8-K: Verde Resources Secures Exclusive US License for Biochar Asphalt Technology

Verde Resources has entered into a term sheet with C-Twelve Pty Ltd for exclusive US rights to its biochar asphalt technology, including a minimum production commitment and royalty structure.

Summary

• Verde Resources has signed a binding term sheet with C-Twelve Pty Ltd, granting them exclusive rights to use C-Twelve's biochar asphalt technology in the United States.
• The agreement covers the production and sale of asphalt surfacing products using C-Twelve's proprietary binder and biochar mixed designs.
• Verde Resources is obligated to produce a minimum quantity of these products annually, with specific amounts to be detailed in the final agreement.
• Royalties will be paid to C-Twelve based on the minimum production amount, and additional royalties will be due for any production exceeding this minimum.
• The agreement also includes a carbon credit percentage allowance for C-Twelve.
• Verde Resources will have the right to file and maintain US patents related to C-Twelve's technology under the Verde brand.
• Verde Resources can market and sell the products under its own brand, while acknowledging C-Twelve's contribution.
• C-Twelve will collaborate with Verde Resources on a joint technology installation at the National Center for Asphalt Technology (NCAT) Test Track in Alabama, targeted for completion between December 16 and 20, 2024.
• The term sheet is effective from October 18, 2024, and will remain in effect until February 28, 2025, unless a definitive agreement is reached earlier.
• Upon signing the definitive agreement, Verde Resources will pay a $300,000 sign-on fee and issue 1,500,000 restricted shares to C-Twelve.

Sentiment

Score: 7

Explanation: The agreement is a positive development for Verde Resources, providing access to new technology and a potential market opportunity. However, the minimum production commitment and royalty obligations introduce some risk. The sentiment is therefore moderately positive.

Positives

• Verde Resources gains exclusive access to a potentially valuable biochar asphalt technology in the US market.
• The agreement includes a framework for future expansion of the license to other countries.
• The joint installation at NCAT provides a platform to showcase the technology.
• Verde Resources retains the right to market and sell the products under its own brand.

Negatives

• Verde Resources is obligated to meet a minimum production amount and pay royalties even if this amount is not met.
• The agreement requires a $300,000 sign-on fee and the issuance of 1,500,000 restricted shares to C-Twelve upon execution of the definitive agreement.

Risks

• Failure to meet the minimum production amount will still result in royalty payments.
• The final terms of the definitive agreement could differ from the term sheet.
• The technology's success in the US market is not guaranteed.
• The agreement is subject to the execution of a definitive agreement by February 28, 2025.

Future Outlook

The agreement is contingent on the execution of a definitive agreement by February 28, 2025, which will detail the specific terms of the license, including the minimum production amount and royalty rates. The company also has the first right of refusal to extend the exclusive licensing of the Licensed Technology to other countries and territories.

Management Comments

• Jack Wong, Chief Executive Officer, signed the report on behalf of Verde Resources.

Industry Context

This agreement positions Verde Resources to potentially capitalize on the growing interest in sustainable and environmentally friendly construction materials, specifically in the asphalt industry. The use of biochar in asphalt is an emerging trend that could offer both environmental and performance benefits.

Comparison to Industry Standards

• The use of biochar in asphalt is a relatively new technology, so direct comparisons to established industry standards are difficult.
• However, the agreement with C-Twelve suggests that Verde Resources is aiming to be at the forefront of this emerging market.
• Other companies are exploring similar technologies, but this agreement gives Verde Resources an exclusive position in the US market for C-Twelve's specific technology.
• The NCAT test track is a well-known and respected facility for asphalt testing, so the joint installation will provide valuable data and visibility for the technology.

Stakeholder Impact

• Shareholders may view this agreement positively as it represents a potential growth opportunity.
• Employees may be involved in the production and marketing of the new products.
• Customers may benefit from access to new and potentially more sustainable asphalt products.
• Suppliers may be impacted by the new production requirements.

Next Steps

• Negotiation and execution of the definitive agreement with C-Twelve by February 28, 2025.
• Finalization of the minimum production amount and royalty rates.
• Joint installation of the technology at the NCAT Test Track between December 16 and 20, 2024.
• Filing and maintenance of US patents related to the technology.

Key Dates

Keywords

biochar asphalt, exclusive license, technology, royalty, minimum production, C-Twelve, Verde Resources, asphalt surfacing, patents, NCAT