Update on Canadian Forestry Joint Venture

RNS Number : 2070Q

Active Energy Group PLC

28 August 2014

 

Active Energy Group Plc
("Active Energy Group" or the "Group" or the "Company" or "AEG")

Update on Canadian Forestry Joint Venture

On 18 July 2014, Active Energy Group Plc (AIM: AEG.L), the London Stock Exchange AIM-listed international supplier of Biomass for Energy (BFE) fuel products, industrial wood chip, and forestry management and development services, announced that it had entered into an important new joint venture to exclusively commercialise in excess of 100,000 hectares (c.250,000 acres) of mature forestry assets in Alberta, Western Canada, which were expected to yield more than 20 million m³ of commercial standing timber.

Following the formalisation of the joint venture arrangements and the establishment of the joint venture company, KAQUO Forestry and Natural Resources Development Corporation ("KAQUO"), in which the Group shall have a 45% equity interest, the Directors of AEG now expect that KAQUO will have the rights to commercialise a significantly larger hectarage than at first envisaged, and in any case not less than 200,000 hectares (c.500,000 acres) of high quality forestry in Alberta.

KAQUO and AEG are currently undertaking an extensive sampling of approximately 2% of the forestry assets, following which an updated volumetric estimate of the standing timber will be issued.  The Directors expect that this exercise will be concluded within the next two months.

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Enquiries:

Active Energy Group Plc
Richard Spinks, Chief Executive Officer                                                 Tel: [phone]
                                                                                                                                [e-mail]

WH Ireland Ltd. (Nominated Adviser and Broker)           
Chris Fielding / Nick Field                                                                            Tel: [phone]

Novella Communications
Tim Robertson / Ben Heath                                                                         Tel: [phone]
                                                                                                                                [e-mail]

About Active Energy Group:

·   Company website: www.active-energy.com

·   Active Energy Group Plc, a London Stock Exchange AIM-listed company (AIM: AEG.L), is an international supplier of Biomass for Energy (BFE) wood chip for green energy power generation, industrial wood chip for MDF manufacturing, Biomass fuel granules and granulating systems, and forestry/timberland development and management services.

·   The Group, headquartered in London, operates from five locations:

o Ukraine, where it is the largest producer and exporter of MDF-quality wood chip

o Spain and Montenegro, from where it supplies BFE Biomass wood chip to European power plants

o The United Kingdom, where it operates an R&D facility for its new Biomass fuel granulating systems

o Canada, where it has entered into a landmark forestry joint venture with three indigenous Métis Settlements to commercialise c.200,000 hectares of mature forestry/timberland assets

·   The Group is led by a highly experienced and dedicated management team with a proven track record of working in the industries and regions from which its revenues are generated.

·   In June 2013, AEG acquired its major trading partner and raised approximately £3.5 million to facilitate future growth and expansion of its international production and shipping facilities.

·   In May 2014, the Group announced the formation of a new subsidiary, AEG Pelleting Limited, to commercialise and market a revolutionary new Biomass for Energy (BFE) fuel granulating process that converts sawdust and other industrial and agricultural co-products into valuable fuel granules for use in large-scale power plants and micro-CHP boilers.

·   European Biomass for Energy (BFE) Market:

o  Biomass-fuelled power is expected to account for over 50% of European renewable energy, according to an EU directive on National Renewable Energy Action Plans.

o  EU directives and continued commissioning of new Biomass and CHP power plants in Europe continue to generate additional demand for Biomass fuel, with little visibility on where that fuel will be sourced.

o  The European Renewable Energy Council (EREC) estimates that Biomass-based energy production will grow from 43TWh (Terawatt Hours) in 2005 to 250TWh in 2020.

o  Key NGO bodies such as the European Biomass Association and Eurelectric (the European Union of the Electricity Industry) advocate establishing harmonised, binding sustainability criteria for solid Biomass fuel.

·   Turkish MDF Market:

o  Turkey is the leading producer of MDF in Europe, producing an estimated 4.3 million m³ in 2012 in six plants around the country.  

o  AEG has developed relationships with all of the major Turkish MDF manufacturers.

o  Currently, circa 69% of the wood chip imported into Turkey comes from across the Atlantic; all of it for production of wood-based panels, primarily MDF. 

o  By contrast, wood chip from AEG's port-side production facilities in Ukraine can be transported across the Black Sea in approximately one-tenth of the shipping time from the U.S., Canada and Latin America, which provides manufacturers with substantial cost savings and cashflow advantages, as well as considerably fresher and higher-quality product.

 

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