AFC Energy PLC (AIM:AFC, OTC:AFGYF) new deal with a currently undisclosed ‘industrial scale’ new partner is a significant step forward, according to stockbroker Zeus Capital.
It promises to de-risk the small-cap’s development model and deliver material revenue in the next few years, the broker highlighted in a note.
Presently, Zeus has put its forecasts and valuation for AFC on pause, pending ‘further updates on this highly positive development’.
AFC shares rocketed more than 40% higher in Wednesday afternoon’s dealing, following the announcement of the partnership, with the price on AIM reaching as high as 15p.
At 12.34p at the moment, AFC is up 31% for the day, valuing the firm in excess of £100 million.
The confidential collab
AFC this afternoon told investors it has signed a Joint Development Agreement with ‘a global industrial company listed in the S&P 500’.
In London, AFC shares rocketed around 24% following the announcement.
The identity of the partner remains confidential, nevertheless, AFC said the two companies will collaborate to develop ammonia crackers for hydrogen production using AFC Energy’s proprietary technology. Its envisaged that the systems will range from small to large scale applications. Potential applications include port-side hydrogen pipeline filling in Northern Europe.
Under the terms of the agreement, development costs incurred by AFC Energy will be reimbursed by the partner.
It anticipates that material revenues will begin in 2027.
AFC chief executive John Wilson said the partnership would underpin the firm’s strategy to deliver commercial viability of the hydrogen economy without government subsidy.
It will accelerate efforts to provide a further suite of roadmap products, alongside our hydrogen fuel cell power generators, he highlighted.
“We are delighted to have signed the JDA with the Industrial Partner, whose commitment to AFC Energy's proprietary ammonia cracker technology provides important industry peer validation, as we further commercialise and develop AFC's offering,” Wilson said in a statement.
“We look forward to developing our commercial relationship with the Industrial Partner and using our technology to help heavy industry to decarbonise its operations."
A significant step forward
Zeus Capital analyst Robin Blyde, in a note, commented: “This news is a significant step forward in AFC Energy’s aim to enable and promote the hydrogen economy and build an economically viable, efficient and safe hydrogen supply chain, without government subsidy.
“The group states that the JDA project will run alongside further development and roll-out of its core hydrogen fuel cell power (H-Power) generator products.”