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Cielo Waste Solutions Corp
Symbol C : CMC
Shares Issued 171,640,840
Close 2019-04-01 C$ 0.09
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Cielo Waste, Renewable U to build refineries in Alberta

2019-04-01 11:24 ET - News Release

Mr. Don Allan reports

CIELO PROVIDES OPERATIONS UPDATE AND ANNOUNCES MEMORANDUM OF UNDERSTANDING TO BUILD RENEWABLE FUEL REFINERY IN BROOKS, AB

Renewable U Energy Inc. has exercised its option to enter into a joint venture with Cielo Waste Solutions Corp. in the city of Brooks, Alta., for the purposes of building one or more refineries. As such, Cielo and Renewable U have executed a binding memorandum of understanding.

Further, in response to recent inquiries regarding progress on the company's desulphurization process, Cielo would like to provide an operations update.

Operations update

As previously disclosed, Cielo has selected a third party supplier to guide the company with respect to the best and most economical way to remove the sulphur from Cielo's process. The supplier is based in the United States and, while it is well known and reputable, unfortunately, the process has been slower than Cielo had anticipated. Cielo has made efforts to speed up the process and has been in consistent, weekly communication with the supplier; however, as it is an unrelated third party, Cielo must rely on the timing of the supplier.

The supplier has performed analysis on two samples of Cielo's renewable diesel and will perform a third. The first was completed in the fall, as previously announced. As the first sample consisted of very high percentages of used motor oil (UMO), which is being used to mix with the waste feedstock to make a slurry that is further broken down into the renewable diesel, the analysis indicated very high sulphur numbers. The second tested sample had a much lower UMO content, resulting in lower sulphur numbers that were much more in line with what Cielo had experienced in its demonstration plant. The third sample to be sent will consist of 99 per cent sawdust, which is anticipated to indicate very low sulphur numbers, much better than Cielo was able to achieve in the demonstration plant, and is expected to result in a very high-grade renewable diesel with higher renewable content and Cetane numbers and a significantly lighter colour. Therefore, Cielo expects it is becoming easier and less expensive to remove the sulphur.

To aid in expediting the analysis of the results from the selected desulphurization supplier, Cielo has also contacted a very experienced North American engineering firm to provide additional advice on sulphur removal to finalize the process. It is one of management's top priorities to complete the sulphur removal process as quickly as possible.

As well, in the meantime, Cielo is fabricating the desulphurization and polishing towers such that, when the supplier and the engineering firm determine the amount of desulphurization medium required and the process is finalized, Cielo will be ready to implement and begin removing the sulphur expediently.

Memorandum of understanding

Renewable U has exercised its option to enter into a memorandum of understanding with Cielo for the territory of Brooks, Alta., and has incorporated a new company, Renewable U Brooks Inc., to this end. Cielo has received a $250,000 fee in consideration for the opportunity to enter into the joint venture with Renewable U and to secure the territory of Brooks.

The general terms of the memorandum of understanding, which are to be incorporated into a definitive agreement between Renewable U and Cielo forming the joint venture, are substantially the same as the previously announced terms for the joint venture refineries to be located in Medicine Hat, Grande Prairie and Calgary, Alta., as follows:

  1. Renewable U Brooks will be solely responsible for financing 100 per cent of the costs associated with acquiring the land, building and commissioning of the initial joint venture refinery in Brooks Alta.
  2. Cielo will over all manage the project, overseeing the planning, construction, commissioning and operation of the joint venture refinery and will receive a management fee for the construction of the joint venture refinery equal to 7 per cent of the cost of the projects, subject to certain exclusions, and will continue to receive management fees once operations begin based on industry standards.
  3. In the event that Cielo does not execute the definitive agreement for Brooks, Alta., subject to an exclusion, by June 30, 2019, Cielo has agreed, subject to applicable laws and policies, to issue Renewable U Brooks common shares of Cielo in lieu of returning the fee, valued at the greater of 25 cents per share and the average closing price of Cielo's shares during the five trading days prior to June 30, 2019.
  4. Profits will be split 30 per cent in favour of Cielo and 70 per cent in favour of Renewable U Brooks until Renewable U Brooks has received profits equalling 100 per cent of the costs of the project plus the applicable management fees. Thereafter, profits will be split on the basis of 50.1 per cent in favour of Cielo and 49.9 per cent in favour of Renewable U Brooks, reflecting the respective interests/ownership of the parties.

Barry Morishita, Mayor of the City of Brooks, stated: "We are excited at the prospect of working with Cielo Waste Solutions Corp. for the development of a renewable diesel facility in our community. A project such as this will bring unique opportunities to our region through a diversification of our economy, employment opportunities and various enhancements into the future. As an added bonus, the production of renewable diesel fuel has numerous environmental benefits while adding unchartered potential to our local and provincial energy industries."

Lionel Robins, chief executive officer of Renewable U, stated: "We are very excited to continue to have the opportunity to work with such an amazing green corporation. We have been working with Cielo to secure waste feedstock for Brooks and believe that we are going to change the way the world looks at waste streams. This is such a game-changing technology that Renewable U will continue to work closely with Cielo on future municipalities and make a serious dent in Canada's greenhouse gas reductions."

Don Allan, president and chief executive officer of Cielo, stated: "The continued support shown by Renewable U is very impressive. This growing business relationship will make the buildout of the next refineries that much easier. With the support of the City of Brooks, we believe the timing of construction can be shortened once permits have been obtained. Cielo continues to gain industry confidence and continues to move our strategic plan forward."

Joint venture extensions

Cielo and Renewable U and Cielo and Seymour Capital, respectively, have agreed to extend the deadlines set out in their respective, previously announced memorandums of understanding to June 28, 2019. The parties will continue to work together to complete the due diligence and other processes in preparing to execute on the respective joint ventures.

Financing update

One of Cielo's contractors has agreed to convert $14,818.44 into 113,988 shares at a deemed price of 13 cents per share, which shares will be subject to a four-month hold.

Cielo has closed its private placement offering of units at 13 cents per unit, with each unit consisting of one common share and one share purchase warrant, exercisable at 20 cents for a period of two years, subject to accelerated exercise provisions. A total of $1,644,371 in gross proceeds was raised in three tranches by the issuance of 12,649,007 units.

About Cielo Waste Solutions Corp.

Cielo holds the exclusive licence for the global rights to a transformational, patent-pending technology engineered to convert garbage-derived feedstocks to high-grade renewable diesel at a significantly lower cost than biofuel companies. With landfills being one of the world's leading contributors to greenhouse gas emissions and being projected to double in size over the next seven years, Cielo can potentially resolve this crisis, on a cost-effective basis, by converting multiple different garbage-derived feedstocks, including sorted municipal solid waste (garbage), wood and agriculture waste, tires, blue-box waste, all plastics, and virtually any other cellulous waste product, into high-grade renewable diesel.

We seek Safe Harbor.

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