Dyesol : Quarterly Webconference - Q&A

Q. 1 How do you assess the danger of a full takeover by Tasnee?

A.1 Richard Caldwell considers himself a small shareholder in that regard and that he is always seeking to get the highest price for Dyesol's shares. Tasnee has made no indication to date in respect of their ultimate intention in relation to a takeover. These things remain, of course, private to Tasnee. Dyesol is sure that Tasnee will be watching Dyesol closely from a takeover perspective as they get nearer and nearer to meeting their technical and commercial goals.

Australia has some of the most protective takeover rules in the world. These rules are for the benefit of small shareholders. It would be extremely unlikely that Tasnee would ever be able to acquire shares in Dyesol to the extent that they control Dyesol without having to make a full bid for the company and pay full value for the shares, requiring an expert's report which would give an opinion in relation to both the fairness and equity of that transaction. Mr Caldwell's job, of course, in the meantime is to increase the value of those shares as much as possible, and he is particularly encouraged by the technical progress at the moment. Dyesol has every confidence that shares will trade higher over the time. The completion of the Major Area Demonstration Project should be an important inflection point for shareholder value.

Q.2 What are the timelines for the engagement in Turkey?

A.2 This year Dyesol will be completing the transfer of technology through a small prototype at a facility in Mersin. That is subject of a contract of approximately 2 million USD, which is already underway. With the completion of this contract, at the end of 2015 and the beginning of 2016, Dyesol will be making plans to scale up that technology through the commitments of the Turkish Development Bank. A pilot line will be developed in 2016 / 2017. An information memorandum, which was supplied to the Turkish Development Bank, forecasts scale-up to mass production for 2018. So it is basically 3 years of aggressive scale-up, seeking ultimately over the next 10 years onwards to build a factory capable of producing up to 5 million m² per annum or in the vicinity of 600 MW of additional power each year for the Turkish PV market.

Q.3 Are there any developments in the industry that might be a threat to Dyesol?

A.3 Understanding the competitive environment is one of the greatest challenges for a technology company. Dyesol works very closely with the EPFL and believes it has access to the latest technology. Dyesol also has other collaborations all over the world with key universities that keep the company up to date with new developments. Of course, many new developments are under the radar, which makes it hard to monitor them. Dyesol attends most conferences around the world and believes that it has the best understanding of the PSC technology in terms of industrialization. The company focuses, in particular, on stability and durability, whereas academic research is very much focused on performance and efficiency. The greatest barriers to market entry probably are capital and the need to scale up to achieve economies of scale that deliver a competitive product. Dyesol is very careful in preserving its technology and registers its IP through patents where necessary. Many of Dyesol's developments are preserved in know-how and industrial secrets. Furthermore, Dyesol has very little turnover in staff: Key technical staff has been with the company for at least 8 years. All this means that Dyesol is well positioned to take advantage of its progress.

Q.4 Are local Australian glass industry players on Dyesol's radar, given that previously Pilkington was the partner of choice?

A.4 Looking at some of the former partners, Dyesol has to put this into context with the Global Financial Crisis. Industries that were most affected by it included the building materials industries. In response to those challenges many of the global companies have gone back to their core businesses. While initially this was considered to be a threat to Dyesol's business model, the Company has re-emerged from this situation quite strongly. Dyesol still retains working relationships with both Pilkington and Tata. At the end of last year Dyesol announced a new distribution agreement with Tata, which better reflects the way Tata wishes to operate in global markets going forward. Tata is currently unable to contribute capital to non-core developments, but looks willing to work closely with companies such as Dyesol to introduce new technologies into their core technologies. That is how Dyesol expects to move forward with Tata and remains in good contact with the company. Dyesol keeps Tata informed of the technical progress and looks forward to be able to deliver a steel-based product which Tata can introduce to its very extensive distribution network over the next five years. Glass products are focused on a delivery for 2018; steel-based products are forecast to enter the global marketplace in 2018 / 2019.

One of the drawbacks of the original commercial agreements was that Dyesol had exclusive relationships with both Pilkington and Tata. Moving forward, those kinds of relationships are and will be non-exclusive. Dyesol is in a position to talk to individual glass companies in Turkey, Australia, and Korea, for example, so that it can have bespoke arrangements with these companies in individual markets. Dyesol has progressed discussions with glass companies in those countries over the last 12 to 24 months and will disclose more information on these relationships when the Company is in a position to do so. Dyesol does not want to jeopardize these relationships through unnecessary and early announcements, but it expects these relationships to be productive ones where both companies play to their individual strengths. Through them Dyesol seeks access to routes to market, which is very important in the building industry. Potential partners should be free of conflicts of interest, i.e. they should not have exposure to other solar companies and technologies.

Q.5 What are the current efficiencies Dyesol can achieve?

A.5 Tile or module efficiency is approaching 10 %, which is one of Dyesol's quarterly milestones for the remainder of 2015. Dyesol is confident that it can produce tiles and ultimately larger panels with an industrial efficiency of 10% and greater. The forecast for Dyesol's market entry product is a minimum of 12% industrial efficiency.

Q.6 How many employees are going to work in Turkey?

A.6 The joint venture that Dyesol seeks to form in Turkey will be a separate legal entity, 50 % controlled by Dyesol and 50 % controlled by Nesli DSC. In terms of engineering, manufacturing, installation and maintenance, a workforce of 2000 employees is forecast. This of course presupposes that financing is available from the Turkish Development Bank, in part or in full, in the form of equity, grants or low interest loan. In the Turkish market the level of penetration of solar is very low, so it is very fertile ground for Dyesol's purposes.

Q.7 Can you give us an update for the Printed Power and Timo projects?

A.7 Dyesol is not able to make major claims about progress right now. However, Printed Power has internal milestones and Dyesol remains confident that they are on track to produce a complimentary product for use in, at least, small scale devices to support Dyesol's technology. The original reason for working with Printed P0wer was to have sufficient battery capability to support some off-grid power applications.

Timo is now 100 % owned by Dyesol. It performs two principal roles; the first role is within the Turkish prototype contract and the second function is for the provision of equipment in our sales catalogue.

Q.8 Has Dyesol ever considered the possibility of a commercial collaboration with Bluescope Steel?

A.8 Anything is possible. One of the drawbacks of Dyesol's previous engagement with Tata was that it became very difficult to have meaningful conversations with large multinational steel companies. Dyesol has had conversations with many of the largest steel companies in the world and is re-engaging with some of these companies now. However, this is not the point of focus for Dyesol right now. The point of focus is about improving the technology so that it is ready for mass production. Dyesol aims to be in a position to maximise the benefit for Dyesol's shareholders. The more progressed Dyesol's technology is, the harder a bargain it can drive with potential collaborators such as steel companies, which will facilitate distribution and provide things such as warranty protection. So, it is a deliberate strategic position for Dyesol not to form early-stage relationships at the moment with potential industrial collaborators.

Q.9 What is Mr Robert McIntyre's expertise? How does he serve Dyesol?

A.9 Dr McIntyre is a very accomplished materials scientist from the UK. As a young scientist, he enjoyed the privilege to work at the Max-Planck institute in Berlin. He has spent his entire career working around zirconia and titania. He is Head of R&D at Cristal for their global titania operations and is an expert in photo catalytic processes. Dr McIntyre has a high level of understanding of materials chemistry and makes a great contribution to our Technology Advisory Board, especially in a context where this technology is evolving very rapidly and there are very few experts. And most of these experts either work for or collaborate with Dyesol.

Q10. What does the new CEO at Tasnee mean for Dyesol? Is Mr Caldwell going to meet him anytime soon?

A10. He will certainly try to meet him. From my personal perspective, the new CEO has a strong reputation at his former employer, SABIC. He is known for focusing on business development and technological development, and also for making the businesses profitable. As I understands it, he is a world-class operator and Dyesol can only benefit from having him on the register.

Q.11 Does Dyesol plan to collaborate with energy storage companies such as Tesla?

A.11 It is hard not to have enormous admiration for Tesla and Elon Musk, in particular. Their technology is not a particularly new one, but it is probably more affordable and more user-friendly. They seem to be introducing this technology in order to facilitate the proliferation of solar, and obviously have a positive view on solar as the renewable energy of choice. However, they appear to be experiencing some teething problems with their cars. Tesla's battery technology would make an excellent complement to Dyesol's solar technology - in fact to all renewable technologies - and provide the pathway in taking the technology off-grid. The technology for off-grid applications is clearly progressing very quickly.

Q.12 Is Professor Grätzel still actively involved in the development of the technology, or is he only overseeing Dyesol's activities?

A.12 Professor Grätzel is not involved in day-to-day management of Dyesol. He provides guidance on technology development through his participation in his quarterly reviews of progress made in the Dyesol Technology Development Plan. He is also a Dyesol shareholder. There is a close relationship between Dyesol and EPFL, where Professor Grätzel still works.

Q.13 How do you judge the current and future market for DSC and BIPV?

A.13 Dyesol has abandoned its commercialisation activities in the field of DSC, but remains involved by virtue of its materials supply to prospective manufacturers. Dyesol believes Solid-State DSC or Perovskite Solar Cells (PSC) have excellent commercialisation potential because over their promising competitive performance. Compared to DSC, PSC is lower cost, higher efficiency and better stability or longer life. The promise of longer life is principally because there are no obvious corrosion or thermal expansion issues as with liquids. As a versatile, nano-technology, PSC also has the possibility of addressing multiple applications, the greatest of which is building integrated photovoltaics (BIPV).

Q.14 Will another capital increase be necessary before mass commercialization can begin?

A.14 Dyesol's principal objective is to maximise returns to shareholders by making prudent decisions in relation to business and technology development. Where it can outsource or collaborate it will do so to preserve capital. This is known as a capital light model. However, the Company will not speculate or disclose to the market its capital raising intentions in advance of board decisions.

Q.15 Given the current state of research, when will we see a glass prototype, and with which efficiency?

A.15 Dyesol has commenced planning and preparation for a Major Area Demonstration glass prototype. That is expected to be completed no later than end-2016.

Q.16 When will we get new results for ssDSC durability?

A.16 Dyesol released the results of the latest stability and durability tests to the ASX on May 11. This was based on tests performed by a team led by Professor Michael Grätzel using a perovskite solar cell architecture similar to that being developed by Dyesol for mass manufacture.

Q.17 What can a commercialization with CSIRO look like? Will Dyesol supply pastes or are you planning to buy a 3D printer, which has apparently been tested with during the last months?

A.17 Dyesol does not intend to form a commercial collaboration with CSIRO. It currently collaborates successfully with CSIRO on technology development and expects to continue that collaboration into the foreseeable future. 3D printing is not a technology that we consider critical to our development path.

Q. 1 How do you assess the danger of a full takeover by Tasnee?

A.1 Richard Caldwell considers himself a small shareholder in that regard and that he is always seeking to get the highest price for Dyesol's shares. Tasnee has made no indication to date in respect of their ultimate intention in relation to a takeover. These things remain, of course, private to Tasnee. Dyesol is sure that Tasnee will be watching Dyesol closely from a takeover perspective as they get nearer and nearer to meeting their technical and commercial goals.

Australia has some of the most protective takeover rules in the world. These rules are for the benefit of small shareholders. It would be extremely unlikely that Tasnee would ever be able to acquire shares in Dyesol to the extent that they control Dyesol without having to make a full bid for the company and pay full value for the shares, requiring an expert's report which would give an opinion in relation to both the fairness and equity of that transaction. Mr Caldwell's job, of course, in the meantime is to increase the value of those shares as much as possible, and he is particularly encouraged by the technical progress at the moment. Dyesol has every confidence that shares will trade higher over the time. The completion of the Major Area Demonstration Project should be an important inflection point for shareholder value.

Q.2 What are the timelines for the engagement in Turkey?

A.2 This year Dyesol will be completing the transfer of technology through a small prototype at a facility in Mersin. That is subject of a contract of approximately 2 million USD, which is already underway. With the completion of this contract, at the end of 2015 and the beginning of 2016, Dyesol will be making plans to scale up that technology through the commitments of the Turkish Development Bank. A pilot line will be developed in 2016 / 2017. An information memorandum, which was supplied to the Turkish Development Bank, forecasts scale-up to mass production for 2018. So it is basically 3 years of aggressive scale-up, seeking ultimately over the next 10 years onwards to build a factory capable of producing up to 5 million m² per annum or in the vicinity of 600 MW of additional power each year for the Turkish PV market.

Q.3 Are there any developments in the industry that might be a threat to Dyesol?

A.3 Understanding the competitive environment is one of the greatest challenges for a technology company. Dyesol works very closely with the EPFL and believes it has access to the latest technology. Dyesol also has other collaborations all over the world with key universities that keep the company up to date with new developments. Of course, many new developments are under the radar, which makes it hard to monitor them. Dyesol attends most conferences around the world and believes that it has the best understanding of the PSC technology in terms of industrialization. The company focuses, in particular, on stability and durability, whereas academic research is very much focused on performance and efficiency. The greatest barriers to market entry probably are capital and the need to scale up to achieve economies of scale that deliver a competitive product. Dyesol is very careful in preserving its technology and registers its IP through patents where necessary. Many of Dyesol's developments are preserved in know-how and industrial secrets. Furthermore, Dyesol has very little turnover in staff: Key technical staff has been with the company for at least 8 years. All this means that Dyesol is well positioned to take advantage of its progress.

Q.4 Are local Australian glass industry players on Dyesol's radar, given that previously Pilkington was the partner of choice?

A.4 Looking at some of the former partners, Dyesol has to put this into context with the Global Financial Crisis. Industries that were most affected by it included the building materials industries. In response to those challenges many of the global companies have gone back to their core businesses. While initially this was considered to be a threat to Dyesol's business model, the Company has re-emerged from this situation quite strongly. Dyesol still retains working relationships with both Pilkington and Tata. At the end of last year Dyesol announced a new distribution agreement with Tata, which better reflects the way Tata wishes to operate in global markets going forward. Tata is currently unable to contribute capital to non-core developments, but looks willing to work closely with companies such as Dyesol to introduce new technologies into their core technologies. That is how Dyesol expects to move forward with Tata and remains in good contact with the company. Dyesol keeps Tata informed of the technical progress and looks forward to be able to deliver a steel-based product which Tata can introduce to its very extensive distribution network over the next five years. Glass products are focused on a delivery for 2018; steel-based products are forecast to enter the global marketplace in 2018 / 2019.

One of the drawbacks of the original commercial agreements was that Dyesol had exclusive relationships with both Pilkington and Tata. Moving forward, those kinds of relationships are and will be non-exclusive. Dyesol is in a position to talk to individual glass companies in Turkey, Australia, and Korea, for example, so that it can have bespoke arrangements with these companies in individual markets. Dyesol has progressed discussions with glass companies in those countries over the last 12 to 24 months and will disclose more information on these relationships when the Company is in a position to do so. Dyesol does not want to jeopardize these relationships through unnecessary and early announcements, but it expects these relationships to be productive ones where both companies play to their individual strengths. Through them Dyesol seeks access to routes to market, which is very important in the building industry. Potential partners should be free of conflicts of interest, i.e. they should not have exposure to other solar companies and technologies.

Q.5 What are the current efficiencies Dyesol can achieve?

A.5 Tile or module efficiency is approaching 10 %, which is one of Dyesol's quarterly milestones for the remainder of 2015. Dyesol is confident that it can produce tiles and ultimately larger panels with an industrial efficiency of 10% and greater. The forecast for Dyesol's market entry product is a minimum of 12% industrial efficiency.

Q.6 How many employees are going to work in Turkey?

A.6 The joint venture that Dyesol seeks to form in Turkey will be a separate legal entity, 50 % controlled by Dyesol and 50 % controlled by Nesli DSC. In terms of engineering, manufacturing, installation and maintenance, a workforce of 2000 employees is forecast. This of course presupposes that financing is available from the Turkish Development Bank, in part or in full, in the form of equity, grants or low interest loan. In the Turkish market the level of penetration of solar is very low, so it is very fertile ground for Dyesol's purposes.

Q.7 Can you give us an update for the Printed Power and Timo projects?

A.7 Dyesol is not able to make major claims about progress right now. However, Printed Power has internal milestones and Dyesol remains confident that they are on track to produce a complimentary product for use in, at least, small scale devices to support Dyesol's technology. The original reason for working with Printed P0wer was to have sufficient battery capability to support some off-grid power applications.

Timo is now 100 % owned by Dyesol. It performs two principal roles; the first role is within the Turkish prototype contract and the second function is for the provision of equipment in our sales catalogue.

Q.8 Has Dyesol ever considered the possibility of a commercial collaboration with Bluescope Steel?

A.8 Anything is possible. One of the drawbacks of Dyesol's previous engagement with Tata was that it became very difficult to have meaningful conversations with large multinational steel companies. Dyesol has had conversations with many of the largest steel companies in the world and is re-engaging with some of these companies now. However, this is not the point of focus for Dyesol right now. The point of focus is about improving the technology so that it is ready for mass production. Dyesol aims to be in a position to maximise the benefit for Dyesol's shareholders. The more progressed Dyesol's technology is, the harder a bargain it can drive with potential collaborators such as steel companies, which will facilitate distribution and provide things such as warranty protection. So, it is a deliberate strategic position for Dyesol not to form early-stage relationships at the moment with potential industrial collaborators.

Q.9 What is Mr Robert McIntyre's expertise? How does he serve Dyesol?

A.9 Dr McIntyre is a very accomplished materials scientist from the UK. As a young scientist, he enjoyed the privilege to work at the Max-Planck institute in Berlin. He has spent his entire career working around zirconia and titania. He is Head of R&D at Cristal for their global titania operations and is an expert in photo catalytic processes. Dr McIntyre has a high level of understanding of materials chemistry and makes a great contribution to our Technology Advisory Board, especially in a context where this technology is evolving very rapidly and there are very few experts. And most of these experts either work for or collaborate with Dyesol.

Q10. What does the new CEO at Tasnee mean for Dyesol? Is Mr Caldwell going to meet him anytime soon?

A10. He will certainly try to meet him. From my personal perspective, the new CEO has a strong reputation at his former employer, SABIC. He is known for focusing on business development and technological development, and also for making the businesses profitable. As I understands it, he is a world-class operator and Dyesol can only benefit from having him on the register.

Q.11 Does Dyesol plan to collaborate with energy storage companies such as Tesla?

A.11 It is hard not to have enormous admiration for Tesla and Elon Musk, in particular. Their technology is not a particularly new one, but it is probably more affordable and more user-friendly. They seem to be introducing this technology in order to facilitate the proliferation of solar, and obviously have a positive view on solar as the renewable energy of choice. However, they appear to be experiencing some teething problems with their cars. Tesla's battery technology would make an excellent complement to Dyesol's solar technology - in fact to all renewable technologies - and provide the pathway in taking the technology off-grid. The technology for off-grid applications is clearly progressing very quickly.

Q.12 Is Professor Grätzel still actively involved in the development of the technology, or is he only overseeing Dyesol's activities?

A.12 Professor Grätzel is not involved in day-to-day management of Dyesol. He provides guidance on technology development through his participation in his quarterly reviews of progress made in the Dyesol Technology Development Plan. He is also a Dyesol shareholder. There is a close relationship between Dyesol and EPFL, where Professor Grätzel still works.

Q.13 How do you judge the current and future market for DSC and BIPV?

A.13 Dyesol has abandoned its commercialisation activities in the field of DSC, but remains involved by virtue of its materials supply to prospective manufacturers. Dyesol believes Solid-State DSC or Perovskite Solar Cells (PSC) have excellent commercialisation potential because over their promising competitive performance. Compared to DSC, PSC is lower cost, higher efficiency and better stability or longer life. The promise of longer life is principally because there are no obvious corrosion or thermal expansion issues as with liquids. As a versatile, nano-technology, PSC also has the possibility of addressing multiple applications, the greatest of which is building integrated photovoltaics (BIPV).

Q.14 Will another capital increase be necessary before mass commercialization can begin?

A.14 Dyesol's principal objective is to maximise returns to shareholders by making prudent decisions in relation to business and technology development. Where it can outsource or collaborate it will do so to preserve capital. This is known as a capital light model. However, the Company will not speculate or disclose to the market its capital raising intentions in advance of board decisions.

Q.15 Given the current state of research, when will we see a glass prototype, and with which efficiency?

A.15 Dyesol has commenced planning and preparation for a Major Area Demonstration glass prototype. That is expected to be completed no later than end-2016.

Q.16 When will we get new results for ssDSC durability?

A.16 Dyesol released the results of the latest stability and durability tests to the ASX on May 11. This was based on tests performed by a team led by Professor Michael Grätzel using a perovskite solar cell architecture similar to that being developed by Dyesol for mass manufacture.

Q.17 What can a commercialization with CSIRO look like? Will Dyesol supply pastes or are you planning to buy a 3D printer, which has apparently been tested with during the last months?

A.17 Dyesol does not intend to form a commercial collaboration with CSIRO. It currently collaborates successfully with CSIRO on technology development and expects to continue that collaboration into the foreseeable future. 3D printing is not a technology that we consider critical to our development path.