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    CARBN   NO0010778095

CARBON TRANSITION ASA

(CARBN)
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Axxis Geo : Carbon Transition ASA (Axxis Geo Solutions ASA) - Investing in revolutionizing technology which significantly reduces Co2 emissions in energy production from coal fired power plants - Arbaflame AS

07/07/2021 | 02:06am EST
Lysaker, 7 July 2021

Reference is made to the stock exchange announcement by Axxis Geo Solutions ASA
(the "Company") today regarding its new strategy and change of name. The Company
has today made its first investment under the new strategy by investing in a
convertible loan with a face value of NOK 30 million in Arbaflame AS
("Arbaflame"). 

Arbaflame has spent a decade and invested around NOK 550 million (owner's
equity/equity like instruments and grants) in developing a patented technology
which enables the production of black pellets from bio waste ("ArbaCore").
ArbaCore can fully replace coal in coal-fired power plants worldwide. When
replacing coal with ArbaCore in coal fired power plants, Co2 emissions are
reduced by approximately 90% compared to coal. Thus, ArbaCore enables long term
use of coal-fired power plants with minimal Co2 emissions and a speedy, cost
efficient switch from coal to environmentally friendly energy sources. Arbaflame
is a technology developer and enabler of the production process for ArbaCore. As
part of its growth strategy, it has an aim to build, own and operate the first
ArbaCore production plant(s) in the initial market penetration phase. In the
second stage of its growth strategy, it will seek partners in the global market
which it will co-own ArbaCore production facilities with and license the use of
the ArbaCore technology from Arbaflame. In line with this growth strategy,
Arbaflame has recently completed construction of it first production facility in
Kongsvinger, Norway (ArbaOne). The facility has an annual production capacity of
70,000 tons of ArbaCore pellets. Arbaflame has recently signed an off-take
agreement for most of the production (at ArbaOne) the next 5 years which
corresponds to a backlog of up to EUR 65m, given certain conditions being met.  

The ArbaCore black pellets not only drastically reduces carbon emissions
compared to coal, it also has large benefits compared to white pellets and other
black pellets on the market in terms of demonstrated fuel properties. Equally
important, coal-fired power plants can utilize ArbaCore in their existing plants
with only minimal adjustments to the plants and related infrastructure, which
also makes ArbaCore the superior economical choice for energy producers. In
comparison, upgrading a coal power plant to the use of white pellets have huge
costs compared to ArbaCore.

Through the same process of making ArbaCore pellets from bio waste, Arbaflame's
technology is also able to extract high value biochemicals with significant
positive environmental impact and high earnings potential. This product area
which operates under the name ArbaRaf, includes bio-chemical products such as
furfural, methanol and aromatics. In addition, the company has an R&D program
for bi-products such as bioplastics and fish feed. Arbaflame has signed an MOU
with a Belgian off taker for the entire volume of furfural from the first
production plant at Kongsvinger. The extraction of biochemicals is currently
undergoing further R&D to fully utilize the potential and Arbaflame expects that
biochemicals has the potential to constitute at least 50% of their earnings over
time. 

Arbaflame has positioned themselves to revolutionize the market for coal-fired
energy production by simply replacing the coal with their environmentally
friendly ArbaCore pellets. The market potential for ArbaCore is therefore
enormous. From current production capacity at 70.000 tonnes per year, Arbaflame
expects to add more than tenfold this capacity by 2026 to more than 850,000
tonnes per year, which only constitutes 0.2% of the total coal consumption in
EU. In addition to being environmentally friendly, the rising Co2 emission
prices have made ArbaCore  an economically viable and attractive  solution for
energy producers, as the CO2 emission costs have risen to a level which makes
ArbaOne very price competitive compared to coal in key markets. 

The market potential for biochemicals is also expected to be very large, and
Arbaflame estimates their addressable market currently is around USD 20 billion
and includes markets such as bio fuel, aromatics and coatings, and which could
increase significantly if their R&D activities related to bioplastics and fish
feed materialises.  
Arbaflame has just completed an efficient and private funding round attracting
strong interest from high quality Norwegian investors and raised NOK 156 million
in a convertible loan to fund working capital and further growth. The
convertible loan carries an annual interest rate of 3% p.a. and allows holders
to convert their debt to equity corresponding to a pre-money equity value of
roughly NOK 500 million. Arbaflame has signed an LOI for a second production
facility in Sweden and Carbon Transition expects Arbaflame to conduct an IPO in
Norway in the foreseeable future.
 
"The investment in Arbaflame reflects our new strategy to become a listed
investment vehicle focusing on companies which contribute to the energy
transition and Co2 reduction. I am happy to announce that our first investment
is Arbaflame, which is a highly promising company with a proven technology,
substantial backlog and which address a huge market in desperate need of
innovation. We believe Arbaflame, with their strong and dedicated management
team and board of directors will, together with their investors, be able to
fully utilize their potential and become winners on a global basis", says Gisle
Grønlie, Chairman of Carbon Transition ASA (Axxis Geo Solutions ASA).  

«We are delighted to initiate a commercial phase for our bio waste based coal
replacement fuel, which will contribute to significantly reducing CO2 emissions
going forward. We have spent substantial resources to develop our unique
technology, which has positioned Arbaflame with high barriers to entry and a
platform for strong growth in the years ahead. As we enter the commercial ramp
up phase with ArbaOne and developing several new projects  to accommodate the
demand for our fuel, we are excited to have Carbon Transition as a major
investor in our company. The strategy of Carbon Transition goes hand in hand
with our ambitions for Arbaflame, and we are pleased to be a part of Carbon
Transition's investments as they target being an active investor within the
energy transition space with a particular focus on large reductions of CO2
emissions. Arbaflame also attracted an exclusive group of other high-quality
investors in the round where Carbon Transition invested, who will join us in our
mission to accelerate coal phase out" says Bjørn H. Knappskog, CEO of Arbaflame.

* * *
In connection with the information set out above, the Company will prepare and
publish a supplemental prospectus for the ongoing subsequent offering in the
Company, as previously announced. The supplemental prospectus will be published
as soon as possible after it has been approved by the Norwegian Financial
Supervisory Authority.   


Contacts
Gisle Grønlie, Chairman 
gisle.gronlie@gmail.com
+47 917 51 194

Ronny Bøhn, CEO
Ronny.Bohn@axxisgeo.com
+47 905 58 517

Nils Haugestad, CFO
Nils.Haugestad@axxisgeo.com
+47 977 04 439

About Carbon Transition ASA (in the process of changing the company name from
Axxis Geo Solutions ASA)
Carbon Transition ASA ("CT") is an investment company listed on Oslo Stock
Exchange (Euronext Expand Oslo) and traded under the ticker Axxis. CT has a
focus towards investing in companies and technologies engaged in the "energy
transition" area, which contribute to significant reductions of carbon
emissions. CT may also invest more broadly in the "energy transition" space. CT
has a legacy OBN seismic business operating under the name Axxis Geo Solutions,
with both a node-technology seismic contract business, and a multiclient
library. This business unit is categorized as an investment, and revenues
generated from this business unit may be invested in the "energy transition"
area.
More information on www.axxisgeo.com.

This information is considered to be inside information pursuant to the EU
Market Abuse Regulation and is subject to the disclosure requirements pursuant
to Section 5-12 the Norwegian Securities Trading Act.

Click here for more information

© Oslo Bors ASA, source Oslo Stock Exchange

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Financials (USD)
Sales 2020 92,8 M - -
Net income 2020 -3,13 M - -
Net Debt 2020 28,1 M - -
P/E ratio 2020 -11,5x
Yield 2020 -
Capitalization 35,0 M 35,0 M -
EV / Sales 2019 0,13x
EV / Sales 2020 0,35x
Nbr of Employees 10
Free-Float 87,1%
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Managers and Directors
Ronny B°hn Chief Executive Officer
Nils Christian Haugestad Chief Financial Officer
Bjorn Gisle Gronlie Chairman
Rick Dunlop Executive Vice President-Operations
Njňl SŠvik Director