LONDON (ShareCast) - (Sharecast News) - Renewable energy and forestry management business Active Energy updated the market on its plans for the completion of the first industrial-scale 'CoalSwitch' production facility on Friday.
The AIM-traded firm said the "substantive" nature of discussions with potential offtake partners in Europe and Asia in recent weeks had further increased its confidence in the scale of the commercial opportunities for CoalSwitch and 'SuperFuel'.

Reflecting that confidence, AEG said it had been focussed on securing a site in Lumberton, North Carolina, which would ensures the group had the scale of facilities to expand production of both products over the next two years.

The company had signed a letter of intent with Alamac Holdings - a privately-owned US entity - regarding the proposed purchase of a site in Lumberton, which would include up to 415,000 square feet of covered factory space, and around 145 acres of surrounding land.

Under the terms of the letter of intent, AEG would conduct due diligence on the site until 28 February, at which point the company said it intended to formalise a commercial real estate purchase contract with Alamac.

The specific terms of that would be finalised and agreed upon completion of the due diligence.

AEG said the factory at the Lumberton site was connected to Georgia Renewable Power's power plant by an existing steam distribution pipeline.

Following the proposed purchase of the Lumberton site, AEG explained that its immediate focus would be on installing the initial five-tonne-per-hour CoalSwitch plant, and generating revenues at the earliest opportunity.

AEG said it had also been progressing discussions with Andritz Group - a global engineering company - to support the installation of the initial CoalSwitch plant at the Lumberton site, and provide engineering support to ensure that the site would have the capacity to produce up to 400,000 tonnes of CoalSwitch per annum.

Ongoing negotiations relating to the supply of feedstock to the site had demonstrated possible additional revenue generation opportunities for the group, which could be advanced alongside the development of the CoalSwitch plant.

Those opportunities included the possible coordination of AEG's activities with existing timber trading businesses, to supply both saw log and biomass to new customers in Europe and Asia.

"The Active Energy team has been working hard over recent weeks to implement the Company's refocussed strategy and achieve revenue generation in as short a timeframe as possible," said AEG chief executive Michael Rowan.

"With this in mind, the installation of our first CoalSwitch plant at the Lumberton site is a priority and we have made important strides forward toward achieving this with the assistance of GRP.

"The letter of intent with Alamac is a critical component of this process and, subject to the satisfactory completion of due diligence, will enable activities on the ground to accelerate with the objective of achieving first CoalSwitch production and sales in the first half of this year."

In addition, Rowan said the company's discussions with global engineering company Andritz Group were proving "encouraging", adding that the board was "optimistic" that a long-term relationship would be established.

"We intend to expand the Lumberton site with their assistance and roll out further CoalSwitch plants both in North America and internationally.

"The board sees the commercial introduction of CoalSwitch as the springboard for both product credibility and the catalyst for new prospective customers to sign for both new plants and for new off-take agreements.

"We have already generated considerable interest from a range of potential customers, partners and off-takers."

Rowan added that alongside the large-scale market introduction of CoalSwitch, ARG was continuing to advance its activities in Newfoundland following the grant of cutting permits in November, with the objective of delivering cash flow in the near term.

"The AEG team is focussed on generating value for our shareholders and although there can be no guarantees, I firmly believe that the quality of our intellectual capital, our partner and customer relationships and our long term strategic focus will be reflected in excellent returns for our shareholders.

"This is a strategy which I believe will dominate our corporate development during the first part of 2019 as we chart a course towards achieving critical commercial milestones, revenue generation and corporate growth."

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