(Alliance News) - Active Energy Group PLC on Monday said it had raised GBP800,000 through a convertible loan note subscription to develop its Lumberton facility in the US.
Shares in Active Energy were up 13% at 0.88 pence in London in morning trading.
The London-headquartered biomass based renewable energy business owns the Lumberton sawmill, located in the US state of North Carolina. It will use the GBP800,000 immediately "to accelerate the development of and increase production volumes" at the facility.
The series B convertible loan notes have a conversion price of 1 pence each and mature on March 12, 2022. They accrue interest at 8% per annum, payable quarterly in arrears, and are listed on the International Stock Exchange. Proceeds are expected to be received by June end.
The funds raised will help Active Energy increase production capacity so as to meet current demand levels with the introduction of a second shift along with the ability to increase production volumes for saw-log exports.
Moreover, the money will provide more working capital to help deploy new personnel crews and equipment at Lumberton and secure more feedstock.
Since all lumber operating activities were merged into Active Energy Renewable Power in early April, Lumberton operations have accelerated and consolidations "has helped to build a profitable business" with Active Energy Renewable Power now seeing higher levels of interest from possible industry partners in the US and elsewhere.
For the past 60 days, Lumberton sawmill operations have operated on a single shift basis and production is already at between 70% and 80% of sawmill capacity. Weekly production targets - which range at between 850 and 950 rail ties, as well as between 25,000 and 30,000 board feet of lumber, plus more than 200 tonnes of sawmill chips and residuals - are being met.
As such, the company feels it is a good time to further increase production ahead of the sawmill's operating at full capacity in the coming weeks. Core personnel are being trained for a second production shift and hiring is planned for the end of June. This second production shift should start by mid-July, allowing sales from the sawmill to double through the third quarter of the year.
The firm started exporting pine saw-logs in May and orders were initial small, around 1,000 tonnes per month with 50% of this delivered so far. Active Energy Renewable Power has now signed a deal with an undisclosed "South East Asian customer" to deliver pine saw-logs to the region and these deliveries have begun already. Terms of the agreement mean that Active Energy Renewable Power is expected to ship 8,000 tonnes per month from ports located near Lumberton.
The company is "considering other complementary opportunities" relating to its lumber activities, aiming to accelerate Active Energy Renewable Power's growth by expanding current operations and pursuing "new opportunities beyond Lumberton".
Moreover, this increase in lumber activities means Active Energy can accrue more feedstock for future CoalSwitch production. CoalSwitch is Active Energy's biomass fuel that can be mixed with coal or even replace coal in coal-fired power stations without the need to modify the station itself.
Chief Executive Michael Rowan said: "The board is grateful for the ongoing support we have received from the holders of our convertible loan notes and also welcomes our new US investors. The board believes that this is the opportune moment to be investing in our lumber activities at Lumberton and that it must increase production to meet current levels of demand. We are pleased to be announcing the next offtake agreement with and look forward to taking advantage of the market opportunities that are currently being presented to Active Energy.
"I am excited by these recent developments as they have helped accelerate the expansion of our core activities at Lumberton. In addition, we are establishing the essential building blocks (namely establishing lumber supplies) for the commercialisation and full-scale production of our future CoalSwitch technology in due course."
By Anna Farley; annafarley@alliancenews.com
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Active Energy (AEG)