Continued validation of Ceres Powers technology provides re-assurance for shareholders

The RNS out this morning (full text below) provides continued encouragement for Ceres shareholders, key line from an independent expert being – Ceres has the potential for cost leadership in mass manufacturing of cells and stacks. The Company has developed a low-cost manufacturing sequence that can be conducted in a conventional factory environment using simple processing steps and common equipment.

We have covered Ceres extensively this year (check tags on the right and our July edition under the “5 potential 10 bagger piece”, adding the stock to our Conviction Buy list at 5.2p. Dominic Picarda our Technical Analyst expert covered the stock this weekend in this webcast – http://www.spreadbetmagazine.com/blog/2012/9/15/dominic-picardas-weekly-webcast-a-technical-take-on-ceres-po.html

This news and prior technology updates are all extremely positive for the fund raising required and we think David Pummell doing an excellent job in re-configuring the Company. With a massive market up for grabs and British Gas as a ready made end market partner we remain resolutely long.

Technology Update

The latest durability test data from short stacks demonstrates degradation rates of less than 0.5% per 1,000 hrs over 2,000 hrs of operation. Testing was conducted on simulated natural gas reformate which is identical to actual reformer output in systems operation. In parallel, Ceres continues to improve the already established core technology capability to withstand multiple start-stop events (shut-downs).  The latest results show completion of a 220 thermal cycle stack test (drawing power at c.600 centigrade, cooling down to 100 centigrade and then back to operating temperature in 5 hour cycles) with no reduction in rated power.

These results give the Board further confidence that Ceres core technology is compatible with the requirements for a real-world residential CHP appliance.  The Ceres development plan through to the next field trials in 2014 and the anticipated product launch in 2016, requires further testing and refinement of its core technology and validation of degradation and cycling on multiple stacks over extended periods of operation. 

Independent Expert Report

The Company stated in its announcement of 26^th July 2012 that it had commissioned a globally recognized fuel cell expert to undertake an independent assessment of Ceres’ core intermediate temperature solid oxide fuel cell (‘IT-SOFC’) technology.  This work, conducted by Dr Nguyen Minh a former Chief Scientist at GE Global Research, has now been completed.  Dr Minh’s expert opinion includes the following overall conclusions:

·     Degradation and robustness: Ceres core technology is on track to achieve the degradation level needed for residential CHP (0.5% per 1,000 hrs) with planned development work likely to meet or exceed this level by 2016.  The Company has resolved the rapid degradation caused by anode redox experienced during field trials last year.  Moreover, Ceres technology can exploit its low temperature of operation to address the key driver of long-term durability (interconnect oxidation/corrosion), and shows class-leading levels of interfacial anode-electrolyte strength (high delamination resistance) under representative operating conditions.

·     Manufacturing cost: Ceres has the potential for cost leadership in mass manufacturing of cells and stacks. The Company has developed a low-cost manufacturing sequence that can be conducted in a conventional factory environment using simple processing steps and common equipment.  The manufacturing processes currently used and under development are scalable for commercial volume manufacture, with high levels of quality control. 

·     Performance:  fabricated cells and stacks already show performance and reproducibility suitable for residential CHP under representative operating conditions. Further performance improvements are likely via planned anode, cathode and interconnect engineering.  In addition, the inherent thermal cyclability of Ceres technology is excellent and is likely to exceed the requirements for residential CHP. 

During Dr Minh’s 25 year career he has been responsible for the overall technical objectives and R&D direction for GE’s $multi-million fuel cell programmes, and led fuel cell activities at Honeywell, AlliedSignal and Argonne National Laboratory in Chicago.  He has consulted for the US Department of Energy, the UN and multiple companies, and served on review panels for the US Department of Defense, National Science Foundation, California Energy Commission and others.  Dr Minh co-authored the book “Science and Technology of Ceramic Fuel Cells” as well as 4 book chapters, 20 patents, and over 100 published technical articles on fuel cells and related technologies.  He is now Associate Director of the Center for Energy Research at the University of California, San Diego. 

Dr Minh was appointed by Ceres to conduct an in-depth assessment of the Company’s cell and stack technology, as these core components fundamentally drive performance and durability of the residential CHP product to be launched in the UK with British Gas.  Dr Minh was provided with test results, given access to key technical staff, and made extended visits to Company facilities to conduct reviews.  His report is available for download at:

www.cerespower.com/InvestorRelations/PresentationsVideosandReports/

David Pummell, Chief Executive Officer of Ceres Power, commented:

“We continue to make positive progress in improving the durability performance of our core technology.  The assessment report prepared by Dr Minh gives the Board significant confidence that Ceres core technology is on track to achieve the degradation requirement of residential CHP by 2016.  It also concludes that Ceres has the potential for cost leadership in mass manufacturing of cells and stacks, a key strategic advantage.”