Richmond-based Free Energy Power Corp. (TSXV: FFX) is receiving funding to help it build a power generating plant that will reuse waste heat from Alberta’s Swan Hills oil fields of to produce electricity.
The company recently received a $2.6 million grant from the Alberta government and $1.4 million loan from the Agricultural Financial Services Corporation (AFSC) to help with the construction of the $5.5 million power plant.
The loan will bear an interest rate of 6.24% and is payable in equal monthly instalments over a seven-year term.
When oil is pumped from the ground in the Alberta oil fields, it comes up mixed with scalding hot water. The water is pumped back into the ground after it’s separated from the oil.
The Free Energy power plant will tap the heat from that water before it is pumped back into the ground and use it to power a turbine to produce one megawatt of electricity.
Under the agreement, an oil company – which Free Energy is not naming – will buy electricity from Free Energy at a fixed price. The company expects a return on investment within six years.
“We’re looking at payback at the end of six years,” said Free Energy president and CEO Dean Bethune.
Free Energy also announced a private placement of up to 10 million common shares of Free Energy at a price of $0.10 per share.
Gross proceeds are expected to be $1 million. Proceeds of approximately $750,000 will be used to fund the construction of the Swan Hills Heat Recovery Project with the balance to supplement the general working capital of Free Energy.
All shares issued in connection with the private placement will be subject to a four-month hold period. Completion of the private placement is subject to acceptance of a filing respecting the financing TSX Venture Exchange.
Nelson Bennett