Atome reports latest progress in Paraguay

(Sharecast News) - Green fertiliser project developer Atome Energy updated the market on its operations in Paraguay on Wednesday, reporting that the front-end engineering design (FEED) study and engineering, procurement and construction (EPC) were progressing well, and were expected to conclude in the first quarter of the year. The AIM-traded firm said it had received multiple offtake proposals from leading international players for Villeta's full production volume of its green fertiliser, with concrete news anticipated in the same period.

Atome said it was confident in finalising the financing for the Villeta Project, with strong interest in both the debt financing component and equity investment from international heavyweight investors, all at the project level.

Pre-power purchase agreement (PPA) studies for the 300MW Yguazu Project were set to be completed this month to determine the best location, with a formal 300MW deal targeted for the first half.

For the 145MW Villeta phase one project in Paraguay, detailed FEED, EPC, and financing negotiations were nearing completion.

The FEED study for the Villeta Project was expected to be concluded in the first quarter.

EPC contract discussions with the main and specialist sub-contractors, led by Aecom, were also in their final stages.

The discussions were focussed on achieving a lump sum fixed price turnkey contract to ensure cost and delivery timeline certainty.

Atome said the structure being negotiated aimed to lower project risk and increase bankability, ultimately maximising project returns.

Regarding the offtake of green calcium ammonium nitrate (CAN) fertiliser from Villeta, Atome said it was in advanced negotiations with leading international players.

Multiple proposals had been received and were being actively considered.

The company said it recognised a growing market for CAN, particularly in Brazil and Argentina, where the market had become more open due to government changes.

Additionally, Atome said its product was attractive to European and UK markets due to their emphasis on green fertiliser throughout the supply chain, and the imposition of carbon tax penalties.

An agreement on offtake for Atome's CAN was expected to be announced before the end of the first quarter, with further details to follow when terms are settled.

Project financing had meanwhile gained momentum, with Natixis Corporate & Investment Banking receiving expressions of interest from development finance institutions, international lenders, and export credit agencies.

That interest had led to an indicative oversubscription in the debt financing component of the project.

Discussions were reportedly ongoing with prospective international equity and strategic investors at the project level.

In the case of the 300MW Yguazu Project, pre-power purchase agreement studies were underway in cooperation with ANDE, the state power company of Paraguay, to determine the best location.

Yguazu would benefit from the experience gained in the Villeta project development, both in terms of timescale and costs.

Further updates on Yguazu and a roadmap towards a 300MW power purchase agreement were expected in the first quarter, with the formal deal anticipated to be established within the first half.

"The board is confident that 2024 will be a transformational year for Atome, and we are grateful to the team and our strategic partners who have continued to work throughout the end of the year in order to make rapid progress on the engineering, financial and commercial fronts," said chief executive officer Olivier Mussat.

"Whilst taking slightly longer than we originally hoped, the work and de-risking during this extended time has allowed for significant benefit in enhancing the efficacy of our first 145MW project in Paraguay as well as enabling beneficial impact on design, offtake, and financing."

Mussat said the company was confident that in the first quarter, further key project milestones would be achieved.

"At the same time, work is continuing in parallel on other projects and in particular Costa Rica which, combined with Yguazu in Paraguay, provides a pipeline of projects extending to world-scale in excess of half a gigawatt."

At 1405 GMT, shares in Atome Energy were down 0.67% at 68.04p.

Reporting by Josh White for Sharecast.com.