EverGen Infrastructure Corp (TSX-V:EVGN) announced that it has entered into a letter of intent (LOI) with Grow the Energy Circle Ltd (GrowTEC), in its capacity as general partner of CKPPQ Farms LP, to acquire a 67% interest in a biogas facility in Alberta and to work with GrowTEC on developing and expanding the renewable gas output.
EverGen said the facility is a cornerstone project in a strategic jurisdiction in which it can continue to participate in the consolidation and growth of the renewable natural gas industry (RNG) industry.
GrowTEC, located on the Perry Family farm near Lethbridge, Alberta, is a multi-faceted bioenergy venture of sustainable agriculture, integrating responsible best practices and renewable energy.
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At the core of GrowTEC is an operating farm-scale anaerobic digester that converts biodegradable waste into biogas, which is then upgraded to RNG for use in the gas grid. The project has an offtake agreement with FortisBC and will contribute to FortisBC's target to have at least 15% of its gas supply carbon neutral by 2030.
"We are thrilled to be partnering with GrowTEC and working with the Perry Family Farm on EverGen's first project in the Alberta market. Alberta is a region with high quality organic feedstock and represents a strategic market for EverGen as it plans to become a dominant RNG producer in the province," said Chase Edgelow, CEO of EverGen, in a statement.
"As we expand our RNG infrastructure platform, we are focused on investing in truly sustainable operations that contribute to carbon-negative energy production and positively impact climate change initiatives. GrowTEC is a true green leader, and we are looking forward to building a strong relationship in this agricultural community and having GrowTEC as a long-term equity holder in EverGen. This is another great example of the win-win strategic partnerships that EverGen has been able to strike with existing project owners and developers alike."
Under the terms of the LOI, EverGen said it will acquire a 67% interest in the project either directly or through ownership in a newly-formed special purpose vehicle corporation that will hold the assets of the project for $6.6 million, consisting of an initial cash consideration of $3.3 million and the issuance of 600,000 common shares of EverGen with a deemed value of $5.50 per share.
In addition, GrowTEC will have the right to nominate a director to the EverGen board at the closing of the proposed transaction, expected to be completed in Spring 2022.
The project is currently in Phase 1 of development, which is expected to produce 80,000 gigajoules of RNG annually and will be complete by the third quarter of 2022. Upon closing of the proposed transaction, EverGen will work with the GrowTEC team to commence Phase 2 expansion, which is expected to add an additional 60,000 gigajoules of RNG annually for a total of 140,000 gigajoules of RNG production annually from the project.
This increases RNG production capabilities by over 40% across EverGen's core-operated projects. Additional cash consideration of up to $4 million will be made upon the achievement of certain milestones. Consideration for EverGen's interest in the project will be funded from existing working capital and cash flow.
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