CS quickly came to the conclusion that trying to ramp up production in Saskatoon using equipment not designed or adaptable to the new extraction process was a lost cause. They were actually losing money on the limited protein capable of being produced. Basically a no win situation for the company. If it carried on with some semblance of production it would of quickly used up their cash reserves and then we would of heard the cries for management to swing in the wind. If they didn't try than shareholders would of flamed CS for giving up without knowing for sure. Damned if you do, damned if you don't. Either way they would of been criticized. I have no doubt there is considerable interest in the food industry to develop canola products but without a continuous supply of protein it remains just an interest . It soon became apparent a JV partner was the only option.
No matter how you slice it we needed to target a plan to give the new extraction process the best shot at gaining credibility.....and fast. From the moment GEA was hired it's been all about testing and more testing to confirm the process does work and is scalable. We thought the GEA pilot plant work was intended as a general study but GEA in fact had a specific goal in mind. I still remember people on this board asking what was taking so long to finish? Now we know it was to gather extensive data to not only show the Business Partner the merits of a co-operative venture but just as importantly to prove that the business fundamentals are sound to the private equity firm who is being asked to fund the proposed new plant. I wonder too if the 95% quality they reached wasn't a direct result of the Business Partner's feed stock? If so than they have been the prime JV candidate for quite some time. At least BXI has finished their work and hopefully the next step will lead to a full production facility. Look at ADM. They are still running a Clarisoy pilot plant 10 months after opening much to the chagrin of BU. If this deal does get done than it should indicate the JV group must be pretty confident the interest among corporate customers will translate in to orders for the proposed 75,000 MT plant, if they don't have that commitment already. BXI might not get everything it wanted but it would be a start.
A note of caution though. No one should invest in this stock with their eyes closed. We are not at the bargaining table where we can judge for ourselves the progress of the talks. Until an agreement is signed it's buyer beware or so the market is telling us. Management is confident of a good outcome so they say and maybe some of that has blinded us to the risks we still face. We won't have long to wait to see if the blood, sweat and tears that got us to this point will result in something meaningful.