Active Energy Regulatory News (AEG)

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

19 July 2016

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

Forestry Management MOU in Ukraine

Active Energy, the AIM listed international timber processing, forestry management and renewable energy business, is pleased to announce that it has 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 "MoU"). The MoU remains subject to contract and both parties are working towards completion as soon as practicable. 

Under the terms of the MoU, Active Energy, through its forestry management division AEG TimberLands, will work exclusively in introducing international forestry and environmental standards of sustainable forestry management to improve the value and yield of the forests. This will be achieved through the implementation of more efficient logging practises and technologies and the efficient use of merchantable timber, which AEG WoodFibre can purchase for its processing operations at the Yuzhny port, near Odessa in Ukraine. In addition, new commercial opportunities pursuant to the MoU will allow increased utilisation of forest waste, currently burnt in situ, for the production process of AEG CoalSwitch's innovative fuel replacement product. Management envisage that a facility to manufacture AEG's CoalSwitch product will be constructed close to the forestry, to create the supply of CoalSwitch to the region's existing coal-fired power plants.

The Company, in tandem with international forestry consultants, and the Ukrainian Forestry Institute, have been appraising the quality of forestry, operational and managerial practices, inventories, logistics and market conditions over the past seven months. The MoU effectively replicates the type of forestry asset management and commercial agreements established by Active Energy with the Métis Settlements in Canada. Additionally, it should increase the Company's revenue potential from Ukraine and provide the regional forestry authorities with guaranteed offtake agreements for currently unused material.

Active Energy CEO Richard Spinks said, "This is an encouraging development for the Group. We are a major player in Ukraine and this proposed arrangement with the Government recognises our ability to monetise forestry assets through the implementation of all of our services, in which all Active Energy's divisions work together to provide a single solution, delivering enhanced value to our commercial partners. We will be able to work in tandem with the Government to utilise these forests' asset value to the full, from commercial logging to demolition wood waste and wood process by-products including bark, sawdust and thinning. We believe that this will be the first of a number of agreements within Ukraine and it represents an important milestone for Active Energy's operations within the country and the region. I look forward to providing shareholders with further updates in due course as we move towards the execution of the final contract." 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

**ENDS**

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About Active Energy Group:

Active Energy Group is an AIM quoted international timber processing, forestry management and renewable energy business with three complementary divisions with robust intrinsic value as standalone operations;

· AEG WoodFibre - established wood fibre production business at Yuzhny Port, Odessa with targeted turnover in 2016 of in excess of US$35 million

· AEG TimberLands - forestry management business including European projects and joint-venture to commercialise mature forests in Western Canada

· AEG CoalSwitch - a 51% owned joint venture formed to commercialise a revolutionary biomass coal replacement fuel

The Company has a highly technical and commercial team assembled to expand cash generative woodchip operations, develop Canadian and European timber operations and commercialise proven AEG CoalSwitch product. It has implemented a defined strategic plan to significantly increase revenue and build shareholder value.