The Exchanges

Q And so this was between New Year's Eve in twenty-twenty-four, and then it was essentially summer twenty-twenty-four when you officially commissioned the plant. So say a bit about, a bit more about kind of what happens in that time. Is that really just kind of like testing and getting the plant up and running, or was it also about building the sequestration system over those six months?

A Yep, both of the above. So we really wanted to get the capture units working as, or the collector containers working as quickly as possible, given that that's the Call it the newest technology, right? So the quicker we can get that running, the, the quicker you can get your, your field learnings. So between that first of January, 20, 24 and then May, we were then getting the rest of the balance of plant. So those pots and pans that I was talking about, the heat exchanges, the pumps, the cooling towers, everything commissioned and functioning as you would expect them to, um, building up the operations and maintenance team, And then also having the storage component built out as well.

AI assessment note: “Yep, both of the above. So we really wanted to get the capture units working”

Q So you already start planning that you're going to do Cyprus then in Louisiana. So what are, what's in your mind at this point about how much scale up and whether now is finally the time to go outside and look for infrastructure financing?

A Well, eventually we have to get to gigaton removal by mid-century, right, by twenty-fifty. And megaton for us is that first kind of, like, sizable step towards getting there. So 10 X of tens of thousands gets us to hundreds of thousands of tons a year. And then once you're building out that infrastructure for hundreds of thousands of tons a year capture facility, You've essentially got the beginnings of your make a tonne hub there. So that's, um, that's the way we're looking at the, uh, scale up in size. And then now it's about crafting with the subsidies in place, both on the capex side, as well as the, um, tax credits through 45 queue, the 180 dollars per tonne, um, for, uh, direct air capture and storage. Crafting an overall business case that We can take to the street to see if kind of more traditional infrastructure investment funding is, is amenable to the market.

AI assessment note: “take to the street to see if kind of more traditional infrastructure investment funding”

Q in construction, you are fixing a challenge that you're having with your Container modules. You're moving forward, but that's not your only challenge. You've mentioned before that you're in Iceland and that it's lovely part of the year. Little bit cold another part of the year. So can you say a bit about what happened, ah, in the middle of construction related to the fact that winter came for you?

A Yeah, Iceland in, in winter is not necessarily the most pleasant place to be. Um, so heaps of kudos to my, my team and especially my maintenance team that works outside in winter, um, to make this happen. Happened during operations, and then also during construction, but there are ways that you can shield the team, especially construction teams, from these really harsh winter construct, ah, conditions, and that's by having the various buildings, both the auxiliary buildings, so some of the construction buildings, which were kind of like pop-up tents to allow fabrication to continue, um, as well as the main process hall and maintenance hall built as well. Um, we knew we needed to do this, and we see it Um, still as well, and during operations, we have kind of like wind limits and wind thresholds, after which we don't go up in cherry pickers, um, because it's just too dangerous and unsafe for the people to be working. And it's not just about wind, but also when it's cold, it's just really hard for the guys to work for long durations outside and service equipment as well. So once we had the buildings, both the permanent and auxiliary buildings built, We could provide temporary heat and then allow, um, efficient construction to continue. Still didn't mean that we didn't have to come in some days and dig for our, dig for our, uh, pipe or our valves that were covered in snow overnigh…

AI assessment note: “there are ways that you can shield the team, especially construction teams, from these really harsh winter”

Q a really knowledgeable engineering procurement and construction firm, it brings a lot of comfort to investors. Um, it sounds like there were some reasons to do that from a scalability perspective in your case. So let's talk about how you made that decision for the Mammoth plant. What were the pieces that you kept in house and what were the pieces that you sent out to an EPC and why?

A So what we did keep in-house was the design of the core hardware, so those collector units that you see, and then also, um, for the, the process engineering nerds out there, so the core heat and material balance, the process flow diagram, and the process instrumentation diagram, so the process engineering that supports the hardware as well, or you could even say the hardware supports the process engineering, because ultimately what we are as a, Our company's core technology is we're a process technology company that also has this special hardware. So, the hardware design we kept in-house, we worked with a, a few manufacturers to manufacture the collector containers, and then we worked with an EPC to then take our process design and turn that into a real, a real facility.

AI assessment note: “So what we did keep in-house was the design of the core hardware”

Q Didn't you have an issue with a water tower as well?

A Yeah, so actually after we started running the, the plant and we're commissioning it, um, during the second winter, the cooling towers, um, Which provide cooling for, um, our process. We had isolated and drained it, um, knowing that there was a, um, a time offsite for, or there wouldn't be many people on site during that period. Unfortunately, some rains came and filled up one of the valves that had been closed, and the cooling tower filled up, and finally it got so cold that we ended up with a bit of an ice block. Uh, it didn't, nothing exploded or expanded because it was an open water bath, but, uh, it did take, A couple of guys a whole day sitting there with a hose just trying to get that ice block to melt.

AI assessment note: “it got so cold that we ended up with a bit of an ice block.”

Q base technology. What did you think about going out to finance this? Were you still always considering, like, we're just going to go ahead and raise a venture round and finance this on balance sheet? Or did you think or try to sort of go out to the infrastructure investment market and say, hey, we've built these two plants Maybe we can get some non-recourse financing for this particular one.

A Yeah, it's a great question, and I think ultimately as companies look to get to scale, especially in direct air capture, and once you get to like triple digit, or even triple digit millions, or billions of dollars of capex, debt financing, non-recourse financing is, is ultimately going to be needed. Um, the way that we looked at these first plants is really It was more of a build it and they will come type of mentality. It was also one of the challenges for financing on Um, kind of as you build your overall project to be able to go out to, um, project finance companies to have a complete package that you can take for final investment decision, the big ones being, um, off-take contracts as well. So, kind of what we're seeing in the industry at the moment is people are kind of waiting to see that CDR can be deployed before they make the commitments as well. So, it's kind of this vicious cycle. So, we still kept it on balance sheet, and actually by the time we did get it Um, built and running, it being mammoth, um, what your typical numbers you would expect for off-take contracts by, um, FID, we'd, we'd well exceeded that.

AI assessment note: “So, we still kept it on balance sheet”

Q siting decisions. So you mentioned that you put it on the same site as Orca. It sounds like that's a really huge deal, that you already have site control, you already know what you're dealing with in that particular location, right? Um, so it seems like that makes a lot of sense. Were there any other sites you considered for any other reasons, or was that always the obvious choice?

A That was a quite an obvious choice. Um, there, so usually for siding, we're always looking at energy, land, and storage, and I mean, the setup there is just as, as good as it could be, right? We're right next to the power plant. We can actually get a direct feed from the power plant, which is, which is phenomenal of both heat energy as well as electrical energy, um, and CarbFix has the wells and knows that geology of that area really, really well. So, uh, in terms of minimizing risk as you're trying to Develop a project development asset that was, was logical, um, given that we could remove those two constraints and side constraints by selecting that location again. The other one is also just being familiar with, with the area and familiar with the market. So we could reuse some of the vendors that we had used in, in our first plant. Uh, the first plant was kind of built a bit more scrappily. We kind of bought everything and pieced it together. That's typically how most, uh, startups build their first First plant, whereas the, um, second one with Mammoth, given the scale of it, we actually engaged a couple of EPC companies and took a different contracting and execution approach as well, which would be more typical of a larger scale project.

AI assessment note: “That was a quite an obvious choice.”

Q Right. Ok, so you've got the, you've got the new design, you've tested it at Orca, you're sending it off to manufacturing with your new contract manufacturer, and you start to build the plant. What happens next? Are these, are these things working as you intend them to?

A Yeah, I wish it was as easy as just, uh, flicking a switch and the lights turn on. Um, that's also why I love Working in scale ups and new technology because things don't go as planned. Um, so one of the elements, and I, I touched on it, the filter element, which is the one that experienced the most design change. Uh, we were, while we were testing the prototypes, we actually did see, um, some failures that were earlier than we had expected. And that then comes that decision of, all right, we're also doing a serial production at the same time. What do we do, right? Do we pause everything? Um, redesign. Do we continue manufacturing? So we actually had to go through some quite challenging decisions there, um, with the design and manufacturing team to determine is exactly that balance between schedule and technology. As we were, um, moving forward.

AI assessment note: “we actually did see, um, some failures that were earlier than we had expected.”

Q Well, this is skipping to the end a little bit, but I'm just curious, like, how that wound up turning out for you, because at this point, you've got a couple months of full operation under your belt, so are the, are the sort of modules that require the fix operating as well as the ones that you redesigned? Are you, are there still issues with those?

A Yeah, I mean, Band-Aid fixes are Band-Aids because they're exactly that. So yes, we are still, um, working through, um, Uh, the teething pains of the band-aids and we'll continue to do that and, uh, improve what we have out there. And I think it's also one of the things where also the team having been through this before, um, a lot of, say, production teams are more used to saying, hey, I'm not going to use this unless it works perfectly. However, having been through, um, a couple of plants as well, the teams had that experience, that history of, okay, yes, we know that It's not perfect, and we're going to all need to work together as a team with the project team and the design team to get this thing working as best as we can.

AI assessment note: “yes, we are still, um, working through, um, Uh, the teething pains”