Active Energy signs licence deal with Canadian forestry management firm

Biomass-focussed renewable energy business Active Energy Group has agreed terms for the issuance of its first ‘CoalSwitch’ licence agreement to RMD Environmentals - a Canada-based forestry management and environmental engineering and consultancy business.

The AIM-traded firm said the agreement was for the development and management of projects involving the use of CoalSwitch technology in the provinces of Alberta and British Columbia.

It said that, under the terms of the licence agreement, RMDE has acquired the exclusive rights for the sale and commercial development of opportunities to which the CoalSwitch technology could be applied in the territories for the next 20 years from AEG.

AEG received a license fee of $1.8m, and would receive subsequent royalty payments of $5.00 per tonne on all licensed product that is produced by RMDE, its clients or partners, for the duration of the agreement.

Both AEG and RMDE would jointly co-ordinate all future engineering activities for the installation of CoalSwitch technology, plants and equipment under the license, including the acquisition of manufacturing and processing equipment from AEG.

The company said it anticipated that RMDE would commission its first CoalSwitch plant within the next 18 months, subject to environmental and other permitting processes being finalised at its first location.

Initial preparatory and pre-engineering work by RMDE had started in Alberta for the first plant, and RMDE was examining additional projects using the CoalSwitch technology in both of the territories.

AEG said it had also began discussions with other potential licensees for the use of CoalSwitch technology in other territories.

“This inaugural licence agreement with RMDE is a significant strategic milestone for AEG as the company focuses on the commercial roll-out of the CoalSwitch and black pellet biomass technology, which it has invested in and developed over the last four years,” said chief executive officer Michael Rowan.

“AEG's directors believe the existing and future market opportunity for advanced biomass fuels and fuel additives, which utilise waste wood, including forestry residuals, fire, insect, disease affected timber and other legacy forestry industry waste, and which have significant renewable and sustainability advantages, has never been more relevant.

“To capitalise on these opportunities, AEG recognises that it needs to accelerate market development through the construction of operating, high volume, production facilities in various regions.”

That, Rowan said, would be achieved both through wholly-owned production facilities, such as the Lumberton site in North Carolina, and through commercial partnerships worldwide.

He noted that RMDE was the firm’s first licensed partner, with the board believing collaborations like that would expedite the commercial roll-out of CoalSwitch.

“RMDE is a wholly indigenous-owned business and has been incorporated by Grand Chief Ronald Derrickson, RMDE's controlling shareholder and one of AEG's long-term shareholders.

“RMDE has an in-depth knowledge of the CoalSwitch technology and has been working with a broad spectrum of partners including government, industry and off take partners to develop commercial opportunities within the territories.

“I am grateful for Grand Chief Derrickson's continuing support towards AEG and its commercial goals for CoalSwitch technologies; - in turn, we are supportive of the plans RMDE has presented for the commercial developments in the territories.”

Michael Rowan said that utilising the resources, connections and local experience available to RMDE should enable AEG to leverage its own resources to develop a strategic presence in the territories, without having to make significant capital investment on its own.

He said the new partnership with RMDE had already presented AEG with new opportunities to expand its existing engineering cooperation with other commercial partners, including Andritz, in the supply of more advanced and larger scale plant and equipment to support the installations utilising CoalSwitch technology.

“As AEG continues to develop its intellectual property and know-how at the Lumberton Facility, these improvements and enhancements will be made available to licensee partners including RMDE to further benefit their future commercial operations.

“Equally, as RMDE develops its operational know-how and capabilities in the field, these will be passed back to AEG for use in other CoalSwitch production facilities.

“Finally, AEG has commenced discussions with several other potential licensees to license and utilise the CoalSwitch technology in other regions of the world to take advantage of the increasing demand for advanced biomass fuels.”

At 1050 GMT, shares in Active Energy Group were up 24.47% at 0.47p.