidence with the staff I met without any loss of enthusiam. Many things have progressed since last year and the new production facility was working well. Electrodes were being produced as we went through. The many small improvements that have been made since last year will greatlly improve the product.
We did not get any clear answer as to when the AZKO testing will be complete because that facility will be necessary for some time yet. Every time a new improvement is made to the design it will need more endurence testing. However we must appreciate that these improvemnets are necessary to increase the competitivness of the sysytem

Some more.



oldernowiser
16UP
Thu 22:02
Investor's day 1130

jimmynan
36UP
Well here is my own account of today's tour. I apologise if there are a lot of already well known facts included but I just want to put all my jottings down. Any newbies will get some insight too. Appologies for it being so long as well!!

After the intro by IB, IW and then GL said a few words. Notably GW had just returned from a FC conference in USA, I believe, where he said AFC were a well known name now and the chair of the conference said to GL that she felt AFC were in the best position to become the first FC company to make a profit. This is when taken in context that $billions has been spent on the technology and not a single profit has been made by a FC company to date. Part of this is clearly due to the low cost design of our FC which was repeated several times during the tour.

We were then split into two groups, one led by IW and one by GL. Interestingly IB disappeared off to to conduct a tour with several members of ICL - clearly things are moving forwards here nicely.

I went off with the IW group where we were first taken to a room containing the frame of the next FC system that was going to be sent out to a customer. This customer was clearly ICL although not mentioned in name. It had only arrived this week and there was clearly a buzz about it's arrival. I asked IW if this would be a similar system to the one at Akzo to which he replied he couldn't answer this but clearly his tone suggested they were getting a new system - is it a beta ++ or delta system - who knows. Costs are already coming down, the frames now cost 2/3 of what they originally did however the frame only counts for 10% of the system cost - any saving though must be a good thing! He was very keen to say how they are working very hard to reduce the 'parasitic' power costs reducing efficiencies which mainly comes from the pump which pushes the KOH to the top of the system, after that gravity pretty much takes over.

Next we headed off to see the working fuel cell with 2 fitted cartridges. Apparently the cartridges weren't full size so they could be accommodated in the test room. We could actually touch the system we got that close! Currently they are having to use bottled hydrogen which costs £100/cylinder and each cartridge gets through 15 cylinders a day!! Clearly testing at Akzo and soon at ICL is very cost effective compared to the current set up at HQ. ICL being only 1 1/2 hours away will make site visits much more practical.

After seeing the FC system we were shown through to the labs which have expanded into a second room since last year's investors day. Here they test 5cm x 5cm electrodes which essentially provide similar dynamics to full sized electrodes so provide small scale test beds. They are currently trying to develop techniques to speed up electrode testing so they don't have to be run for months on end to work out their lifespan. They were also in the early stages of testing electrodes being run on impure hydrogen. The one impurity tested so far didn't seem to effect the performance of the electrode although he didn't state what exactly they were testing. He did say they were looking at ammonia and natural gas as feed gases. IW was very particular about data collection stressing how important it was for data to be accurate and reproducible before releasing it to the market.

Next we headed to the production facility which is in fact 3 large prefab style garages. We only saw the first one which is where the electrodes are produced. The second building was an office for the production staff and where the cartridges were assembles. The third building was were the electrodes were going to be recycled. The team of 4 we saw in the facility were had at work producing the black pellety dough and rolling it out using dough rolling machines. Again they pride themselves in using commonly available machinery which keeps costs low. They are already planning how to best automate the system but are clearly positive that this challen

Thu 22:24
Re: Investor day

oldernowiser
16UP
I went this morning and would agree that there is a general feeling of restrained optimism and confidence. As far as the trials with Akzo are concerned IW said he does not really want them to end - certainly not anytime soon. The level of co-operation between Akzo and AFC is clearly very high and IW says that they have a completely open relationship with Akzo and as a result get access to all of their fount of tecnical knowledge dealing both with Hydrogen and Potassium hydroxide and Sodium hydroxide. The value of gaining deep industrial operations experience with Akzo is proving extremely valuable.

They also confirmed that finance from the EU with ICL is just a matter of dotting is and crossing ts (there was an ICL man present when the FD confirmed this)

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Re: Investor day

richlist
23UP
Thanks to Jimmynan for feedback from the Investor's day yesterday. I also went and have a few more bits of observation, comment for the information hungry among us. Again, I was struck by the optimism and enthusiasm I saw. There has been huge progress since the Investors Day a year ago and our spot checks are just little windows of the ongoing fast moving progress they are making.

On the topic of when will we hear about the akzo trial. It sounds as if the lab test bench already has a newer recipe for electrodes, which was said to have increased longivety and power output. Numbers were not specified, but I imagine we are already ahead of the projected timeline graph in the Peat report. This is very exciting. This has not gone to Akzo yet.

This is not 'delay to get to the perfect product'. It is an ongoing process of iterations. Microsoft have had many of these to keep ahead. Any new recipes will just be new electrodes which need replacing every few months anyway. It is all very good news.

When we visited the running cartridges IW said that the hydrogen costs upto £1500 per day to run tests at Dunsfold. With two test beds at Akzo on free hydrogen, the testing there is therefore worth £1m per year of AFC (and our) money. (Might have been more, I was not sure if this was for testing with a full stack of electrodes).

This means that time at Akzo is very valuable. IW specified that it is used to collect a lot of different kinds of data of use to the company. I got a new insight into why they would not choose to carry on with a longivety test there when they already have something better in the pipeline. I felt very reassured that progress is very good and the absence of an Akzo trial '3 month' rns is not because there is anything wrong.

Regarding any RNS about a contract with Korea, it was said that they have not yet chosen their definitive partner, so not about to get this any day probably. However, IW said this was 'complicated'. The Peat report mentioned that companies cannot operate in Korea without a partner and not clear how a deal should be organised. This may give an insight into how the structure of any agreement needs to be right. It suggests there may be more than one partnership option. It is important for the longer term that the deal is the best for AFC. I felt reassured that there are options there and they will end up with what is best for AFC and not rush into anything.

We saw the new production facility. (I had not seen it before). We were shown the rubbery 1cm diameter pellets of the secret recipe. There were two enthusiastic people operating the rolling machines. One machine was called a 'dough' something. They were said to be used for making pancake roll casings. There seemed to be repeated rollings between transparent non stick sheets (computer aided, so I imagined that accurate and even thickness is important). The recipe seemed to have the properties of a rich shortcrust pastry or shortbread, in that it rolled with a bit of crumbling at the edges. So looked to have capacity to crack if not treated properly. Possibly the 'lightness' and therefore gas permeability would be affected if the 'pastry' is rolled with too heavy a hand. The pieces of 'rolled dough' were then transferred to an oven to dry for 4 hours. We did not see the part where they are attached to the metal plate with a layer of glue or the electrodes assembled.

The process is being managed by a very enthusiastic production managed who is maintaining consistency and not letting the scientists alter things and tinker with the recipe. This a a marked step change from lab excitement to real production.

The process looked very time consuming. It is easy to see that this could be automated using the type of machine that would produce lasagne sheets (eg) but also the need to be careful of thickness, lightness and cracking to get a uniform quality product. I am sure they will be able to scale this up without difficulty, but are ta