REG - Quadrise PLC - Valkor Site License & Supply Agreement

QuadriseAnnouncement

12/06/2023 07:00

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RNS Number : 3245C  Quadrise PLC  12 June 2023

12 June 2023

Quadrise Plc
("Quadrise" or the "Company")

Valkor Site License & Supply Agreement

 

Quadrise Plc (AIM: QED), the supplier of innovative energy solutions for a
cleaner planet, is pleased to announce the signature of a Site License and
Supply Agreement ("SLS Agreement") with Valkor Technologies LLC ("Valkor") in
respect of the use of Quadrise's MSAR® and bioMSAR™ technology at a Valkor
heavy oil asset in Utah, USA ("Primary Project Site").

 

The original Commercial Development Agreement ("CDA") between Quadrise and
Valkor, announced on 11 April 2022, defined the joint intent to complete
commercial scoping to deploy Quadrise's technology at the Primary Project Site
in which Valkor holds an equity interest ("Phase 1") and then to license
Quadrise's technology to Valkor on a conditionally exclusive basis, with
Quadrise providing services, additives and technical support for production
and use of MSAR® and bioMSAR™ fuel in energy applications ("Phase 2").

 

Quadrise and Valkor have progressed Phase 1 to mutual satisfaction and, having
identified the preferred Primary Project Site managed by Valkor, the parties
have now signed the SLS Agreement for the licensing and supply of MSAR® and
bioMSAR™ technology at the Primary Project Site.

 

Subject to the satisfaction of the conditions of the SLS Agreement described
below, commercial revenues for Quadrise could be achieved from Valkor's
Primary Project Site in August 2023. This would achieve a significant
corporate milestone in providing the first commercial licence supply for the
Company's technology.

 

The SLS Agreement comprises four sub-agreements, with the key terms of each as
follows:

 

·    Site Licence Agreement which is conditional on, inter alia, receipt
by Valkor of drilling and underground injection permits for the Primary
Project Site from the Utah Board of Oil, Gas and Mining at a hearing scheduled
for August 2023, and the receipt by Valkor of project financing in an amount
of at least US$15 million for the Primary Project Site. Quadrise has granted
Valkor the exclusive right and licence to use its technology at the Primary
Project Site to produce MSAR® and bioMSAR™ and to market the fuel on a
non-exclusive basis in Utah. In exchange, Valkor will pay Quadrise US$1.5
million, with US$1.0 million payable on satisfaction of the conditions set out
above and a further US$0.5 million on the date on which a Quadrise MSAR®
Manufacturing Unit ("MMU") is delivered to the Primary Project Site.

 

·    Technology Transfer and Purchase Option Agreement ("TTPOA"), under
which, following Valkor's receipt of the MMU, Quadrise agrees to provide
engineering and process design and commissioning services, site operations and
compliance support and project development support services for a minimum
period of two years, and for which Valkor will pay Quadrise an additional
quarterly retainer of US$75,000, after which, Valkor will have an option to
purchase Quadrise's technology and MMU for the primary project for US$1.0
million at which point the TTPOA will terminate (the "Purchase Option").

 

·    Equipment Supply Agreement, which sets out the terms under which
Quadrise will supply a 40 tonne per hour MSAR® MMU and ancillary equipment
necessary to allow the production of MSAR® and bioMSAR™ at the Primary
Project Site after receipt of initial payment.  Under the TTPOA, this
supplied equipment will be owned and operated by Quadrise until the Purchase
Option is exercised, whereby ownership would transfer to Valkor.

 

·    Surfactant Supply Agreement, which covers the terms under which
Quadrise will supply to Valkor the chemicals needed to manufacture MSAR® and
bioMSAR™ under the TTPOA, and subsequently.

 

Under the SLS it is envisaged that both parties may need to commit resources
to additional project advancement activities with third parties to supply
MSAR® and bioMSAR™ and Quadrise technology.  A profit share mechanism has
been agreed under the SLS based on a pro-rata contribution of each party's
costs and time to achieve sales of MSAR® and bioMSAR™ at a premium to heavy
oil sales at the Primary Project Site.  The SLS Agreement has a term of ten
years and may be terminated by mutual consent.

 

In addition to the signature of the SLS Agreement, a non-binding Heads of
Agreement has also been entered into between the parties which, in
complementing the SLS Agreement, also sets out the basis on which Quadrise and
Valkor will seek to agree a conditionally exclusive Sub-License Agreement to
be granted to Valkor covering the state of Utah, as well as the terms on which
the net profit generated under the SLS Agreement, and a future Sub-License
Agreement, will be shared between Quadrise and Valkor.

 

Jason Miles, CEO of Quadrise commented:

 

"We're delighted to move on to this exciting new phase of collaboration with
Valkor and to have signed this conditional Site License and Supply Agreement.
We both share the vision that the low sulphur, lower carbon MSAR® and
bioMSAR™ fuels that will be produced in Utah from heavy sweet oil will offer
compelling solutions for clients across the industrial and marine sectors as
the pace of decarbonisation advances."

 

Steven Byle, CEO of Valkor added:

 

"Investment conditions in the USA are favourable for energy decarbonisation
technologies and growth projects. We are therefore very pleased to have
finalised our discussions with Quadrise and look forward to using their unique
technology in order to produce cheaper, cleaner, lower carbon fuels at our
sites in Utah as soon as possible to meet the increasing demands from our
various heavy oil projects."

 

For additional information, please contact:

 

 Quadrise Plc                                           +44 (0)20 7031 7321
 Andy Morrison, Chairman

 Jason Miles, Chief Executive Officer

 Nominated Adviser
 Cenkos Securities plc                                  +44 (0)20 7397 8900
 Ben Jeynes
 Katy Birkin
 Joint Brokers

 Shore Capital Stockbrokers Limited

                                                        +44 (0)20 7408 4090
 Toby Gibbs, Rachel Goldstein (Corporate Advisory)
 Fiona Conroy (Corporate Broking)

 VSA Capital Limited                                    +44 (0)20 3005 5000

 Andrew Raca (Corporate Finance)

 Andrew Monk (Corporate broking)

 Public & Investor Relations
 Vigo Consulting                                        +44 (0)20 7390 0230

 Patrick D'Ancona

 Charlie Neish

 

 

About Quadrise

Quadrise is the supplier of MSAR® and bioMSAR™ emulsion technology, fuels
and biofuels, providing innovative solutions to reduce energy costs and
greenhouse gas emissions today for clients in the global power generation,
shipping, industrial and refining industries.

 

Learn more at: www.quadrise.com
(https://url.avanan.click/v2/___http:/www.quadrise.com___.YXAxZTpzaG9yZWNhcDphOm86YmE1ODUxYTk2OWRjMGY0M2FiMTAzZjJkNjViNzNkYWQ6NjplNjE5OmE4MGUzNTczNGU4NzRhZGU2YmI3NzZjZGM2MWY2ZTI0MGVkMTQ0MzYzNTE5NWIxMWU0MTAwYjY3ZTcxNjJlYmU6cDpU)

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR") and is disclosed
in accordance with the Company's obligations under Article 17 of MAR.

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