By Julian Singer
Active Energy (AEG) has its headquarters in London and is listed on AIM but currently operates only in North America. It has a history of involvement in forest management but now focusses on two trademarked products (CoalSwitchTM and PeatSwitchTM) that convert woody or peaty biomass into pellets that can replace coal in existing power stations with minimal changes.
When we last wrote about AEG (Greenbarrel, June 2020) the company’s main focus was the development of a reference plant at Lumberton in North Carolina. This is designed to produced 5 tonnes per hour of its CoalSwitch product, using wood from the same site. While construction of the plant proceeded, and one order had been received for a power plant in Utah, AEG still waiting for a modification to its air quality licence to be approved by the relevant state department.
A year later the company is still waiting. AEG requested a modification in order to install additional equipment to improve emissions control, something that the state should normally have approved of. However, it seems that there are strong environmental groups in North Carolina that object to any exploitation of wood from forests, even if they are managed properly. When AEG first bought the site and obtained a development licence it was with the encouragement of the state government but now, apparently, the politics have changed.
Furthermore, on 4 May one of the environmental groups, Southern Environmental Law Centre, started litigation claiming that AEG was discharging wastewater without the required permits. AEG strongly refutes and denies this.
AEG’s woes do not stop there. Last year the company had obtained its first major licence agreement with a British Columbia based forestry company, RMD Environments, for the development of CoalSwitch projects in Alberta and British Columbia. The agreement included an up-front fee of US$1.8m and payments of US$5 per tonne, a potentially useful revenue stream.
Now that is looking very unlikely. On 7 April Ronald M Derrickson, the chairman of RMD, wrote an open letter to AEG complaining that AEG’s patents in Canada were no longer valid and making personal attacks on AEG’s CEO, Michael Rowan. AEG wholly refutes all the allegations and states that its patents and patent applications have been correctly filed. Both parties are now taking legal advice. It is interesting to note that the President of RMD is none other than Richard Spinks, who was CEO of AEG until 2018 when Michael Rowan was Chairman.
The company has been more successful in Maine. In conjunction with a local biomass processing company, Player Design Inc, it has been installing CoalSwitch equipment at the latter’s Ashland Facility, and has obtained a temporary permit to produce 1000 tons of CoalSwitch by 31 July. This will satisfy the order from Utah. If all goes well, and providing a long-term operating permit is obtained, AEG will have two facilities (Lumberton and Ashland) and will be able to sell small-scale facilities to other lumber mill facilities in the region.
In February AEG’s finances were restructured. On the condition that £6 million was raised by offering 600,000 shares at 1p, the owners of £17.7m worth of Convertible Loan Notes agreed to convert them into shares at the appropriate price. In the end £7m was raised and the Loan Notes were converted.
Results for the year ending 31 December 2020 are expected to be released in June. There should be some revenue from earlier, smaller, licence agreements and from forestry operations at Lumberton. This year much depends on resolving the issues in North Carolina and, if possible, the dispute with RMD. Meanwhile the share price stands at 0.65p for a market capitalisation of £8m.
