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(Sharecast News) - Gasification technology company Eqtec has signed a co-development and option agreement with Rotunda Group and its subsidiary Shankley Biogas, it announced on Monday, for the Southport Hybrid Energy Park project.
The AIM-traded firm said it and Rotunda were entering into an agreement to jointly develop a waste management project, to be held in a project special purpose vehicle, which Eqtec would have the option to acquire.
It said it would be responsible for contributing 100% of the development costs pre-financial close, currently estimated at around £0.5m, and receive, at financial close, a return on the funds invested in the form of a development fee, no less than two times the funds invested by Eqtec.
Rotunda had the option to participate in the project's development capital and receive a proportional fee, it added.
The company said Rotunda would receive £0.1m from Eqtec, in consideration for the exclusive option for Eqtec to acquire the subsidiary, which would be treated as a development cost of the project.
Eqtec said the exclusivity period would be for 12 months, and could be extended by mutual agreement of the parties.
Under the deal, Eqtec said it would seek additional planning permission so that its gasification technology could be applied to the project, to make it capable of converting more than 55,000 tonnes of refuse derived fuel waste annually, which would be created by the proposed plant and otherwise destined for landfill or incineration.
That, it said, would generate an estimated additional 6MW to 8MW of "green" electricity.
Eqtec said it estimated that the additional capacity for the thermal conversion of waste, using its gasification technology, had the potential to generate additional revenues for the project special purpose vehicle of around £70m in electricity sales and, potentially, up to £15m in heat sales over a 20-year period, and save more than £80m in disposal costs.
"I am delighted to announce this exclusive partnership to develop the hybrid energy park in Southport, Merseyside, which underlines Eqtec's strategy of engaging in partnerships with strong local players in energy infrastructure which are already in advanced stages of the planning and permitting process, and where Eqtec can add value with its proven, proprietary and patented advanced gasification technology and solutions," said chief executive officer David Palumbo.
"In this way, Eqtec can significantly improve both the environmental impact and the economics of many traditional waste-to-energy facilities, whilst potentially delivering attractive returns to Eqtec and our shareholders.
Palumbo noted that Eqtec recently raised £10m to focus on developing such projects.
"Eqtec is selectively growing its pipeline of potential projects in the UK, as well as internationally, to help ensure that it can deliver attractive risk adjusted returns for our shareholders and wider value to stakeholders."
At 1259 BST, shares in Eqtec were flat at 0.58p.
3 Apr 2024 16:35
IN BRIEF: Eqtec shares surge as reaches settlement with Logik
Eqtec PLC - Cork, Ireland-based thermochemical conversion technology company - Reaches settlement agreement with Logik Developments Ltd and its subsidiary Logik WTE Ltd. Eqtec will receive about GBP1.7 million by around early May, as Logik will pay the sum within the next business day of a sale of a site at Weighbridge Road in Deeside Industrial Park which is expected to complete on or before April 30. If the sale is delayed to between May 1 and November 30, Eqtec will receive GBP2.0 million, and if it is delayed beyond November Eqtec will receive the GBP2.0 million sum plus interest at 4% above the Bank of England base rate on any part of the settlement that it not paid according to the settlement terms.
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