The beginning of 2017 has been about focusing on a few key activities to keep our project moving forward. We continue to make progress, and thank our members for their ongoing patience as we continue to work through the challenges related to completing this project.

Specifically this means:

• We are very pleased to announce that we’ve extended our relationship with Bullfrog Power, as our Education Sponsor, for an additional 5 years and have been working together to bring on a co-sponsor to further support for our project and educational programming.
• Working with Miller Waste Systems and our legal counsel to execute on the 4 key agreements that collectively form our relationship. Negotiating and executing all of these agreements simultaneously is complex and time-consuming, but we have made good progress and continue to collaboratively work through the challenges with Miller.
• We initiated discussions with TREC Education, and an engineer who is volunteering his time, about improving and adding to our educational offering. This will include an update to the in-class workshop, downloadable curriculums for teachers to build their own digesters with students, developing content for signage inside the Zoo and at the biogas site, and building a portable digester to be used as a demonstration in the classroom.
• We have completed a feasibility study, together with a local farmer, exploring the costs and benefits of locating small storage tanks on the farms in the area and more regularly transporting digestate there throughout the year. The primary benefit of this plan is easier management of materials for the biogas plant and ready access to fertilizer whenever it’s needed for the farmer.
• And while we’ve been working on the project, the Ontario Government provided some additional information about their Strategy for a Waste-Free Ontario, which included a target to ban organics from landfills in 2022. This ban, which still has a little way to go before being put into action, would greatly increase the amount of feedstock that needs to be disposed of at compost facilities and biogas plants, like ours. The primary impact on our business of this change is that it will provide upward support to tipping fees on a per ton basis, as demand for our services will increase. More information about the Province’s strategy can be found here.

The past couple of months for us have been all about contracts – editing language, making amendments, coordinating between the parties involved, and getting feedback from our Board.   While we’ve been working on those documents, the Miller Waste team has been working on the designs and narrowing down its list of equipment and service providers.  Everything is moving along nicely and we look forward to closing these contracts in the coming months and beginning construction in the Spring.

The highlights from the last two months included:

• Received approval from the Toronto Zoo to contract with Miller Waste for the design, construction and operation of the biogas plant.  This included some amendments to our original agreements with the Zoo to reflect the changed market conditions since they were signed in 2012.
• Completed first drafts and comments on the construction and loan agreements with Miller
• Initiated discussions with Bullfrog Power about extending our current Education Sponsorship Agreement, and revamping our educational programming in 2017.

Design and Construction

As was communicated in the most recent newsletter, we executed a Term Sheet with Miller Waste Systems Inc. to Design/Build/Finance/Operate and Feed the biogas plant at the beginning of October.  Since that time, we have been working on the language in the various agreements that collectively will govern our relationship during the construction and operations phase of the project.  We anticipate closing these agreements early in 2017.

While this has been happening, the team at Miller has been refining the designs and budgets, and working towards making final decisions for the supply of various equipment and services.  This includes recently completing an Environmental Site Assessment to get a better grasp of the local soil conditions, and initiating an application to the Canadian Food Inspection Agency to allow for the use of our digestate as fertilizer at nearby farms.

We are collectively making good progress, and are still on track to begin construction in the Spring.

Bond Sales & Financing

As noted in our previous update, bond sales closed on September 30th.  We don’t anticipate issuing any new bonds in the near future, but will update you if something changes.

We have, however, moved forward with a Long Term Debt provider, and have been negotiating a Term Sheet with them, that we anticipate will be signed early in the new year.  Ultimately, it’s our plan to execute the binding loan documents at the same time that we execute the construction and operations contracts with Miller.

Feedstock

As previously communicated, Miller’s role in the project alleviates the need for ZooShare to seek out and secure high quality feedstock from other producers.  We continue to maintain our relationships and agreements at the current time, and will work together with Miller to bring in any additional waste producers.  To ZooShare, these represent excellent sponsorship opportunities, and we are hopeful of adding at least one additional sponsor to the project in 2017, whether it is feedstock provider or another company working in a related sector.

Co-op Development

Speaking of sponsors, we sat down with Bullfrog Power this past quarter to discuss extending our sponsorship agreement.  Part of this discussion included ways to revamp and improve the educational programming currently offered, as well as planning for the post-start-up phase, which will include additional signage in the Zoo, tours and potentially an annual biogas design challenge for students.  These plans are currently in development, and so we welcome any feedback and ideas.  Please contact us if you’d like to get involved.

We have also been engaged in planning for the co-op’s budget and human resource needs for 2017, both of which are not substantial, as we head into the construction and operations phases of the project.

The highlights from the last two months include:

• Bond Sales closed above expectations with a total of $1,154,700 raised.
• Executed a Term Sheet with Miller Waste Systems Inc. to design/build/finance/operate and feed the biogas plant.
• Continued progress in securing Long Term Debt, largely as a result of the above.  We received a Term Sheet with an offer to lend from a lender we’ve had a relationship with for a number of a years, and look forward to finalizing the terms of the loan.
• As a result of bond sales ending, we are scaling back sales and marketing activities significantly, and therefore have been preparing to say goodbye to Frances whose last day will be October 14th.

Design and Construction

We are pleased to announce that we executed a Term Sheet with Miller Waste Systems Inc. to Design/Build/Finance/Operate and Feed the biogas plant.

Miller Waste has been providing composting services to Canadians since 1990. Each year, it processes valuable leaf and yard waste along with food waste from municipal and commercial sources. Miller Waste currently owns and operates four compost sites nationwide and has been increasingly involved in anaerobic digestion projects with its partners, including a recently commissioned organics decontamination facility at its Pickering Transfer Station. Collectively, Miller Waste processes 130,000 tonnes of organics annually.

Miller will leverage what it’s already learned in the sector and work together with equipment suppliers and a local engineering firm to complete designs and construction. As stated in the last update, we are excited to move forward with this relationship as it significantly reduces operating risk for the facility as a result of Miller’s access to and experience managing organics from the commercial sector.

With additional agreements to negotiate with Miller, final design work to be completed and then submitted for building permits, we will not be starting construction until Spring 2017.  This puts us on track to begin operations in Fall 2017.

Bond Sales

Community Bond sales closed on September 30th with the expiry of the Offering Statement.

We attended the usual number of events and markets during August and September, and reminded our many subscribers about the opportunity ending, ultimately helping us to exceed our $1,000,000 goal.  All together, a total of $1,154,700 was raised in this offering.

As noted in the previous update, this was not a simple decision, but it was the right one.  Ultimately selling bonds is a costly and time-consuming way to raise money in comparison to other forms of financing.  With the addition of Miller to the project, avenues that were not previously available to us became viable, and so we decided to shut down bond sales.  This is going to help us conserve cash and save money in the short term, while also allowing the organization to focus on completing the remaining milestones leading up to the Commercial Operation Date.

Feedstock

As stated above, bringing Miller into the project gives ZooShare an experienced operator that collects and manages sufficient volumes of commercial organics to more than meet our needs.

As a result of Miller’s ability to decontaminate and remove packaging, we will still be able to serve the needs of local grocery retailers while collecting market-based rates for the organics it accepts, and also leaving potential for sponsorship revenues to grow over time.

Co-op Development

Sadly the end of bond sales also means the end of our need for a full-time Sales and Marketing Manager.  Frances has been with ZooShare since February of 2014, playing a major role in all of our communications and bond sales over her 2.5 years with the co-operative.  She has personally spoken to almost every one of our members at some point, whether it was answering questions, organizing the AGM, or selling/processing bond sales.  As much as we’d love to keep her on, there simply was not enough work or budget to do so.  Frances’ contributions and presence will be sorely missed, but we know she will be moving on to bigger and better things and wish her nothing but the best. Please be sure to send Frances a note to say thanks before she goes.

The highlights from the last months include:

• Initiated discussions and engaged in focused negotiations with one company who will be providing the biogas plant to ZooShare on a Design/Build/Finance/Operate basis, and also be responsible for feedstock over the long term
• Attended nearly 40 events to spread the word about ZooShare and our bonds
• Decided to stop selling bonds when the Offering Statement expires on Sep/30
• Re-initiated discussions with long term debt providers
• Added two new members to our Board – Andrew and Melissa

Design and Construction

We spent the first part of 2016 working with one company on a Design/Build/Finance proposal, and looking forward to beginning construction in May or June.  However, we were not able to come to an agreement that worked for ZooShare, and as a result, changed our approach and began working on a Design/Build/Finance/Operate model with a different company.  This change meant that we did not begin construction as originally scheduled, but it also means that we will have a well-run, well-fed biogas plant with reduced maintenance costs and higher average uptime from year-to-year.  All of this means a 4-6 month delay to the start-up date, but with more stable and sustainable cash flows once we get there.

At this point, we see construction starting in November and the plant reaching its Commercial Operation Date next Summer.

Bond Sales

As of August 16th, we have sold $622,600 of the 5% bonds, which are currently sitting in an escrow account awaiting the completion of construction.  Our Founders’ Club bonds also matured this month and we are pleased to share that over 70% of Founders Club members decided to roll-over their initial investment into new bonds.

As noted in the newsletter, we have made the decision to stop bond sales once the current Offering Statement expires on September 30.  This was not a straightforward decision – without all the feedstock under contract, we have not been able to get sufficient financing from a commercial lender, and selling bonds in small increments like we have has been an expensive way to raise money.  Ultimately, the path that we’ve been carving out over the last couple of months made the decision easier – with long term feedstock and operating & maintenance agreements with a reputable firm, we can get the funds we need all at once from a commercial lender at a lower cost compared to selling bonds.   Selling bonds also requires a lot of organizational attention, between attendance at the many events and speaking to so many current and potential investors, much of our time, energy and budget goes into this activity.  Once they’re closed we can focus exclusively on construction.

Feedstock

We have decided that our best approach is to align with a company that controls decontamination equipment that can meet our needs through their existing contracts and capacity.  This will not prevent us from receiving organics from local grocery retailers.  ZooShare will still receive market-based rates for the organics it accepts, while also leaving potential for sponsorship revenues to grow over time.

As discussed elsewhere in this update, we are negotiating this agreement in conjunction with the design/construction and operating/maintenance agreements to ensure that all integrate seamlessly and minimize operating risk.

Co-op Development

As you know, at this year’s Annual General Meeting, we added a new member to our Board of Directors: Melissa Felder has run her own environmental consultancy since 2001, with a focus on project management, business development, stakeholder engagement, research and technical analysis and environmental compliance.  She has specific academic and work experience related to bioenergy, and has a Masters in Biological and Chemical Engineering.

Andrew Tarasiewicz joined the Board more recently after Peter Roles stepped down for personal reasons.  Andrew is a Senior Consultant at KPMG’s Infrastructure Advisory practice.  Specializing in renewable power generation, Andrew supports clients with M&A, financial advisory, diligence, and strategic advice, he also previously worked at the IESO and had a hand in the designing and launching procurement initiatives, like the FIT program.

Both of their bios can be found here: https://zooshare.ca/team/