Green Energy Solutions Industries, Inc. (PINKSHEETS: GESI) has started the trading week off on the right foot as the project developer for renewable energy projects in Canada is enjoying above average activity with more than 1.3 million shares already moving hands within the first hour of the day; that volume is well above their 50-day average of 357,000 and their 200-day average of 507,000. That’s the good news, the not so good news is GESI continues to struggle with their share price and the volatility that surrounds that price has many investors hesitating.
Last week GESI sank as low as 0.0156, this after hitting a 52-week high of 0.060 in March following their announcement that they anticipated entry into a power purchase agreement that could earn $5.8-$8.1 million annually in the Alberta, Canada market. Needless to say GESI is behind schedule on those earnings figures but they hinted on Tuesday that they may be on track soon enough.
GESI announced on Tuesday that they are “now finalizing the phase for provision of up to $45 million dollars to fund its renewable energy project in Alberta Canada,” this would then get them started on the project development of a 200 ton per day energy production facility, the same facility that they mentioned back in March which could earn $5.8-$8.1 million annually.
According to GESI’s press release on Tuesday “The project-based financing is expected to be offered under project revenue financing terms based upon the projections of revenue that GESI has been able to show would be produced from the waste rail tie to energy project. The project financing of up to $45 million is projected to fully cover the build-out of the waste to energy plant.” Of course investors shouldn’t forget that the financing hasn’t closed just yet, GESI anticipates that happening in two weeks.
Now that waste to energy plant, according to GESI, will target to convert 200 tons of rail ties (feedstock) per day using gasification which would then result in their power production ability to net a 10 Megawatt power supply. Based on the current electrical grid rates this power supply would result in the earnings noted earlier.
In that March 13, 2012 press release announcing potential annual revenue from the new facility GESI CEO Gordon MacKay stated “The increased demand for electricity in Canada, as well as the increase in electrical prices, means that the revenue for GESI is highly likely to not decline in the foreseeable future. Annual electrical pooling prices have increased 100% over the last ten years in Alberta.” That would lead many to believe that GESI could actually be in a solid position for sustainable growth.
That sustainable growth appears to be based on a best case scenario and with no real proven track record to show they can produce these results investors are forced to take a gamble.
Perhaps the biggest hurdle facing GESI’s anticipated growth is actually securing enough rail ties to convert to energy. GESI has said as much, noting they will need to “secure more feedstock to meet necessary quotas for expansion of both facilities and production.”
With that said GESI announced back in March that they were to have a meeting with Canadian Pacific (CP) Railroads “with hopes of securing more feedstock and expanding estimated production. These discussions will possibly expand existing contracts with On-Track Railway and build on the existing relationships GESI holds in the railway industry. Another key aspect of the meeting is to make introductions to CP’s new management team for rail-tie disposal.”
Unfortunately for investors there hasn’t been much in the way of discussion about the outcome of that meeting and no news is usually a bad thing for shareholders. It’s not as if GESI is the only company out there converting rail ties to electricity and if they can’t secure a steady and significant stream then the capacity of their proposed facility really won’t make much of a difference.