Reinventing rail transport for improved ROI

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Cleantech sector(s):

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Freight, mining and public transport railway networks have high construction costs, create environmental damage, and operate in increasingly congested environments. This company has developed innovative railway technology to address these issues. Bulk commodity haulage is a massive market globally and the company believes it is positioned to become a market leader and is currently commercializing the technology in a steel producer's supply chain.
Executive summary of company's business: 

Increasing demand for resources and specifically bulk commodities has seen mining companies expanding their production capacity. The major limiting factor for a bulk commodity mining project is the availability and cost of transport and port infrastructure, billions of dollars for a project.

Sustainable Transportation Solutions (STS) is commercializing an innovative, proprietary (patents pending) railway system initially for the transportation of bulk commodity (coal, iron ore) from mine to port or directly onto a ship. The proprietary transportation system will have similar capacity to conventional rail, but aims to be lighter, less environmentally disruptive and cost less than both rail and road. The technology targets 270% lifecycle reduction in CO2 emissions and 40 -50 % reduction in associated CAPEX and OPEX as compared to conventional railway of the same capacity.

The Company intends to provide its rail infrastructure either directly to project owners or build, own and operate projects in partnership with infrastructure investors. The latter model will enable an ‘open access’ system to be utilised by multiple small and mid-tier mining companies, which do not have the resource base or CAPEX to finance their own lines but need sufficient haulage capacities that only rail can offer. The Company has commenced the feasibility study for its first commercial line.

The proposed line is a 40 km dual track linking an open cast coal mine to a steel plant transporting initially 6 Million tons per annum (Mtpa) of product. Upon completion of the study in December 2012 the Company expects to enter into an agreement with the project owner for the development and construction of the line. The project owner is a leading Indian steel manufacturer with significant bulk commodity operations globally. Upon commissioning of the first commercial system the Company plans to pursue independent projects.

Differentiation vs. competitors: 
While Railveyor requires a significant number of power supply stations to operate and has limited capacities in volume, STS says it can haul up to 50 Mtpa right to the ship with one line. Additionally, STS Freight System uses just 100m2 per km of track. Queensland Rail National (QRN) has high construction costs, high exposure to flooding, high construction costs, limited corridors available, and is dependent on topography. STS states that it reduces costs by 30-40%, is terrain independent and ensures lowest energy consumption and lowest emissions. The company also targets the lowest cost per ton kilometre for delivery of bulk commodities to a port or direct to a ship.
Key team members: 
Wrix Gasteen, Chairman of the Board, holds a Bachelor in Engineering (Mining) with Honours from the University of Queensland, Australia. He was awarded an MBA with Distinction from IMD/University of Geneva, Switzerland, topping his class in Mathematics. He has studied International Marketing at Stanford University’s Business School in Palo Alto in California. He has held Chairman or CEO positions with number of ASX, NYSE, KLSE and SGX listed companies. He was presented with awards from the Securities Investors Association of Singapore (SIAS) in two successive annual awards, recognizing effort in demonstrating corporate transparency. Victor Uzlov, Co-Founder, Managing Director. Prior to STS he was a VP of Mirax Group a leading real estate development corporation in Moscow, with $3.0 billion in assets. He holds an MBA from Higher School of Management with the Government of Russian Federation and bachelor of aviation engineering from the Academy of Civil Aviation. Vladimir Romachko, Co-Founder, Executive Director. He has been instrumental from the early stages of the Company and has steered the Company to investor ready status. Since 2006 he has dedicated significant personal resources and achieved significant results in Design Criteria, Technical Analysis and IP Strategies, to ensure the current commercialisation ready status. Michael McBride, Co-Founder, Executive Director. He comes with a wealth of experience in international marketing, media, and business development. Prior to STS he was a BDM at B100 Systems, conducting Renewable Energy project delegations to Agricultural Ministries in Thailand, Cambodia, and Vietnam pursuing farming partnership co-operative agreements in those countries. He has worked in corporate marketing communications and information services on the ASX IPOs of Commonwealth Bank, Woolworths, NRMA and AMP demutualisation.
Existing investors and capitalization details: 
The company has been developing the commercialisation of its technology with investors and a Series A investment of $800,000 by PRN Asset Management. The company register has 240+ members holding shares. Currently looking to expand the number of investors to a sufficient number for a future public listing on a tier one stock exchange.
Capital sought & use of proceeds: 
Now that the company has moved into commercialisation stage it is seeking, series B funding of £1,500,000 for full project works expenses resulting in delivery of the Feasibility Study for the company's first commercial project. These funds are to meet its financial requirements until July 2013, where it is expected that it will enter into a construction contract. Revenues over the next 5 months will be $650,000 paid by the project owner. It is expected that all future development costs will be met by the project owner, taking the company into profitability in late 2014.
Characteristics of ideal investors: 
Experienced investors in mining businesses who have experience and sophistication to invest in high growth/ high risk business. Mine or Steel Mill owners or other bulkcommodity operators who would benefit from lowest ton per km, supply chain services that STS provides.
Expected close date: 
November, 2012
Financial statements: 
Financial Model for Deployment of FMI 50 bulk commodity transport.pdf
Company name: 
Sustainable Transportation Solutions
Contact name: 
Michael McBride, Vladimir Romachko
Contact email: 
michael@stsplc.com, vladimir@stsplc.com
Web site: 
http://www.stsplc.com

Location

Suite 103, 282-290 Oxford Street, Bondi Junction
2022 Sydney
Australia
Phone: +61 420 868 870
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