Here’s a slurry story that isn’t hard to articulate: Radar Acquisitions (TSX.V: RAC) says it can recycle the primary waste product from coal mines, known as slurry, into a cleaner burning fuel the company is calling “Re-Fuel”.

Radar’s efforts could capitalize on the inherent qualities of coal as a source of energy-both the “positive” and the “negative”. The pluses are few, but significant: It’s cheap and plentiful. The US has about 265 billion tons of coal reserves - more than ¼ of the available coal in the world. This is enough to last close to the same number of years, at least at today’s consumption rate (in the US) of about 1 billion tons per annum.

The obvious downside to coal is that it’s dirty. Really dirty. Dirtier than a Russian horse-doctor’s valise, as they say.

But as a recent article in Wired Magazine points out, we don’t want to throw out the cleaned up baby with the bathwater. “Do the math: Making coal burn cleaner might be the most pressing environmental problem that no one talks about,” the author argues. That’s because the biggest economies in the world are largely heated and powered by coal.

The reality is, coal is not going away, and we’ll have to clean up our act if we’re to continue using without toasting ourselves (and the planet) in the process.

Another downside to coal is that its production results in mass amounts of a waste product known as coal slurry, which consists of rocks, dirt and acidic water. As you’ve probably guessed, slurry is highly acidic and hazardous to your health.

Radar Acquisitions notes that 25% of coal mined is left behind in this slurry, making it a potentially profitable form of waste. And with the company’s patent-pending method of mixing cleaned slurry with other biomass (20%) and forming the resulting product into briquettes, it looks like Radar may have found a way to improve upon coal’s poor track record for emissions.

This month, Radar and its JV partner New Energy USA announced that it signed a lease agreement for the Price Kentucky Refuse Pile, a coal waste pond in-you guessed it-Kentucky. A private company based in the US will operate the Re-Fuel facility, which is expected to be operational by summer 2008.

But can it make money?

I don’t know how big the refuse pile is, nor how much new coal waste will be produced by active mining in the area, but obviously that will limit the production capacity here.

Bryson Goodwin, who does investor relations for Radar, told me on the phone that the revenue model is sound.

“All we have to do now is get the equipment on the ground,” he says. “The cost to produce the final Re-Fuel product is $30/ton freight on board,” which refers to the final product ready to be shipped.

“Presently, we have off-take agreements signed for $68/ton, so you can see it’s a viable profit model. We’re looking at $38 per ton profit.”

He points out that the US government will toss in an extra $4.88 per ton as a Section 45 tax credit for renewable resources.

Coal prices vary greatly, depending on the quality of the final product. High quality coal, sometimes called boutique stoker coal, is currently priced at US$65 to US$75 per ton. The poorer quality steam coal market is $40 to $55/ton.

Radar produces a coal briquette that burns somewhat cleaner than untreated coal, because of the high (20%) biomass content bound to the cleaned slurry material.

The joint venture company, formally called RPS Fuels, plans to build Re-Fuel plants throughout the Appalachian region of the United States where the quality and quantity of available slurry are known to be high. Bryson calls this the “low hanging, high-value fruit”.

“It’s a totally scalable technology that you can use anywhere you have coal waste,” Bryson says.

And in the US, there is plenty of coal waste. Reports I’ve read (here’s one) state that there are between 600 and 700 coal slurry impoundment facilities in the US with several billion tons of coal waste. The eastern US produces 500 million tons of coal annually. (Cough!!)

Although there are a growing number of companies using slurry for various purposes-from building materials to power generation, for example-the pickings are still very good, according to Radar.

“It’s a great industry to be in, because it’s a win-win situation. This is a technology that will help companies reduce carbon emissions, reduce existing high-acid pollution at abandoned coal mines and create wealth for shareholders.”

Radar is presently raising funds in order to build facilities capable of producing 500,000 tons per year. The plan for 2008 is to have 20 units in production at a cost of $10 million each. Funds will be raised at a ratio of 70:30 (debt vs equity financing).

If this little 20 center can find the funds necessary, it’s goal of 500,000 tons annually could become a reality in a hurry. Not bad for a slurry.

~ Doug

Coming up: I’m working on a couple pieces. One on the International Cyanide Code and which gold companies have actually signed onto this voluntary regulation. The other piece is about the rise of Arise Technologies in the solar sector.

Other Stats: (09 Apr 2008)

Rolling 52 Week High 0.490

Rolling 52 Week Low 0.200

Total Number of Shares: 27,569,843

Shares in Escrow: 3,464,270

Net Shares Outstanding: 24,105,573

Float Quoted Market Value: 5,303,226