9th Jun 2016 08:30
LONDON (Alliance News) - China New Energy Ltd Thursday said it has raised GBP750,000 through an equity raise to accelerate its field work in Africa and to give the company the option to invest further in new or existing projects.
China New Energy has issued 37.5 million shares at a price of 2.0 pence each after an unnamed institutional fund manager subscribed for the shares, which represent 8.44% of the company's enlarged issued share capital.
The issue price is a almost a 26% discount to the closing share price on Wednesday, and the market has reacted accordingly.
China New Energy shares were down 19% to 2.19 pence per share on Thursday morning.
"We have recently announced the potential projects in Africa and this investment will assist us with the initial work needed to meet the early project milestones as well as providing additional working capital for our other projects," said Weijun Yu, chairman of the company.
"We continue to seek direct investment opportunities to become an owner and operator of projects. Whilst oil prices are forecast to remain low, it is our belief that bioenergy projects will continue to be developed in emerging markets due to the job creation and environmental benefits," he added.
China New Energy provides bioenergy technology and has constructed more than 100 bioethanol and biobutanol plants since being incorporated, and claims to have a 60% market share in China.
On Thursday, the company said it has finished its third project on behalf of Chinese agricultural commodity trader and food manufacturer COFCO after expanding its production capacity of edible alcohol and fuel alcohol.
The company said it has also continued to invest in research and development and has applied for a new patent in the country, without providing further detail.
In Thailand, China New Energy said its project has been delayed due to movements in the oil price and said the environmental impact assessment application has been cancelled whilst the feasibility of the project is reviewed, but said the project is "unlikely" to restart.
In Hungary, the company said the financing of the Visontai project has also been delayed due to oil prices, but said the recent recovery means it is "optimistic" about recommencing those funding discussions. China New energy holds a 24% interest in the project and said it does not intend to increase that holding, stating funding is likely to come from Chinese banks.
Once funding is secured, construction of the project will take around 13 months, it said.
On a more positive note, the company diversified its production technology back in 2015 and subsequently won its first contract in North America, and said Thursday the components for the project have been manufactured and are soon to be shipped to Canada to be installed, estimating the project will be completed by the end of July.
Moving onto Africa, where the company is looking to expand, China New Energy said Sunbird has secured the land lease from the government of Zimbabwe for a 20,000 hectare site and an environmental impact assessment is "nearing completion".
The company has not yet signed a formal contract with Sunbird regarding the project, but expects this to be completed once a final investment decision for the project is made.
China New Energy is also working with Sunbird in Zambia, and said Sunbird expects the investment promotional and protection agreement will be signed by the end of this month.
In Nigeria, China New Energy is waiting for Sunbird to secure the certificate of occupancy to be issued before the project is able to be advanced further.
By Joshua Warner; [email protected]; @JoshAlliance
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