Energy and timber processing firm Active Energy Group PLC (LON:AEG) saw shares shoot up as it unveiled plans for its main backer to lift its stake in the company and to consolidate its innovative CoalSwitch joint venture into the group.
The AIM firm sees the move by key participants in the venture to convert shares into Active Energy as a significant vote of confidence that the group will be able to fully commercialise this revolutionary technology.
AEG CoalSwitch had been developing an environmentally-friendly process that cleanses raw biomass by removing salts, minerals and other contaminants that harm the atmosphere and damage power plant furnaces.
It means the fuel can then be burned in coal fired power stations, or alongside coal – removing the need for an expensive conversion.
The firm wants to tap into the energy industry's move away from coal and to have an alternative where coal must be used.
Key participants of the venture have agreed to convert their holdings into equity of Active Energy. These include Sandy Munro, who provided key technical advice; Philip Scalzo, the inventor of the CoalSwitch technology and all key members of the engineering and business development team, and Trident Limited - the operating company which introduced the CoalSwitch opportunity to the company.
Meanwhile, the group's major shareholder Gravendonck has agreed to convert US$1.4 million of existing debt into shares at 2.65p per share, increasing its holding to 29.9% from around 26%.
Richard Spinks, Active Energy's chief executive, said: "I believe strongly that the company is at a tipping point; something that has been recognised by our major shareholder and all of the key participants in the CoalSwitch JVA."
He said the foundations laid by the group over the last 18 months were starting to bear fruit.
"With an improved balance sheet and CoalSwitch under Active Energy's control, we can continue our upward trajectory as we look to leverage our ability to source and commercialise underutilised forests, transforming their economics, be it through implementing modern management techniques or establishing off-take agreements for cash generative WoodFibre processing operations and, utilising their waste and poorer quality timber in a high margin exercise, through the production of our transformative CoalSwitch product."
The board says it aims to have three operating and profitable divisions by the end of 2017.
Shares gained 13.46% to stand at 2.95p.