Friday, April 15, 2016

Xogen Puts Toxic Genie Back in Bottle

Mining companies and industrial processors have a common fear:  that water seeps away from their environs, stealing away with toxic chemicals and metals used in their businesses.  It is called ‘leachate’ and it threatens both surface and ground water.  In the U.S. mining accounts for about 1% of water usage, while in Canada miners use about 4% of water.  Nonetheless, mine processes often involve highly toxic chemicals, including mercury, ammonium nitrate, cyanide, nitric acid and sulfuric acid.  Leftovers or ‘tailings’ from mining operations are often piled up in the open for years as process water and rainwater filter through, taking some of these chemicals along with metal solids along with it. 

Municipalities and other landfill owners have a similar problem.  Rain falling on the top of landfill begins the process of ‘leaching.’  Dissolved and suspended solids from the partially degraded wastes turn into a stream of black liquid.  The U.S. Geological Survey completed a study of twenty-two landfills in the U.S.  Leachate samples were determined to hold 101 of 190 ‘contaminants of concern’ (CECs) such as pharmaceuticals, industrial chemicals, household chemicals, and hormones.  CECs were found in EVERY leachate sample at levels ranging from 2.0 nanograms per liter to 17,200 nanograms per liter.

The need to ‘put the toxic genie back in the bottle’ could not be more acute.  The series on water is continued to highly one more company that poised to do just that for a community in upstate New York. 

Privately-held Xogen has developed a wastewater treatment system that is capable to removing even the most toxic chemicals, including ammonia and cyanide, nitrates and oils.  At the heart of the system is an electrolysis reactor.  As wastewater passes by electrodes in the reactor, contaminants are oxidized.  At the same time highly oxidative compounds are created such as ozone, hydrogen peroxide and hydroxyl radicals, which in turn react with organic matter in the water.  The end result is a mix of hydrogen, oxygen, carbon dioxide and nitrogen gas.  Pathogens are completed killed and solids float to the surface of the water. 

The Xogen system is designed to handle highly contaminated wastewater to eliminate toxic leaching into ground and surface water.  For example, there are no usable by-products such as energy-rich organics that can be converted to gas and then electricity as we see with other wastewater treatment solutions.  The April 12th post “Water Gleaners” described three solutions of this sort.  However, for waste stream generators with worries about violating toxic emissions standards, the Xogen system can still be a cost effective solution even without the offsetting benefits of by-product sales.

Based in Canada, Xogen was invited to run a pilot plant in Oswego County, New York at the Bristol Hill Sanitary Landfill.  Located in northern New York along the shore of Lake Ontario, Oswego is the major port of central New York State and a railroad hub.  It is known as the ‘snowiest community in the U.S.’ and often receives over 300 inches of snow in a season.  While a great deal of fun for kids playing in the front year, all that snow melting through the Bristol Hill landfill is causing a big problem for this small community of 20,000 people.  Xogen was asked by the County of Oswego to target the ammonia leaching out of the Bristol Hill site. 

The good news is that the Xogen system met the very stringent discharge permit limitations at Bristol Hill set down by the U.S. Environmental Protection Agency.  The bad news is that Xogen is capital constrained and is struggling to move forward with the next step at Oswego.  Xogen management is on the road these days looking for as much as $3.0 million in new capital to move forward with work at Oswego as well as pursue opportunities in the large U.S. landfill market.  The U.S. has over 3,000 active landfills and another 10,000 inactive landfills, many of which have serious leachate problems that Xogen could help resolve. 

As a private company Xogen does not widely share its financial details.  However, qualified investors would certainly be offered a complete picture of Xogen’s financial position, growth strategy and capital plans.  In my view, it is a company well worth the effort to investigate.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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