ADA-ES, Inc. announced today it has been awarded a contract by a major utility to supply treated activated carbon (AC) to enable the utility to reduce mercury emissions to meet state regulations for coal-fired generating plants. The five year contract requires ADA to begin delivering AC upon written notice from the utility, expected to start in the third quarter of 2009 and is expected to result in total revenues of approximately $35 million over the term of the contract. The contract also contains a one time option for the utility to increase AC quantities by up to 50% from current commitments as required for other plants within its fleet.
Dr. Michael Durham, President and CEO of ADA-ES, commented, “This is a significant contract for the Company and represents our first successful commitment for long-term supply of actived carbon. The contract terms reflect the type of long-term take-or-pay commitment we believe is necessary to support debt financing for the new AC production facility.”
To suppy AC for the utility mercury control maket, ADA has previously announced its plans for building a new large-scale AC production facility, with the first of six production lines expected to be operational in early 2010. As reflective of this contract, the early demand for AC requires product deliveries in 2009. Since this precedes the startup of its first production line, ADA has developed an interim alternative AC supply program to process and sell AC into this market. In March 2008, ADA acquired the assets of an AC processing facility and entered into a letter of intent for a supply agreement to purchase AC beginning in 2008, with quantities increasing to over 20 million pounds during 2009. ADA recently achieved 90% mercury capture at a full-scale power plant with its treated AC produced from this facility. The Company is exploring a number of alternatives to increase this potential supply to 50 million pounds per year.