27 Jan 2014 07:00
27 January 2014
NOVA RESOURCES LIMITED
("Nova" or the "Company")
Contract Awarded to Enerstry Korea
Nova (AIM: NOVA), the investment company focused on high growth opportunities in the energy, infrastructure, technology, natural resources and manufacturing sectors, primarily in Russia and Asia, today announces that Enerstry Co., Limited ("Enerstry Korea"), which is 93.33% owned by Enerstry Group ("EG"), in which Nova has a 23.72% shareholding, has secured an offtake contract with Hansung Industries Co., Ltd ("Hansung"), where Hansung is to purchase steam from a renewable energy plant (the "Hansung Plant") which is to be built, owned and managed by Enerstry Korea.
Hansung is a styrofoam manufacturer. It has a production facility in South Korea's Kyungsang province.
Enerstry Korea will build a plant which uses wood pellets as fuel to create heat energy and steam for use at a site owned by Hansung, which is located at Jinhae, South Korea. Enerstry Korea expects to complete, test and commission the Hansung Plant by 31 August 2014. As is the case with the recently announced Yonsei Plant, the Hansung Plant will be wholly owned and managed by Enerstry Korea. Construction of the HansungPlant will be funded through a combination of debt finance, which has already been secured by Enerstry Korea and existing cash resources.
Hansung has entered into a 10 year offtake agreement (the "Term") with Enerstry Korea, under which Hansung is to pay for the heat energy supplied by the Hansung Plant at rates set at levels that reflect savings when compared to the use of bunker fuel oil C, which was the previous source of fuel for heat generation at the relevant site. At the end of the Term, an extension to the offtake agreement may be negotiated, failing which, the ownership of the Hansung Plant will be transferred to Hansung for zero consideration.
Enerstry Korea expects the Hansung Plant to start generating revenues in September 2014 and, based on certain assumptions, Enerstry Korea expects revenues of approximately US$700,000 per annum from the Hansung Plant. Enerstry Korea expects total combined revenues of US$19.5 million over a ten year period from the Hansung Plant and the Yonsei Plant.
Commenting, Fook Meng Chan, Chairman and CEO of Nova, said:
"South Korea has limited domestic energy resources and is heavily dependent on imports to meet its energy needs, currently importing approximately 97 per cent of its total energy consumption. The country has recently introduced a plan to reduce this dependence and is focussed on increasing its energy mix and expanding the quantum of renewable energy that it produces."
"Nova's Board believes Enerstry Korea is well positioned, having the requisite management team and expertise, to take advantage of these trends. I am excited by the potential that Enerstry Korea has and believe it is well placed to develop a strong position in the South Korean waste to energy market."
Enerstry Korea's strategy is to build, own and operate steam and/or electricity plants under long term offtake agreements from established, reputable companies. Enerstry Korea intends to create stable, long term income streams for the benefit of its shareholders. At the end of the initial terms of the offtake agreements, if they are not extended, the relevant plants will be transferred to the counterparty company that Enerstry Korea entered into the offtake agreement with.
Following the new equity investment in, and loans available to, EG (as described in Nova's announcement of 20 January 2014), Enerstry Korea now has the financial capability to build, own and manage additional environmentally friendly renewable energy plants in Korea. Enerstry Korea is presently in negotiations with a number of parties to build such plants. Further announcements will be made as and when appropriate.
Nova's Board will continue to seek other investments which it believes present strong potential for long-term, sustainable growth.
Enquiries:
Nova Resources Limited +65 6236 2985
Chan Fook Meng, Chairman and CEO
Daniel Stewart & Co (Nominated Advisor & Broker) +44 20 7776 6550
David Hart / Alex Brearley
Blythe Weigh Communications +44 20 7138 3204
Paul Weigh / Halimah Hussain / Camilla Horsfall