Global Thermoelectric Inc
GLE
Shares issued 29,033,349
Aug 15 2002 close $ 1.95
Thursday August 15 2002
News Release
Mr. Peter Garrett reports
GLOBAL THERMOELECTRIC PROVIDES UPDATE ON DEVELOPMENT
PROGRESS ...
Global Thermoelectric will be presenting at the Raymond James Technology
Conference on Thursday, Aug. 22, 2002, in Montreal, Que. The company will be
discussing its progress in the advancement of its solid oxide fuel cell (SOFC)
technology and testing of its SOFC system prototypes.
Highlights
1. Testing of prototypes in conjunction with the company's Enbridge alliance is
continuing. The company, as of Aug. 15, 2002, has achieved a test duration
exceeding that recorded in the earlier version of its prototype.
2. Significant breakthroughs have been achieved in the service life and
manufacturing costs of Global's fuel cell stacks.
3. The company has signed a definitive agreement with Citizens Gas & Coke
Utility of Indianapolis, Ind., as a follow-on to a memorandum of understanding
signed earlier.
4. Based on a comprehensive engineering analysis of its current technology and
commercial product requirements, the company is anticipating a product launch of
its initial commercial applications in the second half of 2005.
5. Recent executive appointments reflect the company's evolution to a product
development focused organization. The three recently appointed executives: Peter
Garrett, president and chief executive officer; Dr. Brian Borglum, vice-president
and chief technology officer; and Eric Neary, VP of engineering, have over 56
years of combined experience in product development environments.
6. The company is not aware of any internal developments not previously
disclosed that would account for the recent increase in trading activity of its stock.
The company believes that its SOFC technology has fundamental advantages for
stationary power applications, as hydrocarbon fuels can be directly used in the
operation of its fuel cells. This ability allows comparatively sophisticated and costly
fuel reforming equipment to be avoided, thus reducing the ultimate cost of a fuel
cell system. In addition, Global's SOFC technology can use an existing natural gas
infrastructure both in North America and regionally in developed economies
throughout the world. The commercial adoption of its technology is not dependent
on the development of an expensive and logistically daunting hydrogen
infrastructure. Propane can also be used as a fuel source in the company's fuel cell
systems, enabling it to capitalize on extensive propane distribution networks
around the world.
Global's fuel cell systems operate at 750 degrees Celcius, which results in the
production of high-grade heat for cogeneration applications, boosting system
efficiencies considerably. However, there are a number of challenges, particularly
in the fuel cell stack, as a result of operating at these temperatures. The fuel cell
stack consists of fuel cell membranes, separated by interconnect plates, that
facilitate the electrochemical reaction in the production of electricity. Thermal
expansion and contraction within the stacks demand sealing mechanisms between
the interconnects and other components be very robust and durable. It is the
company's belief that improving the service life of the fuel cell membranes and
stacks with cost-effective solutions is a key success metric in a commercially
viable SOFC system.
Over the last six months, Global has reallocated a significant portion of its
technical team in recognition of the importance of these developments. The
company is pleased to report that this more refined focus has resulted in the
following achievements:
As previously disclosed over the last three years, Global has demonstrated
industry leading power densities in its fuel cell membranes. In addition, the
company has demonstrated numerous advances in its membrane manufacturing
process. Its new TCS2 manufacturing process reduces labour costs by 50 per
cent and material costs by 30 per cent.
A long-term test of a fuel cell membrane (which recently achieved 5,000 hours of
continuous operation and is still continuing) indicates that previous membrane
designs, which were already close to meeting commercial performance targets,
have been surpassed in terms of performance. These current tests indicate that the
company's current membrane can be expected to operate for approximately
13,000 hours nearing Global's initial target of 20,000 hours for commercial
performance. Further improvements will be targeted between now and 2005.
Global's current stack design (Gen4) has been improved considerably through
sealing and interconnect refinements. In controlled test environments (test stands),
these stacks have demonstrated that a service life of 15,000 hours of continuous
operation can be expected. Service life is measured in terms of a predefined
minimum voltage output and fuel use.
A new generation stack design (Gen5), currently being tested, has also initially
indicated a service life of 15,000 hours. More importantly, this stack design has
proved more resilient to thermal cycling, facilitating the warm-up and cool-down
of the stack associated with on/off operation. Furthermore, this stack design can
be manufactured with 70-per-cent-less cost than that associated with the
company's Gen4 stack.
As reported earlier, the company has begun testing system prototypes (model
RP2) in its facility in conjunction with its agreement with Enbridge Inc. These tests
are continuing, and as of Aug. 15, 2002, the company can report that the
performance of an RP2 prototype has exceeded the previous version tested with
Enbridge. The RP2 incorporates a number of improvements, including a modular
approach to component design and layout and enhanced serviceability, particularly
around the fuel cell stacks. It is important to understand, however, the company's
strategy concerning prototypes and field testing. Global believes that until such
time as the technology advancements are made in terms of performance, reliability
and cost reductions commensurate with those required for a commercial product,
a large-scale prototype program is not an appropriate use of the company's cash
and technical resources. Global recognizes the fundamental importance of
demonstrating its development progress and will continue with a prototype testing
program with its partners. This testing program will be accelerated when
near-commercial performance, reliability and cost targets are within reach.
Recent executive promotions in Global have given the company the opportunity to
analyze its commercialization progress to date and revisit its strategic plans for a
successful commercial product. A rigorous analysis of Global's current technology
and the development of a comprehensive technology and product development
plan have been completed. Based on the company's heightened focus on the
underlying enabling technologies, such as stack performance, the company
anticipates that an initial commercial product designed for early adopter markets
will be available in the second half of 2005. The company is committed to
communicating its progress on the milestones required to achieve this 2005 time
frame.
Over the last year, Global has signed MOUs with distribution partners, including
Suburban Propane, Superior Propane, Citizens Gas, Bonneville Power Authority
and Montana-Dakota Utilities, evidencing the company's emerging relationships
with important proponents of its technology. Until such time as the engineering
analysis discussed above was completed, negotiating delivery timelines and other
commitments was difficult. Global now has the engineering road map that will
guide further negotiations required to evolve these MOUs into definitive
agreements.
Today, Global is pleased to announce the signing of a definitive agreement with
Citizens Gas, which will form the basis for the SOFC system co-development,
demonstration and commercialization activities to be jointly financed by the
parties. "Citizens Gas is an excellent example of the innovative, forward-looking
partners with whom Global is collaborating," stated Mr. Garrett.
With over 175 people directly involved in its SOFC commercialization program,
including 14 employees with PhDs and 110 engineers and technologists, the
company firmly believes that it has assembled one of the most talented and
dedicated teams in the SOFC industry.
"We are well funded with cash and short-term investments on hand at June 30,
2002, of $107.8-million, representing a multiyear cash reserve, yet are judicious in
how our cash is being utilized," commented Mr. Garrett. "We now have an
executable engineering and product plan that provides an expected product launch
date in 2005. This plan, however, is not without technology and financial risk, and
shareholders should be cognizant of this. Our challenge, and one we relish, is to
translate our demonstrated technical successes to date and in the future into
commercial success."
Consistent with its communication strategy, the company will be communicating its
intermediate milestones in mid-September, and subsequently, its progress thereon.
WARNING: The company relies upon litigation protection for "forward-looking"
statements.
(c) Copyright 2002 Canjex Publishing Ltd. stockwatch.com |
