CALGARY, ALBERTA -- (Marketwire) -- 03/26/13 -- West Mountain Capital Corp. ("the Company" or "WMT") (TSX VENTURE: WMT) is providing the following corporate update on its business activities in China as well as guidance respecting its anticipated capital requirements and capital plans for the next two years, namely 2013 and 2014.
The Company has entered into a number of agreements that have positioned it for growth in China in the areas of contaminated soil treatment and the recovery of oil from oily sludge waste. A summary of these agreements follows.
-- Nanjing - An Agreement of Strategic Cooperation with the Nanjing Institute of Environmental Science (the "Nanjing Agreement") for the treatment of contaminated soil throughout China. Under this agreement the parties constructed a TPS soil treatment unit that was completed in June 2012 having an annual contaminated soil treatment capacity of 30,000 tonnes. The Company plans to increase its TPS soil treatment fleet in 2013 by fabricating additional TPS units to add 120,000 tonnes annually of soil treatment capacity. In 2014 the Company plans to fabricate additional TPS units to add a further 300,000 tonnes of annual treatment capacity. By 2015 the Company plans to have 450,000 tonnes of annual soil treatment capacity in China.-- Hangzhou - A subcontract with Hangzhou Dadi Environmental Co. Ltd. to treat 33,000 tonnes of pesticide-contaminated soil in Hangzhou, China as a commercial demonstration of the TPS technology. The treatment of the contaminated soil commenced in December 2012 using the first TPS unit constructed under the Nanjing Agreement. This TPS unit is presently processing under steady state conditions and regularly exceeds its rated daily treatment capacity by 10-15%. It is expected that the project will conclude on or about December 31, 2013. The revenue from this demonstration contract is approximately CDN$3.5 million. As this is a commercial demonstration contract revenues and margins will be less than normally expected for this type of project.-- Zhoushan - The Company is a 50:50 equity partner in a Sino-foreign joint venture company with Zhoushan Nahai Solid Waste Central Disposal Co. Ltd. ("Nahai") of Zhoushan, Zhejiang Province, China. The WMT-Nahai Joint Venture is designing, engineering, constructing and will operate an oily sludge waste recovery facility in Zhoushan, Zhejiang Province. This non-TPS facility will receive, process and recover oil from oily sludge waste generated from oil storage operations and oil tanker cleaning activities in that region. Construction of this facility is expected to be completed in Q3 2013 and will have an annual treatment capacity of 50,000 tonnes. At full capacity this facility has the potential to generate annual revenue of approximately US$15 million with 20% EBIT.-- Changqing - A 10-year subcontract agreement with Liaoning Huafu Environmental Engineering Co. Ltd. to construct and operate a hazardous industrial sludge treatment facility in Changqing, China. Construction of the equipment and facility is expected to begin early in Q2 2013 and be completed and commence operations before the end of 2013. The Changqing facility will employ TPS technology and have an annual treatment capacity of 15,000 tonnes. The subcontract contemplates a broadening of the scope of operations to include an additional six (6) locations. The annual revenue potential of this sub-contract, including the revenue from the additional locations, is approximately US$16 million with 25% EBIT.
The Chinese environmental market increased from $72 billion in 2005 to $162 billion in 2011 (125% growth). The average expenditure growth was $32.5 billion annually, or 1.5% of China's GDP for the respective years. Contaminated soil remediation projects were listed among five vital projects of China's 12th five-year plan for the period of 2011-2016, with the Chinese government announcing in early 2011 its plan to invest approximately $3 billion in soil investigation, remediation and improving regulations during that time. In addition to the amounts invested directly by the Chinese government, and according to the China Securities Journal, the estimated market value of soil remediation projects undertaken in China is expected to reach US$6.36 billion annually by 2015. As a result of growing demands, it is anticipated that the treatment of contaminated soil and underground water will be one of the growth drivers of China's 13th five-year plan (2016-2020).
It is estimated that there are over 600,000 contaminated sites in China and of these, 300 contaminated sites have been prioritized for remediation within the next 5 years. The average size of a contaminated site in China ranges between 100,000 - 150,000 tonnes of soil. This suggests a contaminated soil remediation market of between 30 - 45 million tonnes over the next 5 years. The Company currently has 30,000 tonnes of annual treatment capacity resident in China and expects to increase its annual treatment capacity to 150,000 tonnes by 2014 and to 450,000 tonnes by 2015.
Between 1991 and 2012, China's oil production expanded from about 2.2 million barrels a day to 4.3 million barrels a day. In 2011, China ranked as the fifth largest oil producer in the world and it is forecast that China's oil production will grow to 4.5 million barrels per day by the end of 2013. Oily sludge is generated by oil storage operations and oil tanker cleaning activities among other activities, and is one of the main sources of pollution throughout China with complex physical and chemical properties. As a result of increased oil production, the demand for oily sludge treatment services have increased and are anticipated to increase further in the coming years. Upon the completion of the Zhoushan treatment facility, the Company's annual treatment capacity for oily sludge in Zhoushan will be 50,000 tonnes.
2013 - 2014 Capital Program
The Company will require additional capital over the next two years to increase its fleet of TPS units and expand its treatment capacity for contaminated soil and oily sludge as described above, and to meet its commitments under the joint ventures and agreements described above. A summary of the capital expenditures presently planned for the next two years are as follows:
2013 Capital Expenditures
-- US$6.7 million for the construction of TPS units to increase the Company's contaminated soil treatment capacity to 150,000 tonnes per year;-- US$1.0 million for the construction of a small TPS unit to support the hazardous industrial sludge treatment operations at the Changqing project; and-- US$1.3 million for completion of the oily sludge treatment facility in Zhoushan.
2014 Capital Expenditures
-- US$16.0 million for the construction of TPS units to increase the Company's contaminated soil treatment capacity to 450,000 tonnes per year.
The Company plans to undertake multiple rounds of financing over the next 12 months to fund the cost of its China-based capital program. In particular, William Blair & Company, an investment bank with offices both in the U.S. and China, has been engaged to assist with the completion of one or more equity issues for aggregate proceeds of up to US$25 million. In addition, WMT is presently conducting a private placement of convertible debentures in Canada for proceeds up to CDN$1.5 million that will be used for general corporate purposes. Please refer to the Company's news release of February 21, 2013 for details of this financing.
About the West Mountain
WMT is an established Canadian environmental solutions company specializing in the thermal treatment of a variety of hazardous and non-hazardous waste streams. It employs TPS Technology, a unique indirectly heated, closed loop technology that allows it to extract even the most hazardous contaminants from soil, industrial sludge, pharmaceutical waste and consumer waste streams converting much of it into reusable oil and synthetic natural gas that it uses to sustain the process. This methodology offers significant opportunity for greenhouse gas reduction over traditional hazardous waste destruction technologies. WMT's management team maintains expertise in hazardous waste management, Brownfield remediation and pharmaceutical waste management with experience spanning North America and 15 countries internationally. The Company will operate in China through a wholly-owned foreign enterprise and has completed all the necessary documentation to incorporate under the name Shanghai Phase Separation Environmental Technology Co., Ltd. ("PS2").
About Nanjing institute:
The Nanjing Institute of Environmental Sciences is a key technical provider for policies, legislation, action plans and technical guidelines on biodiversity conservation in China, with research areas in rural environmental protection, nature conservation and biodiversity protection. NIES carries out research on rural ecology, nature conservation, pollution prevention of township and village enterprises and agriculture chemicals. NIES undertakes key national research programs and scientific research projects on the rural environment and provides scientific basis and technical support for the management of rural environments and nature and ecological conservation while assisting in the formulation and implementation of relevant policy and action plans.
Hangzhou Dadi Environmental Protection Engineering Co. Ltd. is a private hi-tech environmental protection enterprise that specializes in remediation of contaminated sites (including soil and groundwater). They have a professional technical team composed of over 50 people, among which more than 50% have master and doctor degrees who hold intermediate or senior titles. They have completed more than 20 site investigation and remediation projects and more than 10 scientific research projects at the national, provincial and municipal level.
Zhoushan Nahai Solid Waste Central Disposal Co. Ltd. is a private company and a leader in the management of hazardous waste and oily sludge based in Zhoushan, China. The company has excellent infrastructure including an oil storage facility (2,500,000 tonnes), a waste oil recovery facility (capacity of 1,000,000 tonnes per year), bilge water treatment facility (20,000 tonnes per day) and a solid waste destruction facility (20 tonnes per day). Nahai possesses the only waste management treatment permit in Zhoushan and is strategically located on the coast of the East China Sea with excellent accessibility to the traditional oil shipping lanes. Zhoushan is an island port and tourist city newly developed in China and is in the center of the fourth largest fishery in the world.
Huafu Environmental Engineering Company is a division of the Liaoning Huafu Group. The Company was established in 1992 specializing in R&D, consulting, procurement, manufacturing, engineering and cooperative investment in the areas of heavy oil recovery, wastewater treatment and energy conservation from different industries. In addition to Huafu Environmental Engineering the group includes Liaoning Huafu Petroleum Hi-tech Corp. Ltd, Liaoning Huafu-Andmir Environment Equipment, Shandong Huafu Petroleum & Environmental, and the Panjin Huafu LengJia Wastewater Treatment Plant. The Huafu Group has innovated and developed some 300 different advanced products and technologies and hold over 50 registered patents in China for environmental equipment.
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward-looking statements with respect to potential revenues and earnings from projects located China, future deployments of the TPS technology, the Company's capital expenditure plans for 2013 and 2014 and the completion of financings to fund the planned capital expenditure program. The purpose of the forward-looking statements and information is to provide readers with basic information regarding the potential size of the contaminated soil treatment market and the oily sludge waste recovery market in China and the potential participation by WMT in these markets and may not be appropriate for other purposes. The forward-looking statements and information are based on certain key expectations and assumptions made by WMT, including expectations and assumptions concerning the plan to be awarded contracts to treat such material and obtaining the financing necessary to carry out its planned capital expenditure program. Although WMT believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because WMT can give no assurance that they will prove to be correct.
Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the Company's contracts for operations in China, the fabrication of TPS soil treatment units, the availability of financing, the treatment of hazardous industrial sludge in general, attempting to secure work, the uncertainty of estimates and projections relating to the value of the contract, health, safety and environmental risks, transportation costs, environmental risks, failure to realize the anticipated benefits of the contract, failure to obtain required regulatory and other approvals, and changes in legislation, including but not limited to environmental regulations, and risks associated with doing business in China. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).
This forward-looking information represents the Company's views as of the date of this news release and such information should not be relied upon as representing its views as of any date subsequent to the date of this document. The Company attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimates expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts the responsibility for the adequacy or accuracy of this release.
West Mountain Capital Corp.
Mr. Paul Antle
President and CEO
709 726 0336