Edison Investment Research Report on Leaf Resources

Game-changer technology for bio-based products

Edison Investment Research Report on Leaf Resources

Edison Investment Research Ltd, a leading European, independent investment research company, with offices in London, New York and Sydney has released their initial research coverage on Leaf Resources Glycell technology.

Highlights include:

• “Game-changer technology for bio-based products”,

• Leaf Resources’ Glycell^TM technology dramatically cuts the cost of producing cellulosic sugar from biomass,

• Glycell^TM has the potential to change the face of global renewable production,

• The Glycell^TM process has enormous valuation upside because of its potential global application.

Extract from the report
Summary
Leaf Resources’ (LER) Glycell^TM technology dramatically cuts the cost of producing cellulosic sugar from biomass. It also produces ‘clean’ sugars, with low degradation, for higher-value bio-based chemicals and plastics manufacture. Its quality co-products open up high-value global growth opportunities. The shares are trading well below our valuation range.

Lower costs, unlocks high-value growth areas
LER’s Glycell^TM process is a disruptive technology that dramatically reduces the costs of bio-based chemicals, plastics and fuel produced from biomass. The process has the potential to change the face of global renewable production. The cost advantage is partly driven by higher process yields, the simplicity of the process and additional revenue from co-products. The quality of its co-products offers another dimension, unlocking high-value opportunities in new growth areas such as the renewable aromatic resource for the chemical industry offered by lignin.

Valuation: Premium to the share price, co-product upside
We have calculated indicative valuations from royalty and access fee streams. The valuations assume LER’s Glycell^TM process achieves a 5% share of the global carbohydrate equivalents (CHEQ) market in 10 years. This is a reasonable target, but there are both upside and downside risks. In our base case, we use gross profit using revenue from cellulosic sugars only. In a second case, gross profit is based on both cellulosic sugars and a lignin coproduct. For a third case, gross profit is based on cellulosic sugars and two coproducts, lignin and glycerol. While coproducts have very positive valuation impacts, there is a risk the market for the coproducts may take a number of years to develop.

• Base case: valuation range is A$1.24-1.66/share.
• Includes lignin coproduct: valuation range is A$4.16-5.75/share.
• Includes lignin and glycerol coproduct: valuation range A$$5.27-7.31/share.

Read the full report here>>

Managing Director of Leaf Resources Mr. Ken Richards commented:
The release of the Edison report is an important first plank in our strategy of taking the Leaf Resources story to a broader global investment market. We are working with companies from all around the world with our Glycell^TM process and it is important our investment story is also highlighted in world markets.
The Edison report is a vital tool in our efforts to take Leaf Resources to the global investment markets.”