It is the first agreement to result from the framework agreement, announced last month, with California-based firm Phoenix Biomass Energy to develop biomass gasification power plants in the US.
EQTEC has signed a legally binding agreement with Phoenix and North Fork Community Development Council to acquire 19.99% ownership of North Fork Community Power, a special purpose vehicle that has been formed to build and operate a 2 megawatt biomass project in North Fork, California.
EQTEC is paying for its stake by supplying certain items of equipment currently held at EQTEC's Newry site, valued at US$2.5mln. No cash is changing hands.
The gasification trechnology company said it expects to invoice North Fork Community Power €2.2mln (US$2.5mln), under a separate sales contract, for the sale of further equipment and the supply of engineering and design services to North Fork Community Power.
The sales contract, which upon signing will involve a substantial down payment together with further agreed milestone payments until commissioning, is expected to be completed and signed by the end of June 2019.
Once commissioned, the project will have a valuation of around US$20mln, according to North Fork Community Power’s estimates, and will be capable of generating revenues of around US$4mln a year.
"We are delighted that our framework agreement with Phoenix is already progressing at speed and creating significant value to all stakeholders,” said Ian Price, the chief executive officer of EQTEC.
“This transaction fits with our strategy to have diversified revenue streams and it is a major step for the company and for all shareholders," he added.
Gregory Stangl, the chief executive officer of Phoenix, paid tribute to EQTEC's technology, saying it represented a “repeatable, scalable solution that could have a big impact on California's tree mortality crisis and related climate challenges”.
Shares in EQTEC shot up 25% to 0.6p following the announcement.