EQTEC – Signs Collaboration Agreement with Carbon Sole Group
By Richard Gill, CFA
EQTEC (EQT), the waste gasification to energy technology company, has made further progress with its partnership focussed business strategy by signing a two year Collaboration Framework Agreement with Carbon Sole Group, an Irish firm focused on the provision of green energy solutions to the Irish market.
Under the deal, EQTEC has agreed with Carbon Sole to jointly participate in projects in Ireland involving biogas and district heating, waste-to-energy and other energy infrastructure projects using EQTEC’s Gasifier Technology. Carbon Sole considers EQTEC as the exclusive gasification technology supplier and co-developer to three planned Green Energy Parks located in Ireland, with the first two proposed sites already zoned for enterprise/industrial use and suitable for heat and electricity generation using biofuels. 25MWe grid connection contract offers have previously been secured for each site and these will be resubmitted. Carbon Sole is responsible for obtaining the permits, licences and authorisations, power purchase agreements and feedstock agreements for the projects, which are anticipated to be in place by Q1 2021.
As with EQTEC’s other partnership agreements, the two parties will look to develop a portfolio of projects together utilising EQTEC’s EGT Technology and will co-operate to source the necessary equity and debt financing for projects in the pipeline, including project acquisition costs. Carbon Sole will act as an ongoing business developer for advanced green energy utility projects in Ireland and will also introduce opportunities for the sale of engineering design services provided by the EQTEC. Any project that the parties decide to take forward and develop would be subject to a separate contract, with further announcements made when appropriate. In addition, EQTEC expects, subject to contract, to have the option but not the obligation to obtain up to a 25% equity interest in each project progressed under the agreement.
ASSESSMENT
As we have seen in EQTEC’s case, and elsewhere in the alternative energy industry, working together with energy project developers is vital for the commercial success of alternative energy technology companies. This deal in Ireland adds to EQTEC’s current framework agreements with Phoenix Energy in the US and German EPC company ewerGy in Greece and the Balkan Region. Not only does it widen EQTEC’s geographic scope, it provides further third-party validation of the technology and bodes well for an ever increasing project pipeline.
Shares in EQTEC have continued to perform very well since our last update on the company, peaking at a 12 month high of 0.825p in mid-June before settling at the current 0.715p. That price remains short of our current target price of 0.78p. However, given the significant commercial progress made since our last update note in March we are currently working on updating our forecasts and target price on the company. We expect to publish our findings shortly but for now retain our stance of Conviction Buy.
RISK WARNING & DISCLAIMER
EQTEC is a research client of Align Research. Align Research own shares in EQTEC and is bound to Align Research’s company dealing policy ensuring open and adequate disclosure. Full details can be found on our website here (“Legals”).
This is a marketing communication and cannot be considered independent research. Nothing in this report should be construed as advice, an offer, or the solicitation of an offer to buy or sell securities by us. As we have no knowledge of your individual situation and circumstances the investment(s) covered may not be suitable for you. You should not make any investment decision without consulting a fully qualified financial advisor.
Your capital is at risk by investing in securities and the income from them may fluctuate. Past performance is not necessarily a guide to future performance and forecasts are not a reliable indicator of future results. The marketability of some of the companies we cover is limited and you may have difficulty buying or selling in volume. Additionally, given the smaller capitalisation bias of our coverage, the companies we cover should be considered as high risk.
This financial promotion has been approved by Align Research Limited.