Silverado continued to promote the new enterprise. On August 2, 2000, a Company press release declared that “the discovery of a revolutionary, new clean-burning fuel that replaces many of the industrial applications for oil at a fraction of the cost could make a major contribution towards resolving future oil shortages and protecting the environment.” Silverado went on to say that it was moving “as quickly as possible” toward commercialization of the new fuel process that could be produced for costs as low as $7 per barrel.
This time, Silverado said it was working with the United States Government and the State of Alaska to complete funding requirements for conversion of one of the Company’s gold mines to a fuel production facility. It did not, however, specify the government agencies involved, the possible sources of that funding or how much the plant conversion was likely to cost. The Company has not indicated whether any funding resulted from those discussions.
Money, it seems, has posed a recurring problem for Silverado. On November 27, 2000, the Company announced that its gold and fuel projects were close to being funded. It said that $15 million in private funding could be announced by the end of 2000. Those funds, the Company said, would be used to retrofit its Fairbanks, Alaska gold mill into a LRCWF production facility, a process that would take twelve to sixteen months.
How “close” was that funding? As best we can determine that $15 million private placement was not consummated before the end of 2000, and still has not come to pass. The source of future funds for the project remains something of a mystery.
From time to time, Silverado has suggested that some funding might come from foreign sources. The August 2nd press release said that the Company was working with other countries “interested in the development of commercial plants for the new fuel.” According to the Company, the government of Malaysia wanted to become the world’s first producer of the fuel. Almost nine months later, the Company’s press releases and public filings have provided no significant details of any relationship with the government of Malaysia or any other foreign countries.
That does not mean that Silverado has stopped talking about potential foreign alliances. On March 9, 2001, the Company issued a press release stating that “[n]egotiations with three foreign countries to finance and develop the world’s first commercial industrial oil fuel substitute that is environmentally friendly are now in the final stages and a major announcement is expected within the next 90 days or sooner.” What countries are involved? Is Malaysia still in that picture? The Company says that confidentiality agreements prevent it from disclosing the identities of its potential foreign partners at this time.
Still, on March 26th Silverado said that it expected to announce shortly a joint venture with the government of an unidentified South East Asian country which would finance the $100 million cost of the Company’s “first low rank coal plant in Southeast Asia.” It also maintained that discussions were continuing with a second country in that region. What are the details of those plans? Silverado revealed only that it would receive a royalty from fuel sales. What are the terms of that royalty? What role would Silverado play in development of the facilities? Those details were not provided.
Searching For Nuggets
What makes Silverado’s process unique? Does the Company own a patented technology? The Company says that Dr. Warrack Willson, Vice President of its Fuel Technology Division is the inventor of the “proprietary process.” But what portion of the process is proprietary – and controlled by Silverado? In a recent telephone conference call with investors and analysts, Silverado President Gary Anselmo suggested that while most aspects of the fuel production process are publicly available, key elements of the Silverado approach are controlled by Dr. Willson. Are those “unique” aspects protected by patents?
The records of the U.S. Patent & Trademark Office list a Warrack G. Willson among the inventor of two patented technologies. The first, in 1982, was for a “continuing process for the conversion of coal.” It lists Dr. Willson as one of five inventors of the patent, and reveals that the patent was assigned to the United States of America. It would appear, therefore, that neither Dr. Willson nor Silverado controls that patent today – so it would not constitute the Company’s proprietary knowledge.
The second patent, dated April 25, 2000, lists Dr. Willson as one of seven inventors of a patent for “methods to enhance the characteristics of hydrothermally prepared slurry fuels.” That patent has been assigned to Energy & Environmental Research Center (EERC) of Grand Forks, North, Dakota. Where does that leave Silverado? Does the Company’s technology employ this patented approach? If so, does Silverado have an arrangement with EERC that would permit it to use the patented methods?
In any event, it would not appear that this patent represents a “proprietary process” controlled by Dr. Willson. Does that mean that he has developed other proprietary processes that are to be used exclusively by Silverado? And if that is the case, why hasn’t either Dr. Willson or Silverado sought patent protection? If the “proprietary” portions of the process cannot be patented, how can Silverado protect itself against larger, better financed competitors? |
