ATOME (AIM: ATOM), the only international green hydrogen, ammonia, and fertiliser project development company on the London Stock Exchange, with current large-scale projects in Latin America and Europe, as well as hydrogen mobility projects, announces an update on its Paraguay operations.
Highlights:
· Increase of 120-megawatt (“MW”) power purchase agreement (“PPA”) at Phase I Villeta Project to 145MW
· Entry into 300MW pre-PPA agreement for Phase II Yguazu Project with commencement of necessary studies
· Approval of ATOME’s application for tax-free zone status at Villeta Project conditional on completion of environmental studies
· Multiple expressions of interest from leading international players for offtake of Phase I Villeta production
· Final Investment Decision (“FID”) for Phase I Villeta expected in Q4 2023
Extension of Phase I Villeta PPA to 145MW
The existing 120MW PPA entered into between ATOME and ANDE, the Paraguayan National Power Company, has now been inceased to a total of 145MW.
The enlarged PPA enables ATOME to have ample headroom to be able to deliver the 120MW Phase I Project on a 24/7 constant baseload basis as well as providing upside flexibility. The power is immediately available from the recently built Buey Rodeo substation, less than 300 metres from ATOME’s site in Villeta, Paraguay.
The 145MW PPA for ATOME’s totally green project is the single largest PPA granted to any industrial user in the history of Paraguay and demonstrates the ambition of Paraguay, soon to be led by its new President, Santiago Pena, to become a global leader in green industries.
300MW Pre-PPA signed for Phase II Yguazu, Paraguay
ATOME and ANDE have entered into a pre-PPA agreement for 300MW of power for ATOME’s Phase II Paraguay Project to be based at Yguazu where there is a newly built landmark 1-gigawatt substation going through initial testing.
As with the Villeta PPA, the 24/7 power is generated by the 14GW Itaipu Binacional hydroelectric dam the second largest by output in the world which Paraguay shares with Brazil.
The pre-PPA sets out certain studies required by ANDE to be completed to its satisfaction prior to entry into the formal PPA. ATOME is now commencing procurement work for such studies with the objective of completing these before the end of this year.
Tax-free zone Villeta
In relation to its Phase I Villeta Project, ATOME has applied to the Government of Paraguay to be granted a tax-free zone at Villeta.
The Company can now report that the Inter-Governmental National Council of Tax-Free Zones has unanimously approved ATOME’s application for tax-free zone status for its Project at Villeta, conditional only on the Environmental and Social Impact Assessment Study (“ESIA”), currently being completed, being satisfactory to the Ministry of Environment.
The ESIA has been conducted by the well known independent environmental consultant JGP, following Paraguay and International standards. It has been part funded y IDB Invest, part of the Inter-American Development Bank (“IDB”), being the largest multilateral source of funding projects in Latin America and the Caribbean with whom ATOME has signed a mandate with the intent of IDB Invest becoming a key funding partner in the Project.
All factors being equal, and subject always to Government and Presidential approval, ATOME is targeting to receive certified tax-free zone status by the end of 2023. Such status brings inter alia the following benefits which will materially enhance the economics of the Villeta Project:
· Tax-free importation of goods and equipment
· Exemption of VAT on goods and services
· Only 0.5% tax on invoice value of exports outside of Paraguay with no other profits tax
· 3% tax on domestic sales of production within Paraguay
Offtake of Phase I Villeta production
ATOME has received several written expressions of interest from international players to take all of the Company’s Phase I production on a long-term basis.
Whilst it is too early to comment further on this with discussions ongoing, it demonstrates the presence of long-term demand for ATOME’s production, targeted to start by the end of 2025. The Company is confident that interest in and demand for ATOME’s totally green fertiliser marketed under the ATOME “Green-N” label will grow both domestically in Paraguay and worldwide during the time of the build-out process to 2025.
Final Investment Decision
The work towards FID is progressing as with engineering, procurement, and construction discussions with contractors.
The team of Urbas, Casale, and ATOME’s Owner’s Engineer AECOM, together with the Company are all working towards the goal of being ready for FID in Q4 2023. It is the intention that AECOM, the multi-national engineering consulting and technology company with a US$13.1 billion turnover in 2022 will become ATOME’s project manager for the Villeta Project, managing on ATOME’s behalf the EPC contractors.
Further announcements will e made in due course.
Olivier Mussat, CEO, commented:
“Major progress continues to be made on all levels of the Company with significant milestones being achieved. Whilst we recognise that we have set ourselves a challenging target for FID at the Villeta Project at or around the end of the year, we are progressing with our technical and funding partners in a systematic manner in order to achieve that goal.
“We look forward to keeping the market informed on a regular basis between now and then.”