The march towards net zero will require significant investments in both renewable energy and carbon reduction, but companies active in these two areas on the ASX are few and far between.
With renewable energy and carbon mitigation forming two of the three industries in which the company operates, LGI Limited seeks to address this deficiency with its IPO to raise $25 million by issuing 16.67 million shares at a price of 1 each, to raise $50.
However, unlike many ASX hopefuls, the company already has significant revenue and earnings from the 26 projects it develops and operates landfill Sites owned by local governments in Queensland, New South Wales and the ACT.
This includes seven renewable energy generation plants – an eighth due to come online this October – that will generate biogas from landfill to in turn produce renewable energy while reducing carbon emissions and eliminating waste.
Proceeds from the offering, which begins today and ends September 23, will be used to install more power capacity and battery storage in its existing power generation projects, build more biogas flares for mitigation projects, and pay off debt.
“We are working at the optimal point where waste management meets renewable energy and CO2 reduction,” said LGI Managing Director Adam Bloomer.
“We benefit from strong tailwinds in each of these markets because our operations are end-to-end, capturing biogas and using it to generate renewable energy and carbon credits.
“There is an increasing need for distributed, dispatchable generation, a rapidly growing demand for renewable energy, and an increased focus on decarbonization.”
Renewable Energy Revenue Generator
LGI has three revenue streams. Renewable electricity, greenhouse gas reduction and site infrastructure and management.
Its renewable power includes installing power generation systems in landfills.
These include long-term agreements of 15 years or more with governments that give the company the right to harvest and reuse biogas and build and operate power plants.
Seven plants are currently in operation, with an eighth scheduled to start up in October in Toowoomba and another to be built in Nowra next year.
Carbon mitigation involves installing flaring systems at landfills.
By burning biogas – typically Methane, which has many times the global warming potential of carbon dioxide – the company has the ability to generate Australian Carbon Credit Units, which it does at 15 of its 26 sites.
LGI’s remaining revenue stream includes the installation, operation and management of biogas extraction infrastructure and flaring systems for landfill owners to reduce emissions.
To highlight the value of multiple revenue streams, the company has forecast revenue of $31.3 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of $13.3 million.
room to grow
And the company doesn’t stop there.
It is estimated that there are more than 200 landfill sites in Australia that could support commercially viable carbon reduction or renewable energy generation projects.
These provide the Company with ample scope to build a range of generation facilities across the country leveraging its proprietary technological solutions, innovative contracting approach and highly efficient operating model.
LGI also intends to design, install and maintain hybrid renewable energy centers that use a combination of biogas from landfill, energy storage and other renewable sources such as solar power.
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