/NOT FOR DISTRIBUTION IN THE UNITED STATES/
VANCOUVER, July 4, 2019 /CNW/ - Pinnacle Renewable Energy ("Pinnacle" or the "Company") (TSX: PL) today announced that it has entered into a limited partnership agreement (the "Partnership") with Tolko Industries Ltd. ("Tolko") to build Northern Pellet Limited Partnership (the "Facility"), a new industrial wood pellet production facility in High Level, Alberta. The Facility further diversifies the Company's fibre supply using high-quality wood fibre sourced primarily from Tolko's existing sawmill in High Level. The Facility is expected to have a run-rate production capacity of 170,000 to 200,000 metric tons per annum. Annual production volumes from the Facility will be sold through Pinnacle's contracted backlog of long-term, take-or-pay off-take contracts. Under the terms of the Partnership, Pinnacle and Tolko will each own a 50 percent interest in the Facility.
"We look forward to expanding our business relationship with Tolko, growing our production platform in Alberta and further diversifying our regional fibre supply," said Robert McCurdy, Chief Executive Officer of Pinnacle. "We have established a strong working relationship with Tolko through the construction and operation of our jointly-owned Lavington, B.C. production facility, which was completed safely, on-time and on-budget. Our partnership with Tolko offers Pinnacle the ability to diversify the business further and position the Company well to implement our growth strategies."
Brad Thorlakson, President & Chief Executive Officer of Tolko, commented, "We're excited to once again partner with Pinnacle Renewable Energy on a project that promises to bring economic, environmental, and employment benefits to both companies and the community of High Level. When commissioned, Northern Pellet Limited will reduce our carbon footprint, secure and increase full-time permanent employment opportunities in the area, and allow us to use all our bark, shavings, and sawdust to produce pellets for growing markets. We look forward to working with Pinnacle on the project and to a successful, on-time, on-budget completion, with start-up in 2020."
Under the terms of the Partnership, Pinnacle will operate the Facility and manage all aspects of customer relations, marketing, sales, and logistics. Tolko will supply both heat energy and fibre to the Facility under long-term supply agreements. The Facility, which will be built on land owned by Tolko, will begin construction in the third quarter of 2019. Initial wood pellet production at the Facility is expected to commence in the fourth quarter of 2020. The capital cost of the Facility is expected to be approximately $54 million, with 50 percent funded by Pinnacle and 50 percent by Tolko. Pinnacle expects the capital cost to be in line with its capital cost to run-rate EBITDA ratio target range. Pinnacle will fund its portion of the capital costs from draws on its recently expanded credit facilities.
Pinnacle is a rapidly growing industrial wood pellet manufacturer and distributor and the third largest wood pellet producer in the world. The Company produces sustainable fuel for renewable electricity generation in the form of industrial wood pellets. This fuel is used by large-scale thermal power generators as a greener alternative to produce reliable baseload renewable power. Pinnacle is a trusted supplier to its customers, who require reliable, high-quality fuel supply to maximize utilization of their facilities. Pinnacle takes pride in its industry leading safety practices. The Company operates eight industrial wood pellet production facilities in western Canada and one in Alabama and owns a port terminal in Prince Rupert, B.C. Pinnacle has entered into long-term take-or-pay contracts with utilities in the U.K., Europe, and Asia that represent 109% of its production capacity through 2021 and 109% of its production capacity through 2026.
Tolko is a leading North American manufacturer of a wide range of forest products for customers around the world, including lumber, plywood, veneer, oriented strand board, co-products, biomass power and a growing number of specialty wood products. For more than 60 years, our family-owned company has delivered reliability, flexibility, efficiency, and quality in the production of a wide range of forest products for world markets. We hold third-party certification on the forestlands we sustainably manage in British Columbia, Alberta, and Saskatchewan, and we play an active role in the communities where our employees live and work.
This news release may contain ''forward-looking information'' within the meaning of applicable securities laws in Canada. Forward-looking information may relate to Pinnacle's future financial outlook and anticipated events or results and may include information regarding its financial position, business strategy, growth strategies, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding the Company's expectations of future results, performance, achievements, prospects or opportunities or the markets in which it operates is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as ''plans'', ''targets'', ''expects'' or ''does not expect'', ''is expected'', ''an opportunity exists'', ''budget'', ''scheduled'', ''estimates'', ''outlook'', ''forecasts'', ''projection'', ''prospects'', ''strategy'', ''intends'', ''anticipates'', ''does not anticipate'', ''believes'', or variations of such words and phrases or state that certain actions, events or results ''may'', ''could'', ''would'', ''might'', ''will'', ''will be taken'', ''occur'' or ''be achieved''. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. If any of the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those expressed in the forward-looking information. The Company has no obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada.
SOURCE Pinnacle Renewable Energy Inc.