BluSky Carbon Inc. ("BluSky" or the "Company"), an innovative entry into the carbon removal clean technology sector is pleased to announce that it has signed a Letter of Intent (the "LOI") regarding a project proposal with a U.S. based purchaser ("Purchaser") pursuant to which the Company aims to establish a second commercial facility unrelated to the previously announced US$105 million AR1 project (see news release dated Sept 24, 2024), to be designated as the AR2 project and located in Northwest Arkansas.
The proposal sets forth a delivery schedule (similar in nature to the AR1 sales agreement) whereby the Purchaser could purchase from the AR2 project a fixed volume of 70,000 tons of biochar per year over a period of 10 years. The biochar would be supplied on an as-is basis. The moisture content would be verified with a Certificate of Analysis (CoA) at delivery. Based upon a negotiated rate of two hundred and seventy-five dollars (US$275) per ton, the sales value under the proposal is approximately US$192 million.
The Company notes that its ability to meet scheduled delivery of biochar is conditional upon its commissioning a total of five (5) Vulcan Heavy biomass pyrolysis systems (Vulcan Heavy). BluSky's ability to commission any Vulcan Heavy will be contingent on its ability to secure financing on acceptable terms, and no assurance can be given this will occur. The Company further notes that the transactions contemplated by the LOI remain subject to the negotiation and entering into of a definitive agreement.
Concurrently and integral to the sales proposal contained in the LOI, BluSky has received a 25-year land lease agreement offer from a third party for the Company to lease a portion of a strategic location offering ample room and infrastructure suitable for the AR2 pyrolysis systems build-out. Additionally, BluSky has received a substantial and highly competitive feedstock proposal option from a third party to purchase up to 500,000 tons per year of biomass feedstock containing a moisture content of 40% or less derived from waste streams generated by the regional forestry industry. This feedstock proposal more than meets all the estimated production needs for the AR2 facility as currently proposed, with ample room for additional production scalability in future. The Company is assessing whether to move forward with each of these additional proposals, and notes that its ability to secure either or both is contingent upon it securing financing on acceptable terms and proceeding to a definitive agreement with respect to the sales proposal relating to the AR2 project.
Under the terms of the ten-year biochar sales proposal, standard commercial clauses regarding any breaches of agreements would be subject to written notification detailing the breach; thereafter, if the defaulting party does not remedy the breach within a mutually agreed period, the Agreement may be terminated for cause. Payment terms are proposed to be net 60 days. Delivery terms would be FOB production site in Northwest Arkansas
Biochar is black carbon produced from biomass sources (i.e., wood chips, plant residues, manure or other agricultural waste products) for the purpose of transforming the biomass carbon into a more stable form (carbon sequestration).1 It can persist for long periods of time in the soil at various depths, typically thousands of years. Biochar is produced by heating biomass or waste materials containing carbon through pyrolysis. Pyrolysis involves thermal and chemical decomposition of biomass in limited or zero supply of oxygen, typically at temperatures ranging from 300°C to 1000°C. Biochar can be used as a soil amendment to improve soil physical and chemical properties, enhance water retention, and sequester carbon. It also contributes to climate change mitigation by stabilizing carbon in soils for thousands of years, preventing it from being released as carbon dioxide into the atmosphere. Biochar has shown promise in increasing crop yields, improving soil fertility, and reducing environmental pollution through its ability to retain nutrients and minimize greenhouse gas emissions.
BluSky CEO Will Hessert comments, "The momentum in our sector continues to expand and grow. Interest in sustainable carbon reduction, related job creation opportunities, and the topic of waste transformation into a useful mix of saleable products has achieved an inflection point in the minds and attitudes of a growing number of influential business leaders across the nation. Every week we are responding to an increasing number of inquiries and expressions of interest in our technology and related carbon reduction solutions. In fact, managing the interest in our business is pushing us to adopt new procedures to ensure every opportunity has a chance to be heard. As we near the holiday season, we are blessed to be able to reflect on this remarkable situation and grateful for the interest we are more than happy to manage."
