International renewable energy, forestry management and timber processing business Active Energy provided an operations and trading update on Wednesday, on its three "standalone but complementary" divisions AEG CoalSwitch, AEG TimberLands and AEG WoodFibre.
The AIM-traded group's board said it was confident that AEG's CoalSwitch division would be the primary area of growth in 2017, as management focussed on commercialising its technology.
It said CoalSwitch utilised low value wood, timber, forestry, and pulp and sawmill byproducts to produce the world's first 'drop-in' biomass fuel that could be mixed in any ratio with coal or completely replace coal in existing coal-powered stations globally.
Locations had been identified for the first reference plant in North America and management was confident the reference plant would be operational before the end of 2017.
Additionally, it said, the recent advancement of the CoalSwitch coal reduction initiative being developed by the Metis Settlements of Paddle Prairie, Peavine and East Prairie in collaboration with Active Energy provided further encouragement for the division's growth outlook.
A series of meetings and discussions had taken place in recent weeks between representatives of the Métis Settlement Partners, officials representing the interests of the Government of Alberta and members of the Active Energy board to discuss the requisite regulatory, legal, operational issues and establish the corporate framework for the CoalSwitch initiative, the board said.
The company also announced that it expanded its commercial development pipeline with numerous groups in North America as well as in Europe and Asia.
Based upon those discussions, the board said it hoped an additional reference plant would also be established either in Malaysia or in the Baltic states during 2017, subject to available funding.
At AEG Timberlands, the company said it currently had harvesting rights over more than 100,000 hectares of forestry assets in Alberta and acquiring additional assets was a particular strategic focus as management aimed to secure sufficient volumes of sustainable feedstock to complement the CoalSwitch product.
As a result, the Timberlands division's remit was to identify and negotiate with governmental or private owners for significant tracts of timberland in logistically convenient locations in order to provide feedstock to the CoalSwitch plants located nearby the forestry assets.
Management was reportedly in discussions with potential partners over the acquisition of additional harvesting rights for forestry assets in North America and Europe, the board reported.
The final division, AEG WoodFibre, was centred on the sourcing of feedstock from forests and constructing and operating its WoodFibre processing plant at the Yuzhny Port, near Odessa in Ukraine.
AEG said it remained the most significant supplier of wood fibre on the Black Sea region and supplied Turkey's largest MDF producers.
However, as a result of the attempted military coup in Turkey in July 2016, the company experienced a slow-down in trading momentum, and so revenues for the division for the financial year to 31 December 2016 were anticipated to be lower than the revenues of $24.38m reported in 2015.
Despite those lower revenues, the company expected gross profit to show an increase on a year on year basis, and following the events in Turkey, it was decided to complete the final stages of the installation of the softwood line as circumstances allowed.
As such, management expect the final components for the completion of the softwood line will be in place by the end of April.
"Given the significant global market opportunity for AEG CoalSwitch and international interest regarding the CoalSwitch development programme, we believe that this area of the group's activities has the potential to experience significant growth in 2017 and beyond," said CEO Richard Spinks.
"AEG's CoalSwitch division is also attracting interest from regional and national governments globally and we intend to develop our management team and financial structure accordingly to accommodate future developments.
"I believe that we are at an exciting juncture in AEG's development and I look forward to providing our shareholders with further updates as appropriate."