REG - EQTEC PLC - Italia MDC: Project update and new investment

EQTECAnnouncement

22/11/2022 07:00

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RNS Number : 1259H  EQTEC PLC  22 November 2022

 

22 November 2022

 

EQTEC plc

("EQTEC", the "Company" or the "Group")

 

Italia MDC: Project update, new investment and shareholding

 

EQTEC plc (AIM: EQT), a global technology innovator powering distributed,
decarbonised, new energy infrastructure through its waste-to-value solutions
for hydrogen, biofuels, and energy generation is pleased to provide an update
on the EQTEC Italia Market Development Centre in Gallina, near Castiglione
d'Orcia, Tuscany, Italy ("Italia MDC") and in particular, on improvements to
the plant (the "Plant") in support of a sustainable business model, funded by
its existing investors (the "Investors"), as set out in the Company's
announcement on 21 June 2021.

 

Project status

 

The project to recommission the Plant (the "Project") remains on track, with
the commercial operations date ("COD") scheduled for December 2022, subject to
the availability of service providers to complete work on ancillary equipment.
Earlier this year, the Company employed an operations manager and operations
specialists to run the Plant and has had EQTEC operations & maintenance
("O&M") specialists on site since October, to train and support the ramp
up of the local team. The Company expects to take delivery of the last,
critical, ancillary equipment this week, with mechanical and electrical
completion of the Plant anticipated by the end of November 2022.

 

The Project has overcome a number of unexpected delays with on-time delivery
of key components and availability of service providers to support
commissioning of specific pieces of ancillary equipment.

 

The Company intends to continue communicating its progress with Italia MDC in
coming weeks, in the run-up to full operation of its first Market Development
Centre ("MDC"). The Company is also currently pursuing construction and
commissioning of additional MDCs in Croatia, France and the UK.

 

Business model resilience

 

In addition to being a showcase for EQTEC technology in a live, commercial
environment, the Italia MDC will be a clean solution for conversion of locally
sourced agricultural waste into energy, in the Val d'Orcia of Tuscany. It is
expected to be a successful investment with a healthy and sustainable
profitability and rate of return. Throughout the recommissioning of the Plant,
the Company has worked with the Investors to identify ways of making the
business model of the Plant more resilient to changing economic conditions,
flexible in pursuing future opportunities and sustainable as a business
interest.

 

The Investors have agreed to invest in specific enhancements to the Plant that
will allow it to produce biochar, for which there is a growing market in Italy
and Europe more generally. Additionally, the Investors agreed to installation
of an additional feeding-in system so that the Plant can accommodate both
low-density and high-density feedstocks. These augmentations will allow the
Plant to vary its feedstocks as market conditions change and to add biochar as
a revenue stream. Other augmentations, such as addition of a dryer and a
thermal oxidizer will make the Plant more self-sufficient and give the
operation greater control over the end-to-end conversion process.

 

The new financial model approved by the Board of Directors and shareholders of
Italia MDC currently forecasts revenues of c. €2.6 million and EBITDA of c.
€1.0 million per year from COD through end of 2027.

 

New investment and resulting shareholding

 

To fund these additional investments, EQTEC Italia MDC Srl (the "SPV") has
raised c. € 1.45 million through a combination of shareholder loans and
equity from Quainstone Limited and the Company, each subscribing approximately
for half of the amount, resulting in a change to relative ownership of the
SPV. The Company's share remains largely unchanged as the majority of its
participation was through a shareholder loan, intended to be repaid with a
bank refinance after COD. The updated capital ownership of the Plant is as
follows:

 

 Investor                Ownership share
 Quainstone Limited       48.25%
 EQTEC Holdings Limited  19.99%
 MetalNRG Eco Limited    15.88%
 Pitcole Limited         15.88%
 TOTAL                   100.00%

 

David Palumbo, CEO of EQTEC, commented:

 

"We are eager to get the Italia MDC up and running as another demonstration of
EQTEC's technology in a live, commercial environment. We expect to see
operational availability of 90% or more, as we have seen at the plant we
commissioned in Spain over a decade ago. I am especially pleased that our
fellow SPV Investors have supported additional investment to improve the
Italia MDC's business proposition and are already looking at other
opportunities to invest and deploy EQTEC's technology in other areas. I look
forward to sharing the news of mechanical and electrical completion, COD and
operational performance of the Plant.  We expect a busy programme showcasing
the plant early in 2023, with a number of strategic and project investors
interested to see the live operations."

 

This announcement contains inside information as defined in Article 7 of the
EU Market Abuse Regulation No 596/2014, as it forms part of United Kingdom
domestic law by virtue of the European Union (Withdrawal) Act 2018, as
amended, and has been announced in accordance with the Company's obligations
under Article 17 of that Regulation.

 

ENQUIRIES

 EQTEC plc                                                     +44 203 883 7009
 David Palumbo / Nauman Babar

 Strand Hanson - Nomad & Financial Adviser                     +44 20 7409 3494
 James Harris / Richard Johnson

 Panmure Gordon - Joint Broker                                 +44 207 886 2500
 John Prior / Harriette Johnson

 Canaccord Genuity - Joint Broker                              +44 207 523 8000
 Henry Fitzgerald-O'Connor / James Asensio / Patrick Dolaghan

 Alma PR - Financial Media & Investor Relations                +44 203 405 0205
 Josh Royston / Sam Modlin                                     EQTEC@almapr.co.uk (mailto:EQTEC@almapr.co.uk)

 Instinctif - General Media Enquiries                          +44 207 457 2381 / +44 788 788 4794
 Chris Speight / Tim Field                                     EQTEC@instinctif.com (mailto:EQTEC@instinctif.com)

 

About the project

 

The Project constitutes a plant located on a site owned by Toscana Cereali
Societa' Cooperativa Agricola, from whom EQTEC Italia MDC Srl is leasing. The
1MWe plant currently approaching full commercial operation is capable of
converting multiple types of biomass feedstock into electrical power and
thermal energy. Initially, the plant will export electrical power to the
national grid, for which a connection has been secured with a preferential
tariff. Biomass feedstock will be provided by at least one local supplier with
alternative suppliers also prepared to supply feedstock.

 

In addition to being a profitable, commercial-scale facility with an important
role in the local, agricultural community, the Plant is expected to become a
Market Development Centre for the Company, so that it can showcase EQTEC
technology to prospective clients including Industrial, Utility, Municipal or
other Agricultural clients looking to replicate success with sustainable,
waste-to-energy technology.

 

The Company currently owns 19.99% of EQTEC Italia MDC Srl, with an option to
acquire further equity in the Project.

 

About EQTEC plc

 

As one of the world's most experienced gasification technology and engineering
companies, with a growing track record of delivering operational and
commercial success for transforming waste-to-energy through best-in-class
technology innovation, engineering and project development, EQTEC brings
together design innovation, project delivery discipline and solid commercial
experience to add momentum to the global energy transition. EQTEC's proven,
proprietary and patented technology is at the centre of clean energy projects,
sourcing local waste, championing local businesses, creating local jobs and
supporting the transition to localised, decentralised and resilient energy
systems.

 

EQTEC designs, supplies and builds advanced gasification facilities in the UK,
EU and US, with highly efficient equipment that is modular and scalable from
1MW to 30MW. EQTEC's versatile solutions process over 50 varieties of
feedstock, including forestry wood waste, vegetation and other agricultural
waste from farmers, industrial waste and sludge from factories and municipal
waste, all with no hazardous or toxic emissions. EQTEC's solutions produce a
pure, high-quality synthesis gas ("syngas") that can be used for the widest
range of applications, including the generation of electricity and heat,
production of renewable natural gas (through methanation) or biofuels (through
Fischer-Tropsch, gas-to-liquid processing) and reforming of hydrogen.

 

EQTEC's technology integration capabilities enable the Group to lead
collaborative ecosystems of qualified partners and to build sustainable waste
reduction and green energy infrastructure around the world.

 

The Company is quoted on AIM (ticker: EQT) and the London Stock Exchange has
awarded EQTEC the Green Economy Mark, which recognises listed companies with
50% or more of revenues from environmental/green solutions.

 

Further information on the Company can be found at www.eqtec.com
(http://www.eqtec.com/) .

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