Update-Wood Pellet Operations
02 August 2007 - 5:01PM
UK Regulatory
RNS Number:3764B
Libra Natural Resources PLC
02 August 2007
Press Release 2 August 2007
Libra Natural Resources plc
("LNR" or "the Company")
Canadian Wood Pellet Operations: Update and Further Expansion
Libra Natural Resources plc ('LNR' or the 'Company'), the international cleaner
fuel company, today announces further details on its expansion strategy for its
North American wood pellet businesses.
WEST KOOTENAY: NEW FACILITY
In line with the strategic direction outlined in LNR's Preliminary Results for
the year ended 31 December 2006, which described a significant increase in size,
scale, and range of investments in our wood pellet business, we are pleased to
inform shareholders that we have completed the acquisition of all development
rights associated with a proposed 60,000 metric ton pellet plant in the West
Kootenay region of British Colombia from Sure Fire Capital Corp.
The project, known as West Kootenay Pellets Ltd, will be located on a seven acre
site adjacent to a wood processing plant which is owned and operated by
Kalesnikoff Lumber Company. Fibre will be supplied from a number of local
sources under contracts which have already been signed. In each case the initial
fibre supply contract is for a period of seven years, which can be renewed for a
further seven year period (14 years in total).
The project capital cost is estimated at C$6 million, and will be funded from a
mixture of existing cash resources and debt. Upon receipt of requisite permits,
the plant will take approximately six months to construct. It is expected that
the West Kootenay facility will enter commercial service during Q1 of 2008.
EXISTING BRITISH COLUMBIA FACILITIES: EXPANSION OF OPERATIONS
As announced at the time of LNR's Preliminary Results, we have commenced a
programme to significantly upgrade our existing wood pellet production
facilities in British Columbia, the Westbank plant and the Princeton-Co
Generation ('Princeton') plant.
Westbank
At Westbank, a project is now well advanced to install a semi-automated bagging line. This
equipment, similar to that which has been in use at our Princeton plant for more than a year, will
enable reductions in operating costs and access to the higher margin retail markets. Substantial
elements of the equipment have been installed and the remainder has been shipped by the
manufacturer.
We anticipate that the line will be operational in September and will immediately enhance earnings
for LNR.
Princeton
At Princeton, a project has been initiated to expand pellet production capacity, which involves the
installation of a larger capacity pellet mill, installation of an additional dryer for raw material
and the erection of expanded finished product storage capacity. The larger mill was successfully
installed in early June and has immediately begun to increase Princeton's pellet production.
Major elements of the dryer expansion have been ordered and several elements have been received on
site and are in the process of being installed. The expanded drying capacity will enable more
production from lower cost raw material sources. The foundations for the expanded storage capacity
have been dug and the silos have been ordered.
This Princeton upgrade project is on schedule for completion in early Q4 and will immediately
enhance earnings for LNR.
In combination, these plant upgrade projects will enhance LNR's wood pellet
business by reducing operating costs and expanding production and storage
capacity resulting in a greater ability to respond to growing market
opportunities.
We estimate that these upgrade projects alone, will increase LNR's 2008 revenue
by at least 15%, with a similar beneficial impact on the combined earnings from
the two plants.
UK AND USA
Shareholders can expect a further announcement within the next month or so,
giving similar details of LNR's planned expansion of its wood pellet operations
in the UK and in the South-East of the United States.
LNR continues to evaluate acquisition opportunities in both these markets,
including the previously announced negotiations to acquire the UK's largest wood
pellet facility. However, given the relative immaturity of the existing market
in these regions, and the growing focus of LNR on acquiring and developing
larger, > 50,000 tpa facilities, as it seeks to meet the exponential growth in
demand for wood pellets, your Company increasingly believes that such expansion
in these specific territories will be development, not acquisition, led.
- Ends -
For further information:
Libra Natural Resources plc
Peter Greensmith, Chief Executive Tel: +44 (0) 20 7877 5050
pg@lnrplc.com
Teather & Greenwood Limited
Nominated Advisor & Joint Broker Tel: +44 (0) 20 7426 9000
Gareth Price/Simon Brown, Corporate Finance
Media enquiries:
Abchurch
Heather Salmond / Franziska Bohnke Tel: +44 (0) 20 7398 7700
heather.salmond@abchurch-group.com www.abchurch-group.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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