Viridis Energy announces supply agreement with Canadian producer

By Viridis Energy Inc. | October 03, 2014

Viridis Energy Inc. has announced that its wholly owned subsidiary, Viridis Merchants Canada Ltd., an aggregation and trading service of wood pellets, has secured an additional 45,000 metric tons of wood pellets per year over the next two years from a western Canadian manufacturer to augment the company's current production capacity. The additional wood pellets are expected to be available in October and will be sold to Viridis' existing customers in the U.S. and South Korea, which will support a greater expansion into Southeast Asia. Viridis projects the added supply will generate a minimum of $21 million over the initial two year term of the agreement, depending on the producer's ramp-up.

The initial term of the supply agreement runs from September 2014 to December 2016, with an automatic renewal for an additional 12-month period. The agreement also provides for an additional 15,000 metric tons of EN Plus A1 quality wood pellets per year. The agreement extension plus the potential additional 15,000 metric tons of pellet supply could increase the potential revenue over the full term of the agreement to a total of $40 million.

Commenting on the Viridis Merchants transaction, Christopher Robertson, CEO of Viridis CEO, "As we continue to increase our organic production capacity, Viridis Merchants' transactions has supplemented this growth, creating an overall total wood pellet manufactured and aggregated capacity of over 300,000 [metric tons] annually. Viridis is well on its way to reaching its goal of one million [metric tons] over the next couple of years."

In addition, Viridis announced that its Scotia Atlantic facility has received an order from a large European utility company for 50,000 [metric tons] of wood pellets to be shipped by March 31, 2015. The order, facilitated by Ekman, the Company's distributor, calls for a higher quality industrial pellet than previously shipped by Viridis. Robertson added, "As wood pellet demand continues to increase, we are visibly noticing that pricing for pellets is strengthening in Europe."