Key points:
- SIMEC Atlantis’ share price soared 27.6% after hitting a critical project milestone.
- The firm is much closer to installing the battery energy system at Uskmouth.
- Investors cheered the move, which unlocked a £6 million payment.
The SIMEC Atlantis Energy Ltd (LON: SAE) share price soared 27.58% after the renewable energy company announced that it had achieved a significant milestone in delivering its 230MW / 460MWh battery energy storage system (BESS) at the Uskmouth site.
Investors cheered the announcement that brought the company closer to delivering the crucial battery system to the project. In addition, SAE confirmed that it has secured the needed grid variations for the project and had completed the novation of the grid connection agreement.
Also read: The Best UKÂ Renewable Energy Stocks To Buy.
The project is expected to deliver at least £40 million in revenue to the company over the next 30 years, with £11 million paid within the next 18 months. SAE further announced receiving an initial £6 million payment from USkmouth Energy Storage Limited (UES).
The payment is in the form of an interest-free loan that will be repaid from the development premium of the same amount payable once the project attains planning approval. SIMEC noted that it had applied for planning approval, which it expects to receive in Q4 2022.
SAE expects to receive an additional development premium of £4 million once the project reaches its financial close. In addition, the company took the opportunity to repay a £2 million convertible loan to its parent company, the SIMEC Group.
The SIMEC Group is a 29.7% shareholder in SIMEC Atlantis, which entitles it to the above payments. The two firms recently signed a Heads of Terms (HoT) agreement to form a new company, in which SAE is an 85% shareholder and the SIMEC Group is a 15% shareholder.
SAE also issued an update on its MeyGen project, where it recently got support from the British government in the form of a Contract for Difference (CFD) signed with the Low Carbon Contracts Company (LCCC) on 28th July 2022.
SIMEC Atlantis was supposed to satisfy several conditions to ratify the agreement, which it just did; hence, the contract is set to proceed. In addition, the MeyGen project is one of the world’s largest tidal stream arrays accounting for 75% of the total global tidal stream output, a significant achievement for the project.
So, should you buy SAE shares? The shares look attractive from a long-term perspective.
*This is not investment advice.
SIMEC Atlantis (SAE) share price.
The SIMEC Atlantis share price surged 27.58% to trade at 1.9775p, rising from Friday’s closing price of 1.5500p.