One Honduran company, Energía Renovable de Honduras, S.A.
(ERHSA) has already drafted a concept for a RED in Amapala, in 2011. Their concept,
illustrated in a video and a slide show, seems to advocate for the installation of tidal generators, solar concentrators, and wind power.
ERHSA
has never developed or installed any of these technologies.
What the slides show is a bridge running from Coyolito on the mainland, to Punta Segundo, roughly duplicating the current ferry route. The bridge would be 15 meters wide. Below it would be a series of tidal generators. The deck itself would contain a two lane roadway, and lanes for pedestrians and bicycles as well as a zone for the above water equipment used in generating and transmitting power.
A "dock" would run from Punta Segundo out to Isla Concepcion and would house a deep water port with docks for cruise ships, a cargo area, and fuel service. Isla Concepcion would be developed with a single giant glass pyramid-shaped structure that would contain apartments, commercial space, office space, recreation space, and so forth.
A bridge running from El Tigre island to Isla El Pacar would allow that island to be developed with tourist hotels and a large marina.
Plans call for a commercial airport built in the water near Amapala on El Tigre island with an 8200 foot landing strip, taxiways, and hangars. This should be long enough for most larger aircraft in service in Central America. A road and rail system would circumnavigate the island, with a tram taking people to the top of the extinct volcano that formed the island. Punta Segunda would be used as a shipping container storage area, and for utilities including fuel storage and a solar concentrator power station. The island would also have a technical university, a water desalination plant, a water treatment plant, a hospital, and a technology center. Amapala itself would have its own seaport with commercial, cargo, and recreational boat docking areas.
Wind turbines would be set up on the sides of the volcano itself on Isla Tigre, as well as along the bridge from the mainland, along the dock structure, and on Isla Concepcion.
It's an ambitious plan, well beyond ERHSA's ability to fund, and well beyond anything they've ever developed.
A major drawback of ERHSA's presentation is that it is lifted wholesale from other technology companies, like OpenHydro, which designed the tidal generators shown in the video. There's no
indication of a partnership between ERHSA and the key technology
companies visualized in the video. Instead, ERHSA announced a
partnership with the Korean firm Soosung, which makes industrial lift technology.
ERHSA has a history, and it is not promising.
It is also the company that sold the Sayab wind project, just a gleam in their eye at the time, to MINERCO, when MINERCO was pretending
to be an energy company. Filings with the SEC indicate
that MINERCO never paid ERHSA for its rights to Sayab, so they may
have reverted to ERHSA.
ERHSA did not then, and does not now, have access to the funding to
develop any of its listed projects.
What ERHSA seems to do well is imagining a project. They have never had the funding to develop any of the projects they imagined. It is hard to believe that it would turn out well if their first project was of the scale envisaged in their proposal.
Showing posts with label Minerco Resources Inc.. Show all posts
Showing posts with label Minerco Resources Inc.. Show all posts
Thursday, February 13, 2014
Friday, May 4, 2012
MINERCO: Chiligatoro and Sayab Updates
MINERCO Resources, Inc. is one of those strange energy deals that we've written about previously. It is a company lacking financial resources, which hired a new CEO in 2010 and switched corporate directions. It went from being a company that acquires oil and gas leases, to one that pursues the development of renewable energy sources in Latin America. It has "financed" the purchase of two hydro-electric projects and one wind farm project from Honduran energy companies by issuing stock, but none of these projects is anything more that a bunch of paper at this point. Its stock trades on the OTC market for less than $0.01 a share today.
Its flagship potential project is the Chiligatoro Hydro-Electric project, a power generation project that will take water out of a river, let it drop several hundred feet in elevation running inside pipes to feed turbines, then reintroduce the water back into the river. In addition to the income from the power, they expect to receive carbon offset credits for the facility, and further credits for reforestation.
There's a catch looming over them. Their purchase agreement over the rights to the project from ROTA Inversiones, S.A. of Honduras calls for them to raise $12 million to invest in the project by May 27, 2012, or the rights to the project revert to ROTA. They haven't raised $12 million; they haven't raised $1. Instead they've spent money to issue a series of optimistic press releases as the deadline approaches.
On April 24 they issued a press release stating that they were simultaneously applying for the project power purchase agreement with ENEE, the Honduran National Electrical company, and soliciting bids for the final Design. They still need approval from the Honduran Congress as well, before any construction can start, and of course, financing.
Only the bit about soliciting bids is actual new news. The "applying for the Power Purchase Agreement" was already a statement in their March 31, 2012 10Q filing with the SEC, which says "Final approval and start of construction is anticipated by early 2012." Oops. That's not going to happen.
MINERCO uses PR Newswire to issue its press releases. Anyone can use their service, if they can pay. According to this column, MINERCO paid $2,500 for the April 24 promotional campaign. The columnist speculated this release was to help support their falling stock price.
Then on May 1 MINERCO announced they are negotiating with an unnamed equity partner who might acquire 25-60% of the Chilligatoro project, with an investment of $3 million to $7.2 million. Scott Vanis, MINERCO CEO, said:
Here's the thing. Real companies only announce done deals, not deals that might be, because they might not be. If it is far enough along to announce, its also far enough along to name the partner. Everything else is fiction.
Cui bono?
MINERCO had revealed in the March 10Q filing that they are in negotiations with ROTA Inversiones for a 12 month extension of the May 27 deadline to raise the capital. Was the May 1 press release meant to help convince ROTA Inversiones to sign that extension? Without an extension, MINERCO will lose the Chiligatoro project.
But this is only part of MINERCO's headaches. In theory, on June 18, 2012, they need to have invested a further $10 million in the Sayab Wind Project which they purchased from Energia Renovable Hondureña, S.A. However, because the project still lacks environmental approval from SERNA, the deal has not been consummated, and no shares of MINERCO stock have been conveyed to Energia Renovable Hondureña, SA according to the latest 10Q filing. They state there that they expect this approval, and the transfer of stock and title to the project, to happen in the second quarter of this year. At that point the clock will start ticking for them to raise the $10 million investment in that project.
The company lost $552,844 in the 3 months ending January 31, 2012 and had $115 in cash and claimed a further $715,615 in assets.
Its flagship potential project is the Chiligatoro Hydro-Electric project, a power generation project that will take water out of a river, let it drop several hundred feet in elevation running inside pipes to feed turbines, then reintroduce the water back into the river. In addition to the income from the power, they expect to receive carbon offset credits for the facility, and further credits for reforestation.
There's a catch looming over them. Their purchase agreement over the rights to the project from ROTA Inversiones, S.A. of Honduras calls for them to raise $12 million to invest in the project by May 27, 2012, or the rights to the project revert to ROTA. They haven't raised $12 million; they haven't raised $1. Instead they've spent money to issue a series of optimistic press releases as the deadline approaches.
On April 24 they issued a press release stating that they were simultaneously applying for the project power purchase agreement with ENEE, the Honduran National Electrical company, and soliciting bids for the final Design. They still need approval from the Honduran Congress as well, before any construction can start, and of course, financing.
Only the bit about soliciting bids is actual new news. The "applying for the Power Purchase Agreement" was already a statement in their March 31, 2012 10Q filing with the SEC, which says "Final approval and start of construction is anticipated by early 2012." Oops. That's not going to happen.
MINERCO uses PR Newswire to issue its press releases. Anyone can use their service, if they can pay. According to this column, MINERCO paid $2,500 for the April 24 promotional campaign. The columnist speculated this release was to help support their falling stock price.
Then on May 1 MINERCO announced they are negotiating with an unnamed equity partner who might acquire 25-60% of the Chilligatoro project, with an investment of $3 million to $7.2 million. Scott Vanis, MINERCO CEO, said:
We are very excited about the potential of obtaining an equity partner in our Chiligatoro project. This would lower our capital expenditure outlay and expedite the construction of all 3 phases of Chiligatoro. This also opens up the possibility of partnering on future projects as well.
Here's the thing. Real companies only announce done deals, not deals that might be, because they might not be. If it is far enough along to announce, its also far enough along to name the partner. Everything else is fiction.
Cui bono?
MINERCO had revealed in the March 10Q filing that they are in negotiations with ROTA Inversiones for a 12 month extension of the May 27 deadline to raise the capital. Was the May 1 press release meant to help convince ROTA Inversiones to sign that extension? Without an extension, MINERCO will lose the Chiligatoro project.
But this is only part of MINERCO's headaches. In theory, on June 18, 2012, they need to have invested a further $10 million in the Sayab Wind Project which they purchased from Energia Renovable Hondureña, S.A. However, because the project still lacks environmental approval from SERNA, the deal has not been consummated, and no shares of MINERCO stock have been conveyed to Energia Renovable Hondureña, SA according to the latest 10Q filing. They state there that they expect this approval, and the transfer of stock and title to the project, to happen in the second quarter of this year. At that point the clock will start ticking for them to raise the $10 million investment in that project.
The company lost $552,844 in the 3 months ending January 31, 2012 and had $115 in cash and claimed a further $715,615 in assets.
Monday, January 24, 2011
Strange Energy Deals
Something puzzling is going on in the Honduran energy field. A single company, Minerco Resources, is snapping up the rights to approved hydroelectric and wind power properties, without any cash changing hands. And it's not like Minerco is an international giant.
How does a company that in April, 2010 had just $85 in the bank, little income, and over 331 million shares of stock outstanding, whose only source of income is by issuing shares of stock, come to acquire the rights to several hydroelectric and wind generation plants, all unbuilt, in Honduras?
Let me tell you the strange tale of connections leading from a car dealership in Canada to the heart of Honduras.
Minerco Resources incorporated in Nevada on June 21, 2007 as an oil and gas exploration company.
In its first SEC filing, the stock registration form S1, on Dec. 10, 2008, it lists its sole asset as interest in an unbuilt 6 mile long gas pipeline (PMD-Duke pipeline) in Morgan County, TN. which it acquired from its CEO and sole officer (CEO, CFO, chairman of board) Michael Too, when the founding CEO stepped down. At this time it registers 23 million shares of stock, and in subsequent filings indicates that it anticipates it needs $1.7 million over the next year to acquire properties, and doesn't know how it will raise the funds. Michael Too is a car salesperson in Ontario, Canada; the company's largest stockholder, Raymond Li, sells audio equipment in Richmond Hill, Ontario. Corporate Headquarters move into Michael Too's residence in Quebec City after the first year.
The company continues to loose money through the March 22, 2010 10Q filing and by now there are over 55 million shares of stock outstanding. The next day, Michael Too resigns all offices with the company, and as a director as well.
The same day, V. Scott Vanis was appointed President, CEO, CFO, and Chairman of the Board of directors. Vanis, based in Houston, Texas, previously ran a financial services company that provided financing and acquisition services to energy companies, especially in Latin America.
Vanis, Minerco tells us in their press release, served as a consultant to the Honduran government on energy reserves and projects. That prior service seems to have greatly influenced the direction Minerco subsequently took.
On May 27, 2010, Minerco announced an agreement to buy the rights to the Chiligatoro Hydroelectric project in the southern department of Intibuca in Honduras from ROTA Inversiones S.A., a Honduran renewable energy project fund run by Marco Rodriguez. The price: 18 million shares of Minerco's stock payable over 2 years, and some royalties on the net income from the plant itself, once it's constructed and producing power. The stock involved was issued as new shares. Minerco must raise $12 million by May 28, 2012 to retain the project. Otherwise it reverts to ROTA Inversiones. The following day, on May 28, 2010, Minerco Resources appointed Marco Rodriguez to its board of directors, per the terms of the Chiligatoro agreement.
A press release tells us that Mr. Rodriguez has served as an energy advisor to Honduran presidents since 1994, and served on the energy panel of the strategic planning and infrastructure panel (none of which I can verify with available resources).
In June of last year, Minerco stock experienced a price run-up, all the way to $0.90 a share from its more normal $0.03, before settling back down. What fueled the trading binge, that reached a volume of 56 million shares? Two things: the announcement on June 1 that the Honduran National Energy Council had approved the Chiligatoro Project, and a $50,000 advertising deal to hype the stock.
Included in the June 1 press release from Minerco was a claim that V. Scott Vanis and Marco Rodriguez had been invited to meet with Porfirio Lobo Sosa in the Casa Presidencial.
By August 2010 there were 333 million shares of stock outstanding, and about $20k of cash in hand. The company plan requires them to raise $13 million in cash to pay for costs related to Chiligatoro over the next two years. In the following months, they went about amassing cash aggressively, all apparently based on the promise of future profits from Honduran energy projects.
In July of 2010, an El Heraldo article mentioned Marco Rodriguez as head of operations of Minerco in Honduras. Also in July, Sam Messina joined as CFO consultant with a salary of $6,500 per month for 1 year.
Messina was concurrently Secretary, Treasurer and member of the board of another business, Alternative Energy Development Corporation, until he resigned in October of 2010, and apparently went to work full time for Minerco. That followed the September 2010 resignation of Rodriguez from the Minerco board.
Then on October 12, 2010, Minerco Resources borrowed $200,000 interest free, payable on demand, from yet another company, Mainland International, a Belize company whose address is that of an offshoring company, International Privacy Corporation.
On December 2, 2010, Minerco entered into an agreement with Centurion Private Equity LLC to buy up to $5 million of Minerco stock over two years. This stock for cash swap enabled Minerco to access up to $300,000 at a time, up to $5 million total to finance its ongoing business.
On December 7, 2010, Minerco announced to shareholders that the board had adopted a policy that allowed for the issuance of more stock, or a reverse stock split, or the creation of preferred stock shares at the discretion of the directors. They control approximately 58 percent of the outstanding stock and so had the required votes and did not need to ask other shareholders their opinion.
On December 16, 2010, Sam Messina was appointed CFO for five years and given 30 million newly issued shares of common stock (not options), with the proviso that if the company went bankrupt or he leaves in the next two years, he has to return a portion of these shares.
On December 23, Minerco filed a new form S1 with the SEC to sell 60 million shares of common stock for Centurion Private Equity, returning about $450,000 in cash to Centurion. There are now 412 million shares issued.
On January 5, 2011, Minerco purchased all of the interests of Energetica de Occidente S.A. de C.V in the Iscan hydroelectric project (in Guata, Olancho) in exchange for 1 million shares of Minerco stock, and on the condition that Minerco raises $8.5 million within 36 months. Energetica will be paid a royalty on the adjusted gross revenues of the plant, once built and operating.
On January 11, 2011, Minerco hired V. Scott Vanis as CEO for 5 years at $180K salary with bonus clauses increasing his salary if revenues reach certain targets. He was granted 10 million shares of the new, Class A preferred stock. The company changed its articles of incorporation to authorize the issuance of up to 1 billion shares of common stock, and 25 million shares of Class A preferred stock.
On January 13, Minerco announced it had a letter of intent to acquire 30% of the interests of Sesecapa Energy Company in the Rio Frio hydroelectric project (Santa Fe, Ocotepeque). The company also acquired the ability to invest in two subsequent stages of the project. The Rio Frio project is expected to begin producing power in 2012. No terms have been announced yet.
On January 18, the company bought the interests of Energía Renovable Hondureñas S.A in the Sayab Wind Project (San Marcos, Choluteca), a 100 megawatt wind generation plant for 1 million shares of Minerco Resources common stock and interest payments on the adjusted gross income when the plant begins production. In turn, Minerco must raise $10 million in the next 18 months. A similar project by Mesoamerica Energy, financed by the BCIE, is expected to cost $250 million to construct.
What do all these deals mean?
Minerco Resources must raise a total of $22 million by June of 2012, all without a penny of income other than through issuing more shares of stock.
Under current contracts it must raise a further $8.5 million by 2014 by which time, only the Rio Frio project, with the possibility to provide up to $200,00 per year in income, will be producing power. If it fails to raise the funds, all of these projects revert to the previous owners.
Clearly, energy generation in Honduras must have a lot of potential. How else could it convert the promise of a trickle of income into such a river of investment?
How does a company that in April, 2010 had just $85 in the bank, little income, and over 331 million shares of stock outstanding, whose only source of income is by issuing shares of stock, come to acquire the rights to several hydroelectric and wind generation plants, all unbuilt, in Honduras?
Let me tell you the strange tale of connections leading from a car dealership in Canada to the heart of Honduras.
Minerco Resources incorporated in Nevada on June 21, 2007 as an oil and gas exploration company.
In its first SEC filing, the stock registration form S1, on Dec. 10, 2008, it lists its sole asset as interest in an unbuilt 6 mile long gas pipeline (PMD-Duke pipeline) in Morgan County, TN. which it acquired from its CEO and sole officer (CEO, CFO, chairman of board) Michael Too, when the founding CEO stepped down. At this time it registers 23 million shares of stock, and in subsequent filings indicates that it anticipates it needs $1.7 million over the next year to acquire properties, and doesn't know how it will raise the funds. Michael Too is a car salesperson in Ontario, Canada; the company's largest stockholder, Raymond Li, sells audio equipment in Richmond Hill, Ontario. Corporate Headquarters move into Michael Too's residence in Quebec City after the first year.
The company continues to loose money through the March 22, 2010 10Q filing and by now there are over 55 million shares of stock outstanding. The next day, Michael Too resigns all offices with the company, and as a director as well.
The same day, V. Scott Vanis was appointed President, CEO, CFO, and Chairman of the Board of directors. Vanis, based in Houston, Texas, previously ran a financial services company that provided financing and acquisition services to energy companies, especially in Latin America.
Vanis, Minerco tells us in their press release, served as a consultant to the Honduran government on energy reserves and projects. That prior service seems to have greatly influenced the direction Minerco subsequently took.
On May 27, 2010, Minerco announced an agreement to buy the rights to the Chiligatoro Hydroelectric project in the southern department of Intibuca in Honduras from ROTA Inversiones S.A., a Honduran renewable energy project fund run by Marco Rodriguez. The price: 18 million shares of Minerco's stock payable over 2 years, and some royalties on the net income from the plant itself, once it's constructed and producing power. The stock involved was issued as new shares. Minerco must raise $12 million by May 28, 2012 to retain the project. Otherwise it reverts to ROTA Inversiones. The following day, on May 28, 2010, Minerco Resources appointed Marco Rodriguez to its board of directors, per the terms of the Chiligatoro agreement.
A press release tells us that Mr. Rodriguez has served as an energy advisor to Honduran presidents since 1994, and served on the energy panel of the strategic planning and infrastructure panel (none of which I can verify with available resources).
In June of last year, Minerco stock experienced a price run-up, all the way to $0.90 a share from its more normal $0.03, before settling back down. What fueled the trading binge, that reached a volume of 56 million shares? Two things: the announcement on June 1 that the Honduran National Energy Council had approved the Chiligatoro Project, and a $50,000 advertising deal to hype the stock.
Included in the June 1 press release from Minerco was a claim that V. Scott Vanis and Marco Rodriguez had been invited to meet with Porfirio Lobo Sosa in the Casa Presidencial.
By August 2010 there were 333 million shares of stock outstanding, and about $20k of cash in hand. The company plan requires them to raise $13 million in cash to pay for costs related to Chiligatoro over the next two years. In the following months, they went about amassing cash aggressively, all apparently based on the promise of future profits from Honduran energy projects.
In July of 2010, an El Heraldo article mentioned Marco Rodriguez as head of operations of Minerco in Honduras. Also in July, Sam Messina joined as CFO consultant with a salary of $6,500 per month for 1 year.
Messina was concurrently Secretary, Treasurer and member of the board of another business, Alternative Energy Development Corporation, until he resigned in October of 2010, and apparently went to work full time for Minerco. That followed the September 2010 resignation of Rodriguez from the Minerco board.
Then on October 12, 2010, Minerco Resources borrowed $200,000 interest free, payable on demand, from yet another company, Mainland International, a Belize company whose address is that of an offshoring company, International Privacy Corporation.
On December 2, 2010, Minerco entered into an agreement with Centurion Private Equity LLC to buy up to $5 million of Minerco stock over two years. This stock for cash swap enabled Minerco to access up to $300,000 at a time, up to $5 million total to finance its ongoing business.
On December 7, 2010, Minerco announced to shareholders that the board had adopted a policy that allowed for the issuance of more stock, or a reverse stock split, or the creation of preferred stock shares at the discretion of the directors. They control approximately 58 percent of the outstanding stock and so had the required votes and did not need to ask other shareholders their opinion.
On December 16, 2010, Sam Messina was appointed CFO for five years and given 30 million newly issued shares of common stock (not options), with the proviso that if the company went bankrupt or he leaves in the next two years, he has to return a portion of these shares.
On December 23, Minerco filed a new form S1 with the SEC to sell 60 million shares of common stock for Centurion Private Equity, returning about $450,000 in cash to Centurion. There are now 412 million shares issued.
On January 5, 2011, Minerco purchased all of the interests of Energetica de Occidente S.A. de C.V in the Iscan hydroelectric project (in Guata, Olancho) in exchange for 1 million shares of Minerco stock, and on the condition that Minerco raises $8.5 million within 36 months. Energetica will be paid a royalty on the adjusted gross revenues of the plant, once built and operating.
On January 11, 2011, Minerco hired V. Scott Vanis as CEO for 5 years at $180K salary with bonus clauses increasing his salary if revenues reach certain targets. He was granted 10 million shares of the new, Class A preferred stock. The company changed its articles of incorporation to authorize the issuance of up to 1 billion shares of common stock, and 25 million shares of Class A preferred stock.
On January 13, Minerco announced it had a letter of intent to acquire 30% of the interests of Sesecapa Energy Company in the Rio Frio hydroelectric project (Santa Fe, Ocotepeque). The company also acquired the ability to invest in two subsequent stages of the project. The Rio Frio project is expected to begin producing power in 2012. No terms have been announced yet.
On January 18, the company bought the interests of Energía Renovable Hondureñas S.A in the Sayab Wind Project (San Marcos, Choluteca), a 100 megawatt wind generation plant for 1 million shares of Minerco Resources common stock and interest payments on the adjusted gross income when the plant begins production. In turn, Minerco must raise $10 million in the next 18 months. A similar project by Mesoamerica Energy, financed by the BCIE, is expected to cost $250 million to construct.
What do all these deals mean?
Minerco Resources must raise a total of $22 million by June of 2012, all without a penny of income other than through issuing more shares of stock.
Under current contracts it must raise a further $8.5 million by 2014 by which time, only the Rio Frio project, with the possibility to provide up to $200,00 per year in income, will be producing power. If it fails to raise the funds, all of these projects revert to the previous owners.
Clearly, energy generation in Honduras must have a lot of potential. How else could it convert the promise of a trickle of income into such a river of investment?
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