1st Jun 2015 07:39
LONDON (Alliance News) - China New Energy Ltd saw its shares rise early Monday after it bought a 24% stake in a Hungarian bioethanol project for EUR250,000, and said it could increase its stake further.
The company, which provides engineering and technology to the bioenergy market, said it had bought the stake in the Visontai Bioetanol Fejleszto Korlátolt Felelosségu Társaság project.
China New Energy was contracted by the project in 2013 to design and build a refinery to convert corn feedstock into 150,000 litres a day of ethanol, and under the terms of supplementary contractual arrangements it had the option to subscribe for additional equity in the project. It has now exercised its right, and said it still has the right to take its stake in the project up to 50% by paying a further EUR250,000.
"It has been a strategic goal of CNE for some time to buy into a biorefinery project and deliver a recurring income from the sales of bioethanol. We are delighted to acquire a stake in this European project and look forward to the successful development of the business," China New Energy Chairman Yu Weijun said.
China New Energy said the Hungarian biorefinery is now scheduled to enter production in 2017 and it will provide its proprietary pre-treatment, fermentation, distillation and dehydration technology to the project. It will also provide long-term training, support and maintenance.
The contract is worth about EUR34 million to China New Energy, although it will have to pay about EUR11 million to local contractors who will complete the engineering and construction of the biorefinery.
The corn feedstock has already been contracted from Hungarian farmers and a long term off-take for the ethanol has been agreed with an international commodity trader, the company added.
China New Energy shares were up 24.3% at 1.15 pence early Monday, one of the best-performing stocks in the AIM All-Share index.
By Steve McGrath; [email protected]; @stevemcgrath1
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