Islandmagee - Project Funding Update

RNS Number : 4899L

Infrastrata PLC

27 December 2018

 

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.

27 December 2018

InfraStrata plc

("InfraStrata" or the "Company")

Islandmagee Gas Storage Project - Project Funding Update

InfraStrata plc (AIM: INFA), the UK quoted company focused on the development of natural gas storage capacity, is pleased to provide an update on project equity funding for its Islandmagee gas storage project in Northern Ireland (the "Project").

In order for the FID (Final Investment Decision) to be taken there are several key elements that must be aligned: Project equity funding, debt funding, EPC (Engineering, procurement and construction) contractor, capacity offtake partner and, as completed in November 2018, a FEED (Front End Engineering Design) study for the Project.

With respect to the eventual Project equity funding, the Company has been working through several term sheets, having due diligence completed upon its Islandmagee project Phase 1 (2 caverns) and Phase 2 (6 additional caverns) and discussing potential long-term working relationships with such potential Project equity partners.  The Company has been diligently undertaking this work in order to ensure it selects the right Project financing partner and enters into an agreement that will provide long-term value for shareholders on the initial Project and beyond.  The Company remains on track to undertake the FID by the end Q2 of 2019.

A further Project equity funding offer was presented to the Company during the week commencing 17 December 2018.  In order to fully assess and evaluate this offer the Board has decided to delay entering into any formal arrangements in Q4 2018, with a view to concluding its  review and negotiations early in 2019. The Company remains in negotiations with various parties and although approaches have been made to enter into exclusive arrangements, the Board has rejected these advances at this point in time.

All potential Project equity funding partners consider a phased investment commencing with phase 1 (2 caverns) to be the most appropriate way forward.  Initially, financing arrangements will be provided for enabling works, with the majority of the funds being provided to facilitate development of Phase 1 after a successful FID.  All potential project funding partners plan to  take equity in the Project at this point.

Debt funding will naturally follow an agreement on Project Equity funding and the Company is well advanced with discussions but will only request a firm proposal once the equity/debt preference is known from its selected Project equity funder.  The ITT (Invitation to Tender) for the EPC contract has been released, as announced on 21 December 2018, with the tender returns being due by 28 February 2019.  The Company continues to progress with numerous interested partners on the capacity offtake agreement front and expects to focus its attention on a short list in Q1 2019.

John Wood, Chief Executive Officer commented: 

"Our goal was to have identified our preferred long-term Project equity partner in Q4 2018, in order for us to commence the enabling works early in 2019.  With a new offer being presented to  us last week we have considered our position and it is our duty to fully evaluate this offer as it may add value for our shareholders over and above the other offers on the table; this bodes well for our future endeavours.

"Whilst it may be frustrating for our shareholders that the Board has decided to extend our decision-making process, we must ensure we deliver the best proposal for our shareholders. We are extremely encouraged that several credible investors remain in advanced negotiations with us, demonstrating the quality of our initial Project and the level of preparedness of InfraStrata to progress. With this offer in mind, we remain on schedule to conclude all matters and undertake the FID by end Q2 2019."  

For further information, please contact:

InfraStrata plc John Wood, Chief Executive	c/o Yellow Jersey [phone]
Allenby Capital Limited (AIM Nominated Adviser & Joint Broker) Jeremy Porter / Liz Kirchner	[phone]
SI Capital Limited (Joint Broker) Nick Emerson	[phone]
Yellow Jersey Tim Thompson	[phone]

-ENDS-

Notes to editors:

InfraStrata is an independent gas storage company focused on the UK and Ireland. Further information is available on the Company's website: www.infrastrataplc.com 

Background on the Islandmagee Storage Project

The Islandmagee gas storage project is a proposed salt cavern gas storage facility located on Islandmagee in County Antrim, Northern Ireland. The Board of InfraStrata believes that the proposed 500 million cubic metres natural gas cavern storage facility will provide over 25% of the UK's natural gas storage once constructed. The facility will be situated adjacent to the Scotland Northern Ireland (gas) Pipeline (SNIP) and the Moyle 500 megawatt electricity interconnector. Work commenced in 2007 with the acquisition of 3D seismic data to image the Permian salt in the Larne Lough area. During 2012, planning permission was granted for the project and a gas storage licence was issued by the Utility Regulator. In 2015 a well was drilled to core the salt and confirm the technical feasibility of the project, supported in part by the European Commission.  The Front End Engineering and Design (FEED) element of the Project was completed in November 2018 and the FEED report was submitted to the European Union in December 2018 in accordance with the Company's grant conditions. To date approximately £13.5m has been invested in the project.

Further information is available on the company's website: www.infrastrataplc.com 

The Front End Engineering & Design (FEED) and Insitu Downhole Testing programme for the Islandmagee gas storage project is co-financed by the European Union's Connecting Europe Facility.

Disclaimer releasing the European Union from any liability in terms of the content of the dissemination materials:

"The sole responsibility of this publication lies with the author. The European Union is not responsible for any use that may be made of the information contained therein."

 

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