Atlantis Resources: Pure Play Ocean Power

by Debra Fiakas CFA

Atlantis Resources Ltd.
LN) is among the most recent additions to the Ocean Group in Crystal
Equity Research’s Earth, Wind and Fire Index of companies using the
dynamic forces of the planet to generate energy.  Atlantis is a
developer of tidal power generation technologies.  Atlantis has
been working diligently for over a decade to developer underwater
turbine technologies.  A project in San Remo, Australia using
the company’s Aquanator tidal current turbine was among the first in
the world to deliver ‘ocean’ power to an established electric power
grid.  The Aquanator has since been replaced by a larger

Tidal and waver power is an attractive alternative to wind power
generation.  Water is over 800 times denser than wind. 
Consequently, underwater turbines can be substantially smaller than
wind turbines yet generate comparable or greater power.  The
moon cycle is also highly predictable, a characteristic that grid
operators appreciate from a power source.  Even with some
deviations due to weather conditions, consistent power generation
from waves and tides can be counted upon day-by-day and year round.

Atlantis is ready to move ahead with its tidal turbine product line.
The company is providing the tidal turbines for a demonstration
project near Daishan, Zhehiang, China.  Atlantis is also
involved in pilot projects in India and Canada.

MeyGen, the world’s largest tidal stream energy project has been
under development off the coast of Scotand.  It is a
distinctive location where tidal action reaches up to five meters
per second.  Atlantis is will supply the underwater turbines
for the 400-megawatt project, which has received regulatory
consent.  Total estimated project cost is near £51 million
(US$75 million).

The United Kingdom has been particularly supportive of tidal power
development because of the particularly dynamic ocean around the
island nation.  The UK
Department of Energy & Climate Change
calculated that wave
and tidal energy could supply as much as 20% of UK electricity needs
if efficient tidal turbines were in place.  The UK government
has provided £10 million (US$14.5 million) in the form of a grant to
support the MeyGen project.

In 2014, Atlantis completed an initial public offering of its common
stock and listed on the London Exchange.  Since then the group
has successfully raised project financing.  At the end of June
2015, Atlantis reported £85.1 million in equity (US$123.4 million)
and £35.2 million in long-term debt (US$50.7 million).

While Atlantis is still a developmental stage company in many
respects, it has picked up some revenue.  In the year 2014,
Atlantis reported £5.3 million in total sales (US$7.7
million).  Losses have been significant with a net loss of
£16.2 million (US$23.5 million).  Things have not changed much
in recent months.  In the first six months of 2015, Atlantis
recorded another £$951,000 in total sales (US$1.4 million).

Cash usage was significant and is increasing as the company moves
forward with the MeyGen project.  Atlantis burned up £4.3
million of its cash resources (US$6.2 million) in the year 2014 to
support operations and another £7.2 million in the first six months
of 2015 (US$10.4 million).  The group had £29.2 million in the
bank at the end of June 2015, providing support for operations for
about another year at Atlantis’ recent spending rate.

Atlantis shares trade on the London Exchange under the symbol ARL,
making them accessible to most investors.  The stock is
currently trading near its 52-week high even after the rout of U.S.
and European equity markets.  Investors keen on getting a stake
in tidal power, will need to sharpen their trading skills.  ARL
trades at low volumes near 6,700 share per day.

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

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