SIMEC Atlantis Energy Ltd (LON:SAE) believes its 220 megawatt (MW) Uskmouth power station in Wales could become the blueprint for future conversions around the world.
Uskmouth is currently set up as a coal-fired power station, but SIMEC Atlantis is converting it to run on end-of-waste energy pellets – derived from a mixture of biogenic material and plastics that cannot be recycled.
WATCH: SIMEC Atlantis sees Uskmouth as 'catalyst for further conversions throughout Europe'
That process is expected to take around 18 months to complete and first production is targeted towards the end of 2020.
SAE revealed it is already in discussions with plant owners and operators in Europe, Australia, Asia and the USA, with respect to future conversions.
“This project is of huge international interest; with governments and utilities around the world being forced to close down coal-fired power stations, this conversion will offer a new alternative to decommissioning,” said Ernie Rowe, former conversion manager at energy giant Drax, who has been drafted in to take up a similar position at SIMEC Atlantis.
Group chief executive Tim Cornelius added: “This project will be the catalyst for further conversions throughout Europe as SAE seeks to establish itself as a leading independent sustainable energy generation company.
“Cash flow generated from high margin projects such as Uskmouth will allow us to fund growth through carefully selected and executed acquisitions in addition to our existing portfolio of in-house developments and organic growth opportunities.”
READ: Cantor Fitzgerald tips SAE shares to surpass 300p
SIMEC Atlantis told investors it continues to make steady progress with the conversion since the transformational acquisition of the plant back in June.
Head of Conversion at Uskmouth, Ernie Rowe said the project is “on time and within projected budget”, while planning and site environmental permit work is “progressing well”.
“We are looking forward to announcing the award of the FEED contract and following FEED, we will be tendering for the EPC contract ahead of what is anticipated to be an 18-month construction process,” he added.
Ernie Rowe a “useful appointment”
City broker Cantor Fitzgerald reckons SAE shares are worth 75p – almost three times the current price – as it repeated its ‘buy’ recommendation for the stock.
Analysts said Rowe was a “useful appointment” given the experience gained at Drax, one of the leaders in the conversion and operation of coal-fired units using new fuels.
“SIMEC Atlantis has updated on progress at the Uskmouth project and we think it is good to see that the company is progressing on several fronts following the acquisition of the plant,” read a note to clients.
“In particular, the hiring of a head of conversion with experience at the Drax power station gives us comfort that the process is well led.”
Shares rose 0.6% to 26.9p in early deals on Monday.
-- Updates for broker comment and share price --