SIMEC Atlantis soars with acquisition and contracts

Vertically integrated turbine supplier and tidal power project operator SIMEC Atlantis Energy (LON: SAE) saw its share price rocket on Thursday, following a series a series of promising operational updates.

Elsewhere in the sector, there have been developments and operational progress from SIMEC’s counterparts. JLEN (LON: JLEN) continues to gain momentum, Active Energy Group (LON: AEG) an acquisition in North Carolina, Velocys PLC (LON: VLS) commercialised alternative fuels and AFC Energy plc (LON: AFC) developed a hydro-electric vehicle charger.

Highland Green Renewables acquisition

This morning, SIMEC Atlantis began the day by announcing its acquisition of Highland Green Renewables, from SIMEC Energy. HGR has consented over 65 hydro schemes, built more than 45 hydro schemes and provides operation and maintenance services to more than 45 UK hydro schemes. The Company was acquired by SIMEC Atlantis for a nominal fee of £1.00. It will continue its regular operations, while its senior management team will be integrated into the Atlantis senior management team, and will provide the Company with “immediate, positive cash flow”.

Commenting on the acquisition, Atlantis CEO Tim Cornelius,

“We are delighted to welcome the GHR team to Atlantis. We are building a highly experienced energy development and asset management team within Atlantis and GHR brings vast experience in project feasibility analysis, design, consenting, construction management, operations and maintenance and asset enhancement and optimisation.” 

“This restructured transaction is the right outcome for Atlantis. It provides us with more near-term cash to deploy on our flagship Uskmouth and MeyGen projects which will deliver the largest possible returns for investors. We have acquired a world class, cash flow positive, profitable hydro development, consulting and O&M business which we will integrate with our existing engineering services business in Scotland to create one of the most experienced project development teams in the UK. It will allow us to focus on high margin, development opportunities such as the Uskmouth conversion project where we can deliver enhanced shareholder returns.”

“We will retain all the key staff, IP and know how that has made the GHR business the first-class business it is today. The restructured transaction validates the commitment SIMEC is making to building a world leading project development company with the Atlantis management team and we are very grateful for their continued financial, commercial and supply chain support.”

 Kyuden Mirai Energy supply contract

Following its first update, SIMEC continued its lively morning by announcing that it had been awarded a contract to supply tidal generation equipment and offshore construction services to Kyuden Mirai Energy in Japan. The project has a budget of 1.8 billion Yen and the system will be deployed at site in the Nagasaki Prefecture. The delivery and installation of the generator is expected by Q3 2020, with completion and demonstration forecast for Q1 2021.

Offering insight on the update, Tim Cornelius stated,

“SIMEC Atlantis has been at the forefront of marine energy for the past decade, building a strong portfolio of projects across Europe and around the world. Japan’s decarbonisation ambitions and world-leading tidal resource combine to create huge potential for Atlantis’ tidal generation systems in the future.”

“This is our largest awarded export contract to date and our partnership with Kyuden Mirai Energy is representative of the leadership position SIMEC Atlantis has taken in exporting Scottish know how and expertise into new international markets.”

Uskmouth Power Station combustion system design contract

After a ‘competitive’ deliberation, SIMEC awarded Mitsubishi Hitachi Power Systems Europe GmbH a contract to conduct the design and development of the combustion system for its Uskmouth Power Station conversion project. The contract covers the completion of industrial scale milling tests on the fuel pellets, completion of industrial scale combustion tests on the fuel and completion of Uskmouth furnace burner system design.

Providing input for the Company’s third announcement of the morning, David Taaffe, Director of Projects of SIMEC Atlantis, commented,

“After investing more than £2m over the past 12 months in development of the fuel specification required for combustion at Uskmouth and the conversion project’s design and consents, we are now very excited to enter into this important partnership with Mitsubishi Hitachi Power Systems, one of the world’s largest and most experienced thermal generation solution and equipment providers. The project is well on track to contract the conversion works on an EPC basis with terms and conditions suitable for project finance. Completion of this contract with MHPS will be a key enabling step towards that goal. The Atlantis project team at Uskmouth and our fuel partners SSF are looking forward to working closely with MHPS on the final industrial scale tests of the fuel.”

Investor notes

Following the updates, the Company’s shares rallied 14.98% or 1.52p to 11.67p per share 31/10/19 12:26 GMT. Neither a p/e ratio nor a dividend yield are available for SIMEC Atlantis Energy stock.

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Jamie Gordon
Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.