ATOME Provides Update on Paraguay Operations

Source: 1/17/2024, Location: Not categorized

ATOME Energy, the only international green fertiliser project development company on the London Stock Exchange, provides an update on its Paraguay operations.

• Front-End Engineering Design ("FEED") study and Engineering, Procurement and Construction ("EPC") progressing well and to be concluded in this Q1
• Multiple offtake proposals received from leading international players with Company in advanced negotiations for offtake of Villeta's full production volume of its green fertiliser with concrete news expected this Q1
• Company confident in finalising the Villeta Project financing with interest in the debt financing component extending to over 2x oversubscribed and interest from international heavyweight investors in the equity component all at project level
• Pre-PPA studies in respect of the 300MW Yguazu Project to be completed this month to confirm best location for the project with the 300MW PPA targeted for this H1

145MW Villeta Phase 1, Paraguay
Detailed FEED, EPC, and financing negotiations for this first of a kind project are now in their final stages as management continue to push to achieve the best possible expedient outcome for ATOME shareholders. The Company is pleased to report solid progress continuing across key development workstreams.

FEED and EPC in final stages
The FEED study for the Villeta Project will be completed this Q1.

EPC contract discussions with the main and specialist sub-contractors, led by AECOM, the international engineering consultancy and ATOME's Owner's Engineer, will conclude in the coming weeks. Discussions have been focussed on delivering a lump sum fixed price turnkey contract in order to provide certainty on costs and delivery timelines with AECOM contributing value engineering. This contractual structure being negotiated will create alignment between ATOME and its EPC contractor which has the responsibility for delivering the plant in working order, on the agreed timeline and budget, thereby lowering project risk and increasing its bankability, all of which significantly contributes to maximising project returns.

Offtake of CAN from Villeta
The Company is in advanced negotiations with leading international players for the offtake of the full production of green Calcium Ammonium Nitrate ("CAN") fertiliser from Villeta. ATOME has now received multiple proposals from prospective offtakers and management is actively considering a number of proposals which satisfy the financial and strategic objectives set out by the Board.

It has become clear to the Board that there is a significant and growing market for CAN on the doorstep of Paraguay, in Brazil and Argentina, particularly with the latter market becoming significantly more open due to the change in government there. Furthermore, ATOME's offering is particularly attractive to European and UK markets where increasing emphasis is made throughout the vertical supply chain for green fertiliser and carbon tax penalties are now in place and will grow increasingly in the next few years.

An agreement on offtake of ATOME's CAN is expected to be announced before the end of Q1. Further details of the offtake arrangements will be disclosed when terms with an offtaker are settled.

Project financing gains momentum
The Company's financial advisor, Natixis Corporate & Investment Banking, has received multiple formal expressions of interest from Development Finance Institutions, international lenders and export credit agencies leading to an indicative oversubscription in respect of the debt financing component of the project of some 2x. As such, the Board is confident that the debt element of the financing can be achieved on terms acceptable and as envisaged by the Company and we expect to mandate the lead arrangers in Q1.

Discussions are ongoing with prospective international equity and strategic investors at the project level who are continuing to show ongoing interest in financing Villeta due to the project's robust economic case and strategic importance given that it is expected to be the world's first industrial scale green ammonia-to-fertiliser facility and capable of exporting its product economically worldwide.

300MW "Yguazu Project"
Following entry into a pre-PPA with ANDE, the state power company of Paraguay, both parties continue to cooperate on mechanical engineering and feasibility studies to establish the best location for the Yguazu Project.

Yguazu will benefit from the blueprint created by the Villeta project development for green fertiliser production both in terms of timescale and costs. A further update on Yguazu along with an expected roadmap toward a 300MW PPA will be made in this Q1 with a formal 300MW PPA targeted to be entered into within H1.

Olivier Mussat, ATOME's CEO, commented: "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.

"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. We are confident that in this Q1, further key project milestones will be achieved, and we look forward to taking FID on the Villeta project once these workstreams are completed.

"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."

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