AuraSource, Inc. (ARAO-OTC: BB)
November 19, 2010 Issue
The Most Powerful Name In Corporate News and Information
Bringing To Market Their Clean Coal Technology AuraCoal™ And AuraFuel™ For Processing Clean Oil Shale, AuraSource, Inc. Focuses On Environmentally Friendly And Cost Effective Alternative Fuels
AuraSource, Inc. (“AuraSource” or “Company) focuses on clean energy technology development. AuraSource developed the AuraFuelTM and AuraCoalTM processes. AuraSource formed AuraSource Qinzhou Co. Ltd., a WFOE in China (“Qinzhou”) to acquire these types of Hydrocarbon Clean Fuel (“HCF”) technologies, performing research and development related to HCF technology and products based on this technology, licensing HCF technology to third parties and selling services and products derived from this technology.
Through our wholly owned subsidiary, Qinzhou, we will conduct operations in China, to perform research and development related to HCF technology, to sell services and products related to and licenses for our HCF technology, and to possibly acquire additional HCF-related technology.
AuraCoal is patent pending technology designed to remove sulfur and ash from coal pre-combustion. This reduces energy costs and helps eliminate harmful emissions. This proprietary clean coal technology produces a coal water mixture, which contains only trace amounts of sulfur and ash and constitutes an alternative to oil or natural gas. AuraCoal can be delivered via pipeline in a non-volatile state. The conversion to an AuraCoal system is designed to deliver immediate and substantive reductions in harmful particle emissions as well as savings in transportation, processing and safety costs.
Additionally, we formed Qinzhou Kai Yu Yuan New Energy Co., Ltd., a joint venture between AuraSource and Kaiyuyuan Mineral Investment Group (“KMIG”) to build an AuraFuel plant. KMIG provided the funding for this plant. AuraSource is providing the project management expertise and license for the AuraFuel process. The joint venture contracted China Shandong Metallurgical Engineering Corp. as EPC general contractor which will provide a turnkey solution under an initial operation service contract. The AuraFuel plant will utilize the AuraFuel process which AuraSource licensed from China Chemical Economic Cooperation Center (“CCECC”). CCECC is a Chinese governmental division which leads China’s energy and environmental research and development. AuraSource obtained the license for the Gulf of Tonkin Economic Region. The AuraFuel process utilizes a low temperature catalytic process to convert oil shale and low ranking coal into feedstock for the petrochemical industry.
Stoppenhagen, MBA, JD and CPA
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – November 19, 2010
Mr. Stoppenhagen: The overall focus of the company is the development and production of environmentally friendly and cost effective alternative fuels. Specifically we are focusing on two technologies; one is AuraCoal™, which is a clean coal technology. The other technology that we are focusing on we call AuraFuel™, which is an oil shale processing technology.
CEOCFO: What are the two technologies and how do they differ from what might be available today?
Mr. Stoppenhagen: The first technology, AuraCoal, is a coal water mixture technology. We utilize a low grade of coal to produce an ultra-fine coal water slurry, meaning that we pulverize the coal and combine it with water and an additive. Then we have another technology that processes the coal water slurry to minimize the particle size of coal within the slurry. This can be used as a substitute for heavy oil in industrial boilers; also, it becomes alternative for low-ranking coal upgrade for coal-gasification. Our technology reduces the ash content in the coal water slurry, which is different from what others do currently. Therefore, the retrofit of industrial boilers is minimal because an ash collection facility underneath the industrial boiler is not needed.
CEOCFO: Where are you in the process; is it being utilized, commercialized or still in development?
Mr. Stoppenhagen: Currently we are in the development stage with our technologies. However, we have developed the technology and with this technology, we are planning to construct a production plant in Qinzhou, China and to supply AuraCoal to China Power Investment Corp
CEOCFO: Why China?
Mr. Stoppenhagen: Because in China coal water mixture technology is widely in place and widely used, it is more economical to get it off the ground there versus here in the United States. However, once our pilot project is operational we can demonstrate to US companies its benefits. Specifically, we could retrofit power plants in some states that currently have industrial boilers that sit idle the majority of the year and then when there is peak energy demands they turn them on. These plants are not utilized year round due to the high price of heavy oil, whereas with the AuraCoal technology we can keep them running all year on an economical basis.
CEOCFO: How long for the ROI?
Mr. Stoppenhagen: It depends on where you are looking. The ROI (return on investment) in the U.S. is different from in China due to the lower construction costs and higher commodity costs. In China, it is approximately a year and a half from the start of production.
CEOCFO: What about AuraFuel?
Mr. Stoppenhagen: AuraFuel is a technology that utilizes a low temperature catalytic process to convert oil shale or low ranking coal into feedstock for the petrochemical industry. Currently, the US has the largest oil shale reserves in the world and we don’t process any of the oil shale. This source of energy has been looked at for years but we did not have the technology to process it in an efficient manner. With the spike in oil prices and the world demand companies are starting to pay attention to it. In the regions of Utah, Colorado and Wyoming, there is a renewed interest in oil shale. Currently, there is a plant in Estonia and one is being developed in Jordan and another in Australia. There are two different types of technologies in processing oil shale. One process is above ground retorting that mines oil shale and processes it above ground. The other one is called in-situ process, which processes the oil shale in ground. One of the reasons why oil shale has not been processed previously is because under previous technologies it took so much energy to heat up the oil shale in order to release the oil and the gas that made it not economical. Now with the prices being higher, it is more economical to process. We reduced the temperature that is necessary to release the oil and the gas that makes the process more efficient.
CEOCFO: Are companies in either of the industries aware of what you are doing?
Mr. Stoppenhagen: With the oil shale industry, it is a few extremely large players with the large oil companies like Shell and Exxon being notable. Then there are a handful of other companies that are active in this space. Every year there is a symposium and we are there with others in the industry so people are well aware of what we are doing in that the oil shale space. With our AuraCoal technology, it is more of a diverse industry, so people are not necessarily aware and since we have not yet started producing people are not aware, but will be once production starts.
Would you tell us about the recent Bureau of Land Management release?
CEOCFO: You are working with partners in China; where does the company fit into the whole scheme?
Mr. Stoppenhagen: Our Company is a U.S. company out of Arizona. We have two technologies, one being our AuraCoal, which is internally developed and then our AuraFuel technology. The core technology is licensed from a company in China. We are improving upon that technology. That is where our connections are. We collaborate with international companies that are doing business in China as well as the rest of the world and those are companies.
CEOCFO: What is the financial picture like for AuraSource today?
Mr. Stoppenhagen: To the extent that we are a public company and we are a development stage company, we have money in the bank; you can look at our September 30th financials. We have a new press release showing that we have raised additional funding. As with all development stage companies, we will be looking for funding from time to time. Generally, the funding we are seeking is more of a project type financing, meaning that our working capital is funded for quite some time. However, for each project we will need to come up with funding. There are different ways to fund each project depending on the location of these projects.
CEOCFO: Regarding the other technologies in the pipeline, what do you do to find these technologies, how do you evaluate them and do you look to add more?
Mr. Stoppenhagen: Right now, we are heavily R&D focused. We have a large staff of engineers in the hydrocarbon fuels arena and they are constantly searching for new technologies, as well, they are developing internal technologies. We acquired 50% of the rights to utilize a shock wave grinding process that we can use for different applications as well as with our AuraFuel and AuraCoal applications. We are constantly scouring the industry for new technologies as well as developing them.
CEOCFO: Make the case for potential investors, why should they pay attention today to AuraSource?
Mr. Stoppenhagen: Investors should pay attention to AuraSource because of the increase in the need for fuels and with the development of China and the Far East; these fuels will be needed for quite some time. Renewable fuels are definitely advantageous, but it will be a long time for the world to come off those and provide environmentally friendly alternatives that there will be a demand for in years to come. We have a vast supply of oil shale that is available that will enable us to be self sufficient, but currently we are not utilizing this resource. With AuraCoal it is a pure economical equation. AuraCoal is 50% more efficient than the heavy oil and it is more efficient than just using plain coal. It is an easy decision when we present it to the companies as far as whether to get our product or using the current industry standard. There is demand out there and we can supply that demand.
CEOCFO: Final thoughts, what should people remember most when they read about AuraSource?
Right now, what people should remember most is we are a development stage
company. Many times you hear, “Oh it can’t be done because it wasn’t done
fifty years ago.” However, there are new technologies all the time in the
worldwide economies. Our technologies is needed for some time to come and it
this stage in our company where it is the right time to get in. We are at
the beginning of the process instead of at the end.
Investors should pay attention to AuraSource because of the increase in the need for fuels and with the development of China and the Far East; these fuels will be needed for quite some time. Renewable fuels are definitely advantageous, but it will be a long time for the world to come off those and provide environmentally friendly alternatives that there will be a demand for in years to come. We have a vast supply of oil shale that is available that will enable us to be self sufficient, but currently we are not utilizing this resource. With AuraCoal it is a pure economical equation. AuraCoal is 50% more efficient than the heavy oil and it is more efficient than just using plain coal. - Eric Stoppenhagen, MBA, JD and CPA
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