Active Energy Regulatory News (AEG)

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

29 July 2019

Active Energy Group Plc ('Active Energy', 'AEG' or the 'Company')

Results of AGM and Statement

Active Energy, the London quoted international biomass based renewable energy business, is pleased to announce that at its AGM held today all resolutions were passed. The votes were cast as follows:

At the meeting, Non-Executive Director, Simon Melling, made the following statement. 

"AEG has been through a crucial phase in its development over the past 12 months, during which the Board initiated a complete and extensive review of strategy and identified a clear development path. This focussed on the core areas of our business and the commercialisation of our technology, while simultaneously, addressing legacy issues. The main thrust of these efforts has consistently been to add long term value for all stakeholders.

"As shareholders will be aware, the pressing need for AEG was to concentrate on generating revenue, whilst also building a strategically located operational base in order to produce various pelletised biomass fuels including CoalSwitch™. Accordingly, the North American Lumberton Site ('Lumberton') was identified as ideal for the Company's near-term ambitions. Lumberton, consisting of up to 415,000 sq. ft of covered factory space and circa 151 acres of surrounding land in prime lumber districts, has all the requisite ancillary facilities to produce CoalSwitch™, including power supplies, permits, water treatment facilities, a research and analysis lab as well as offices. It also has a critical advantage in being located adjacent to AEG's joint venture partner Georgia Renewable Power LLC ("GRP"). 

"Since the acquisition of Lumberton in March 2019, the Board has achieved a series of significant steps including: 

1. The award of a US$500,000 building re-use and renovation grant for Lumberton;

2. The closure of the Utah site and the transportation of the test reactor to Lumberton;

3. Commenced operation of the test reactor enabling a testing programme for prospective clients;

4. Signed a five-year contract for the supply of up to 800,000 tonnes per annum of feedstock to Lumberton;

5. Signed a lease agreement with Tencate Protective Fabrics, an existing tenant at Lumberton, including an agreed increase in rental income;

6. Signed a lease agreement with Renewable Logistics Systems, LLC ('RLS') including land within Lumberton to be used for saw logging and wood processing, to complement the business activities relating to the Company's CoalSwitch™ and biomass operations;

7. Appointed the experienced US based engineering and consulting firm, Absolute Welding & Consulting to install the commercial scale reactors;

8. Commenced work for the construction of a five-tonne per hour CoalSwitch™ plant to be operational in Q4 2019;

9. Raised £3.4 million (before expenses) through the further subscription of Series B convertible loan notes by both existing as well as new European and Asian institutional investors; and

10. Entered into a joint venture agreement with Renewable Logistics Systems LLC ("RLS"), a supplier of saw-logs, pulpwood and wood chips to international and domestic markets to enter the saw-logging export market and to handle forthcoming logistics operations at Lumberton.

"This progress, and the resolute direction in which the Board is taking the Company, has been endorsed by the new investors.

"The Board wants to take this opportunity to emphasise certain points that it believes all stakeholders should be aware of. Shareholders have been disappointed in the past and the Board is and remains aware of this. Accordingly, the Board has had to make tough decisions over the last 12 months. These have included a restructuring of the operational team in order to execute a revised business model and initiate a path toward future financial success.

"The new strategy and the raising of capital have been aligned around a 'back to basics' approach in order to allow AEG to capitalise on the commercial opportunities which are currently available to AEG in the biomass and renewable fuels markets. This emphasis has meant that AEG's resources have been directed, in the near term, toward North America, specifically Lumberton. With such an effort, the Board believes the likelihood of success will be greatly enhanced. 

"Progress in the first 100 days of owning Lumberton as highlighted above, has translated into credibility for AEG in the biomass marketplace being re-established. This is critical for new commercial opportunities to become available to AEG. These opportunities are not only from partners such as RLS and GRP but also new US and international commercial partners from the renewable fuels industry. A working five-tonne per hour plant to produce CoalSwitch™ still remains the prime focus, nonetheless AEG is also analysing and developing the adjacent opportunities, which both Lumberton and AEG's experience provide.

"Existing opportunities in Newfoundland and Alberta remain part of AEG's strategy. The historic plans in these areas are being reassessed and reconfigured in consultation with the relevant local government and local partners. The Board believes future developments in both these territories will be aided by operations at Lumberton.

"With the growing environmental and regulatory awareness on fossil fuels, the opportunities for black pellet type biomass fuels are increasing in importance. Additional research and engineering resources will be committed in the next 12 months to develop further AEG's core work streams. This work must be progressed against a continual awareness of the biomass fuel market pricing dynamics. Pricing remains firm in the near term, but the Board is continually aware of pricing trends as AEG competes in a global market. 

"AEG's commercial and strategic goals are now clear. The future of AEG is tied to success at Lumberton and the creation of complementary revenues streams from lumber and agricultural crops to the utilisation of other waste streams to create pelletised renewable fuels. The Board has achieved much over the past 12 months but more hard work is required to fully implement AEG's growth strategy.

"The Board would like to thank all shareholders and stakeholders for their continuing support over the past 18 months. The last 3 months have demonstrated some of the true potential for AEG and with the support of all AEG's stakeholders, the Board now believes that commercial success is realistic. This means that AEG will continue with its previously publicly stated ambitions to transform low cost biomass into renewable fuels of the future.

"The Board looks forward to updating the market on our developments as we execute our strategy, expand opportunities at Lumberton, including the completion and operation of the first 5tph CoalSwitch plant and expand into the growing biomass fuel market to deliver value."

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

**ENDS**

Enquiries& Further Information:

About Active Energy Group:

Active Energy Group plc is a London listed (AIM: AEG) renewable energy company that has developed a proprietary technology which transforms low-cost biomass material into high-value green fuels. Its patented product CoalSwitch™ is the world's only drop-in biomass fuel that can be mixed at any ratio with coal or completely replace coal in existing coal-fired power stations without requiring plant modification.

Active Energy Group's immediate strategic focus is the production and commercialisation of CoalSwitch™ and SuperFuel™, a low emission CoalSwitch™ blend that utilises waste coal fines.