CO₂ Solutions Announces Fiscal 2019 Third Quarter Results and Saint-Félicien Project Update

Financial News

Quebec City, Quebec, May 28, 2019 – CO2 Solutions Inc. (the “Corporation” or “CO2 Solutions”) (TSX-V: CST) today announced its financial results for the three-month period ended March 31, 2019. The Corporation’s detailed condensed interim consolidated financial statements and management’s discussion and analysis (“MD&A”) will be filed and available on

Three-month Period ended March 31, 2019 and Subsequent Operational Highlights

Update on the Saint-Félicien Project – Commissioning complete and the unit now in operation

On March 14, 2019, the Corporation announced that the start of the commissioning of the CO2 capture unit had officially begun. This start-up was preceded by the successful pre-operation verifications of each of the capture unit’s systems, after which the unit was put into operation and the first tonnes of CO2 were captured. The Corporation also announced that it would then ramp up the overall capture rate to validate the unit’s nominal capacity of 30 tonnes of CO2 per day. This is the Corporation’s first commercial project with Fibrek General Partnership, a subsidiary of Resolute Forest Products Inc. (TSX: RFP) (NYSE: RFP), and Serres Toundra Inc. The project involves the deployment of a 30-tonne per day (tpd) CO2 capture unit and ancillary equipment at Resolute's pulp mill in Saint-Félicien, Quebec and the commercial reuse of the captured CO2 by the adjacent Serres Toundra Greenhouse complex.

The construction of the Saint-Félicien CO2 capture unit was partly financed with investments from Sustainable Development Technology Canada (SDTC) and the Technoclimat program of the Quebec government as well as a loan from Canada Economic Development (CED).

On April 29, 2019, the Corporation announced that the successful completion of the commissioning of the CO2 capture unit located at the Resolute Forest Products Inc. pulp mill in Saint-Félicien, Québec, a significant milestone and development in the objective of monetizing the Corporation’s proprietary CO2 capture technology. Given the late delivery of certain components and the difficult weather conditions experienced during equipment installation over the fall and winter months, the project’s capture unit was completed later than originally planned and, because of these delays, unforeseen additional equipment costs, and variations in the U.S. to Canadian exchange rate, the Corporation estimates that the total cost of the completed CO2 capture unit and ancillary equipment could reach $11.1M, approximately $2.6M higher than the original estimate provided by the Corporation’s consulting engineers in October 2017. Under the circumstances, given the Corporation’s current cash situation, aggravated by this cost overrun, CO2 Solutions is currently evaluating alternative financing options (see “special committee” announcement below). It should be noted that even at this higher level of capital expenditure (“capex”), the Saint-Félicien capture unit is expected to be profitable and its operating cost profile is expected to confirm the competitive operating and capex estimates of the Corporation’s enzymatic technology at large scale. CO2 Solutions’ completed unit is now only the second commercial carbon capture unit in Canada and the first such project using second-generation technology. The Corporation’s management is confident that this successful completion of the unit will be a major stepping stone for future projects at the same and greater scales.

As part of the commissioning phase, CO2 Solutions contracted Tetra Tech, an independent consulting engineering services firm, to review the Unit’s operational efficiency and deliver a performance audit report (the “Audit”). Specifically, the Corporation sought to validate the Unit’s nominal capacity of 30 tonnes-CO2 per day and the ability of the pulp mill to provide all of the Unit’s thermal requirements with only residual low-grade energy (i.e. hot water).

The Audit confirmed the following:

  • The Unit and its components are accurately sized to produce at least 30 tonnes-CO2 per day under normal operating conditions.
  • The quantity of thermal energy required by the reboiler of the Unit is only 2.4 GJ/tonne-CO2.
  • The required thermal energy is entirely provided by the pulp mill through residual, low-grade energy (i.e. hot water) that has nil value and no parasitic impact on the mill’s energy balance.
  • The quantity of electrical energy required to operate the Unit translates into a cost of only C$7.35/tonne-CO2 (or less than US $5.00/tonne-CO2).

Along with these excellent results confirmed by the Audit, the Corporation recorded two additional significant operating outcomes during this commissioning period; the first is related to enzyme half-life (i.e. durability), and the second is related to the quality of the CO2 produced for delivery to the greenhouse.

Regarding enzyme half-life, the configuration of the Unit enabled a doubling of the enzyme’s half-life relative to what had been observed in earlier large-scale demonstrations of the Corporation’s technology. This gain is the result of modifications to the process following the 2015 Valleyfield demonstration and clearly demonstrates the cost reduction potential of the Corporation’s enzymatic technology.

With respect to CO2 quality, an analysis of the samples drawn from the Unit confirmed its high degree of purity which was well within the stringent guidelines required by greenhouse operators. This purity level was obtained even though the Unit draws raw and unpolished flue gas from the pulp mill’s lime kiln, which mimics conditions similar to those found in cement plants and other industrial applications.

Since the capture unit has now successfully reached its nominal capacity, as provided in the contract, a six-month demonstration period has begun, after which the Corporation expects to generate revenues from the sale of the captured CO2 to the Serres Toundra greenhouse. This unit in Saint-Félicien is the Corporation’s second operating CO2 capture unit and its first commercial unit. The completed Saint-Félicien unit will provide several benefits to its stakeholders, from generating revenues for CO2 Solutions, to reducing the CO2 emissions of Resolute pulp mill and enhancing the growth of Serres Toundra’s greenhouse production. As a result of the successful completion of this Unit, CO2 Solutions continues to attract strong interest from corporations worldwide seeking a cost-effective and environmentally friendly CO2 capture technology.

Update on the VCQ Project

The VCQ project, lead by the Corporation, is the most comprehensive CO2 capture and utilization demonstration project. Launched in February 2017, the objectives of this project are to develop and demonstrate commercially viable end-to-end solutions to capture and utilize CO2 in various applications while reducing greenhouse gas (“GHG”) emissions.

Due to the Corporation’s current cash situation noted above, the VCQ project has currently been paused pending the raising of additional financing.

CO2 Solutions announces the creation of a special committee by the Board of Directors to review Strategic Options

On April 1, 2019, the Corporation announced that its Board of Directors had appointed a special committee (the “Special Committee”) to review all strategic alternatives that may be open to the Corporation. The Special Committee is composed of independent members of the Corporation’s Board of Directors, namely Kimberley Okell, Jocelyn Proteau and Glenn Kelly, the latter acting as Chairman of the Special Committee. In connection with this review process, the Corporation retained the services of Langlois Lawyers and Ernst & Young to act as its advisors.

In order to provide adequate leeway for the Special Committee’s review, the Corporation immediately curtailed its operating activities until its financial situation allows for their resumption. At this time, the Special Committee has initiated a process allowing it to evaluate various strategic alternatives, with the support of its financial and legal advisors.

Financial Update


The Corporation recorded no revenues for the three-month period ended March 31, 2019 and $0.01 million for the same period in 2018. For the nine-month periods ended March 31, 2019, and 2018, the corporation recorded $0 and $0.03 million respectively. Funds received from subsidy or grant agreements signed with federal or provincial government agencies are not treated as revenue. Rather, these amounts are accounted for as a deduction from research and development expenses in the period the contribution is claimed and accrued (see Research and development expenses below).

Research and Development Expenses

Research and development expenses, before tax credits and government assistance, increased by $0.35 million to $2.60 million for the three-month period ended March 31, 2019, compared to $2.25 million for the same period in 2018. Increases in the three-month period from that of the prior year reflect the variation in activity in the VCQ project and the completion of the Saint-Félicien project. These expenses will vary based upon the development phase and activity levels of ongoing projects undertaken by the Corporation.

For the nine-month period ended March 31, 2019, research and development expenditures, before tax credits and government assistance, increased by $6.00 million to $13.84 million from $7.84 million for the same period last year. As was the case above, this increase reflects the higher volume of research and development activities associated with the VCQ and Saint-Félicien projects.

Quebec provincial research and development tax credits accrued during the quarter were $0,21 million and $0,44 million for the nine-month period ended March 31, 2019.

General and Administrative Expenses

General and administrative expenses totalled $0.65 million for the three-month period ended March 31, 2019, compared to $0.51 million for the same period in 2018, representing an increase of $0.14 million. This net increase is predominantly related to an increase of $0.19 million in travel, entertainment and advertising and other general office expenses offset by a decrease in patents amortization of $0.05 million.

General and administrative expenses totalled $2.05 million for the nine-month period ended March 31, 2019, compared to $1.69 million for the same period in 2018. This net increase of $0.36 million is predominantly related to a net increase in travel, entertainment and advertising and other general administrative expenses.

Loss and Comprehensive Loss for the Quarter

The Corporation recorded a loss of $2.45 million, or $0.02 per share, for the three-month period ended March 31, 2019, an increase of $1.97 million from the loss of $0.49 million or $0.00 per share, for the same period in 2018. For the nine-month period ended March 31, 2019, the Corporation recorded a loss of $7.79 million or $0.05 per share, an increase of $5.46 million from the loss of $2.33, or $0.02 per share, for the same period in 2018. No significant factors, other than those described above, contributed to the change in the loss for the three-month or the nine-month periods.

Liquidity and Financial Position

As at March 31, 2019, the Corporation had an aggregate balance of cash and cash equivalents of $1.45 million and negative working capital (current assets less current liabilities) of $10.40 million.

The unaudited condensed interim consolidated financial statements for the nine-month period ended March 31, 2019 and 2018, and related notes included therein and the Management’s Discussion and Analysis for the period ended March 31, 2019, and additional information regarding the Corporation, are available on SEDAR at

Going Concern

To date, the Corporation has financed its operations mainly through cash flow obtained from technology development collaborations, the issuance of common shares or convertible securities and government assistance.

As at March 31, 2019, the Corporation had an accumulated deficit of $47,748,114 compared to $40,344,343 as at March 31, 2018. In addition to ongoing working capital requirements, the Corporation must secure sufficient funding to meet its capital and operational expense commitments related to its research and development projects as well as its general and administration expenses. As at March 31, 2019, the Corporation showed a working capital deficiency of $10,402,657 compared to $3,867,536 at the same time last year. The working capital deficiency includes cash and cash equivalents of $1,447,725 ($8,124,284 in 2018) and deferred grant of $5,880,325 ($9,188,973 in 2018). As at March 31, 2019 and currently, management estimates that these current funds alone would not be sufficient to allow the Corporation to continue its operations over the next twelve (12) months especially given the cost increase related to the Saint-Félicien project.

Through the creation of a Special Committee and through current and ongoing discussions with potential funding partners and provincial and federal government agencies, the Corporation’s management is actively seeking to raise the necessary capital to meet its funding requirements. However, there can be no assurance that management’s plans or current negotiations will be successful. Until such time as financing at terms acceptable to the Corporation can be confirmed or negotiations with potential funding partners are successfully concluded, the Corporation has commenced limiting the ongoing project and development work and reducing its operating costs.

Accordingly, these conditions have resulted in an uncertainty that may cast significant doubt about the Corporation’s ability to continue as a going concern and accordingly, the appropriateness of the use of IFRS applicable to a going concern as described in the following paragraph. In the case that the Corporation is unable to continue its operations, amounts realized for assets might be less than amounts reflected in the Corporation’s condensed interim consolidated financial statements.

The Corporation’s condensed interim consolidated financial statements do not reflect the adjustment to the carrying values of assets and liabilities, expenses and condensed interim consolidated Statement of Financial Position classifications that would be necessary were the going concern assumption inappropriate. These adjustments could be material.

About CO2 Solutions Inc.

CO2 Solutions is an innovator in the field of enzyme-enabled carbon capture and has been actively working to develop and commercialize the technology for stationary sources of carbon pollution. CO2 Solutions’ technology lowers the cost barrier to Carbon Capture, Utilization and Sequestration (CCUS), positioning it as a viable CO2 mitigation tool, as well as enabling industry to derive profitable new products from these emissions. CO2 Solutions has built an extensive patent portfolio covering the use of carbonic anhydrase, or analogues thereof, for the efficient post-combustion capture of carbon dioxide with low‐energy aqueous solvents. Further information can be found at

CO2 Solutions Forward-looking Statements

Certain statements in this news release may be forward-looking. These statements relate to future events such as (i) the Corporation’s projects, including their costs, progression and benefits, (ii) the Corporation’s expected activities, expenditures and capital requirements, (iii) the Corporation’s ability to continue as a going concern, (iv) anticipated developments in the Corporation’s operations foreseeable future, (v) the adequacy of the Corporation’s financial resources and (vi) other events or conditions that may occur in the future, and reflect the current assumptions and expectations of management. Forward-looking statements are frequently, but not always, identified by words such as “expects”, “anticipates”, “believes”, “intends”, “estimates”, “predicts”, “potential”, “targeted”, “plans”, “possible” and similar expressions, or statements that events, conditions or results “will”, “may”, “could” or “should” occur or be achieved.

Factors that could cause actual results to differ materially from such forward-looking statements include, but are not limited to, (i) availability of funding, (ii) general business and economic uncertainties, (iii) third party events and adverse market conditions, as well as those risks set out in the Corporation’s public documents filed on SEDAR and (iv) the adequacy of the Corporation’s available cash resources. The Corporation’s forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made. Consequently, all forward-looking statements made in this news release involve known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements.

Readers are cautioned not to place undue reliance on such forward-looking statements. CO2 Solutions undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law.

Source: CO2 Solutions