Active Energy Regulatory News (AEG)

Active Energy Group Plc / EPIC: AEG / Sector: Alternative Energy

21 July 2016

Active Energy Group Plc ('Active Energy' or 'the Group')

Annual General Meeting Statement

Active Energy, the AIM listed international timber processing, forestry management and renewable energy business, is holding its annual general meeting ('AGM') at 10.00 am today at the offices of Northland Capital Partners Limited, 60 Gresham Street, 4th Floor, London, EC2V 7BB. At the AGM, CEO Richard Spinks will make the following statement:

"We continue to make sound progress in building our business which now comprises of three standalone but highly complementary divisions; AEG WoodFibre, AEG TimberLands and AEG CoalSwitch. 

AEG WoodFibre:

Our core revenue generator at present, AEG WoodFibre, based at Yuzhny Port, near Odessa in Ukraine, has grown over the past 3 years from a small start-up into an established wood fibre production business. It continues to expand and is currently performing in line with management expectations. With supply agreements with the State Agency of Forestry Resources of Ukraine to purchase wood from more than 120 sustainable forests in the national forestry network, we plan to complement the fully-automated hardwood production line, already capable of processing approximately 3,000 tonnes of raw material per day, with the installation of a new 1,000 tonne per day softwood production line by the end of 2016. This would substantially increase AEG WoodFibre's production capacity and broaden its market offering, making us the only operator in Europe to supply in volume, both of the key raw materials for MDF manufacturing from a single facility.

Due to the success of our current operations and reputation for delivery, we have been approached by both our existing clients regarding opportunities to supply their operations in additional jurisdictions, as well as new clients looking for regular supply of high quality wood fibre. We hope to announce more on these developments in due course.

Following the announcement of additional contracts earlier in the year with leading manufactures of MDF in Turkey and the aforementioned increase in contractual enquiries, we are targeting a significant increase in production output at the Yuzhny site and turnover in 2016 in excess of US$35 million, which compares favourably to the 2015 figure of US$24.37 million. We have been in contact with all our Turkish clients and they have informed us that the recent in-country events will have no effect on the demand for our product or change the relationships we have established. In addition to Turkey we are evaluating additional projects in Canada, the United States, Europe and Asia where we feel confident we can utilise our knowledge and skill set to capitalise on additional processing, sourcing and sales opportunities. Many of these are a demonstration of the synergies across our three stand-alone divisions, where cross-selling of opportunities is now a regular occurrence.

AEG Timberlands:

We continue to progress a number of exciting projects with AEG Timberlands focussing on the sustainable management and utilisation of under-utilised and under-valued forestry assets, in partnership with their owners; initially in Europe and Canada.

On 19 July we announced that we had signed a Memorandum of Understanding with a Regional Government in Ukraine, relating to the management, development and sustainable commercialisation of approximately 186,500 hectares of mature commercial forestry in northern Ukraine. The Memorandum of Understanding remains subject to contract and both parties are working towards completion as soon as practicable.

We continue to make progress with the finalisation of the Metis Settlement forestry economic development and coal reduction initiative for Alberta, particularly in terms of structure and business planning. Following significant changes to the political landscape in Alberta and extensive dialogue, we feel confident that we have the support of the Alberta government, in both the Indigenous Affairs and Energy Alberta ministries.

The premise remains to jointly develop an initial forestry area covering 108,000 hectares, owned and controlled by the Metis Settlements of Paddle Prairie, Peavine and East Prairie, and containing more than 35 million cubic metres of mature standing timber. Activity and revenue is envisaged to be derived from logging and wood chipping as well as AEG CoalSwitch production from brush, waste and non-merchantable timber, to target both the domestic and international markets as demand dictates. 

Critical mass will allow us to advance discussions with existing coal-fired power generators in Alberta, Canada and the nearer states of the US, as well as other international territories with active environmental legislation, for the offtake of our coal replacement fuel.

AEG CoalSwitch:

With regards to AEG CoalSwitch, I am pleased to announce that we continue to make progress in commercialising one of the world's first 'drop-in' biomass fuels that can directly replace coal and transform the coal energy dynamic. Following the positive test at the University of Utah, we have established a new, automated, pelleting plant in Salt Lake City, Utah, in the United States. This is now operational and producing commercial samples for the shortlisted off-takers identified over the past nine months. We have made progress in building a commercial network to market the product, which is a viable solution to overcoming the global problem of more than 2,300 worldwide coal-fired power plants, either having to shut down or being forced to invest in retrofitting and converting their facilities. In this vein, we have made the first deliveries of the AEG CoalSwitch product to prospective commercial partners for testing in territories including the United Kingdom, Canada, Ukraine and Malaysia. 

I believe we have a firm foundation from which we can expand our operations, increase market share and enhance financial performance across the Group.

I would like to take this opportunity to thank our shareholders, our highly motivated and experienced teams across our operations, our advisers and my fellow board members for their continued dedication, as we set out to create a new standard in the sustainable management and optimisation of timber resources and opportunities through Active Energy's complementary divisional structure."

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