EverGen Infrastructure Corp V.EVGN

RBC

[retiredcf]

14 July, 2022

EverGen Infrastructure Corp.
Completes acquisition of a 67% interest in a small Alberta-based RNG development

TSXV: EVGN | CAD 2.60 | Outperform | Speculative Risk | Price Target CAD 5.00

Sentiment: Neutral

Our Take: We believe the completion of the previously announced acquisition of a 67% interest of GrowTEC will have a neutral impact on the shares of EverGen due to the small size of the transaction. We expect the market to be more focused on an update on the timing and cost of the two RNG developments in Abbotsford (Net Zero Waste Abbotsford and Fraser Valley Biogas) that had an initial cost estimate totalling $45 million.

Details:

• EverGen Infrastructure announced that it has completed the acquisition of a 67% interest in Alberta’s Grow the Energy Circle Ltd. (“GrowTEC”) for cash consideration of $2.1 million, subject to working capital adjustments, and the issuance of 600,000 common shares of EverGen. Additional cash consideration of up to $4.0 million will be made upon achievement of certain operational milestones.

• The GrowTEC facility is located on the Perry Family farm near Lethbridge, Alberta, and is an operating farm scale biogas facility consisting of an anaerobic digester that has been converting biodegradable waste into biogas and generating renewable power for over seven years. EverGen and GrowTEC will be completing additions to the facility this year to process the biogas and upgrade it to RNG, which will be injected into the local pipeline network. The project has a long-term offtake agreement with FortisBC.

• The GrowTEC facility is currently in Phase 1 of development, and management expects Phase 1 to be completed by Q4/22, at which time the facility will produce ~80,000 gigajoules of RNG annually. EverGen will work with the GrowTEC team to commence Phase 2 expansion, which management estimates will add 60,000 gigajoules of RNG annually for a total of 140,000 gigajoules of RNG production annually from the facility.