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Active Energy making progress persuading companies of the benefits of its CoalSwitch fuel substitute

Snapshot

The AIM-listed renewable energy and forestry management business has developed a fuel substitute called CoalSwitch made from waste wood normally left to decompose following forestry operations

Biomass power station

Quick facts: Active Energy Group PLC

Price: 0.485 GBX

LSE:AEG
Market: LSE
Market Cap: £5.83 m
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  • Renewable energy and forestry management business

  • CoalSwitch fuel substitute product made from waste wood left over by forestry operations

  • Management contracts for two huge tracts of forest in Newfoundland and Labrador, Canada

 

What Active Energy does:

Active Energy Group PLC (LON:AEG) is an AIM-listed renewable energy and forestry management business which has developed a fuel substitute called CoalSwitch, made from waste wood normally left to decompose following forestry operations.

This waste includes pulp and sawmill by-products such as bark, sawdust and thinnings, and wood which is over-age, under-quality, blow-down, beetle-kill, forest-fire damaged, or industrial waste.

The aim is to roll CoalSwitch out in areas where AEG can source high volume feedstock.

Advanced Biomass Solutions (ABS), one of two affiliates set up by AEG, holds all of the CoalSwitch activities and will handle future projects related to the group’s biomass coal replacement technology. The division also oversees the development of PeatSwitch, an engineered soils derivative of CoalSwitch.

AEG’s other affiliate, Timberlands, houses the group’s forestry management business. Timberlands has a joint venture with three native Métis Settlements of Alberta, Canada, to commercialise more than 300,000 hectares (around 750,000 acres) of assets and also a preliminary forestry management contract with the Provinces of Newfoundland and Labrador.

Another key partnership is its joint venture company, AEG CEE, which received market certification and environmental clearance by the Polish government for its ‘SuperFuel’ product back in June.

How’s it doing:

On 26 March 2019, Active Energy announced the completion of its purchase of an industrial site in North Carolina to be the hub for its CoalSwitch business.

The Lumberton site is close to joint venture partner Georgia Renewable Power and comprises up to 415,000 sq ft of factory space and 151 acres of surrounding land.

AEG will pay vendor Alamac US$3.3mln (£2.5mln) to be funded by a US$3.41mln convertible loan note. The Lumberton site is fully permitted for operations.

In October 2018, the company inked a joint venture agreement with Georgia Renewable Power LLC (GRP) which envisages the installation of CoalSwitch facilities into operational plants.

It will also see the partners develop organic waste fertilizer products, and using the CoalSwitch and PeatSwitch technologies, for complementary sales of biomass.

In an operations update in January 2019, the group said it is continuing to assess longer-term international expansion opportunities, with a particular focus on Western Europe and South East Asia.

The company revealed it has received multiple expressions of interest from potential partners in Asia and the CoalSwitch technology is now being evaluated by a number of engineering, procurement and construction contractors to build CoalSwitch production facilities.

It said it has also received a number of approaches from a variety of industries regarding the possible application of its PeatSwitch technology, which produces a beneficiated, soil substrate product made from waste fibre.

However, the company's previously announced memorandum of understanding (MOU) with Young Living Farms (YLF) relating to PeatSwitch plant sales has not resulted in a definitive contract at this stage due to an internal strategic review at YLF.

On the forestry side, it said discussions regarding an MOU with Powerwood Canada continue to progress. Powerwood and AEG have commenced a process to allow financial due diligence by potential funders for the joint venture project in Alberta.

In December 2018, the firm raised just under £1.5mln via a placing of 149.5mln shares issued at 1p each, with warrants attached, to kick-start its forestry operations in Canada. AEG’s management subscribed for 9.5mln placing shares.

Earlier in the month, the company received confirmation that it had been awarded management contracts for two huge tracts of forest in Newfoundland and Labrador.

The licences will allow the group to cut 100,000 cubic metres a year, which it will use to provide the raw material for its biomass technology, CoalSwitch.

What the boss says - Michael Rowan, chief executive:

"The AEG team is focused 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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