Lignol updates shareholders as part of its annual filings

VANCOUVER, Sept. 27, 2011 /CNW/ - Lignol Energy Corporation (TSX-V: LEC), a leading technology company in the advanced biofuels and renewable chemicals sector, today announced that it has filed its management information circular in conjunction with its Annual Meeting of shareholders planned for October 20, 2011.

In addition to the circular, the Company also updated shareholders on a number of corporate matters. The text of the letter to shareholders is as follows:

To our shareholders,

The past year has seen a renewed interest in advanced biofuels, and now recognition from the market of the importance that renewable chemicals will also play in commercializing biorefineries; trends that play into the strength and appeal of the Lignol biorefining platform. While our value in the public markets has yet to reflect this change, Lignol continues to enjoy considerable support and increasing interest from industry and government stakeholders who recognize the importance of our technology and the achievements we continue to make.

We are seeing considerably more corporate interest in our technology than ever before and several high-profile IPO's have come to market in our sector at considerable valuations in the last year. It is against this backdrop that we have recently announced the engagement of CIBC World Markets and Capital West Partners to assist us with arranging investment from strategic investors as we prepare to develop our initial commercial projects. When considering our stage of development and assessing our accomplishments to date, Lignol appears well positioned to capitalize on the renewed interest in this sector and attract the necessary strategic partners and investors that will enable us to commercialize our biorefining platform.

In Fiscal 2011 we set out to achieve three primary goals:

  • Continued development of high-value applications for our HP-L™ lignin;
  • Increasing the strength of our intellectual property portfolio; and
  • Development of strategic partnerships necessary to construct a commercial demonstration plant.

We increased the number of HP-L™ lignin product development projects being undertaken in collaboration with industry leaders in both the corporate as well as research sectors, and commenced sales of tonnage quantities for several industrial trials and applications. The Company has previously announced several Joint Development Agreements (JDAs) for the development and commercialization of applications for its HP-L lignin with a number of its strategic partners in the resins, coatings and rigid foams sectors. One example of this was announced on April 11, 2011 regarding development and trials of Lignol's first renewable chemical product; a resin adhesive formulation using HP-L lignin for the production of Oriented Strand Board (OSB).

Lignol and FPInnovations are now engaged with a major forest products company in further industrial trials. Another example includes the success reported in July 2011 with the production trials of a new foundry resin formulation using HP-L™ lignin conducted by HA International LLC (HAI) at a customer's foundry for the production of metal castings for ferrous and non-ferrous impellors used in a variety of pumping applications. We continue to negotiate the terms of a supply agreement with HAI and evaluation of other formulations within their product line to incorporate HP-L lignin.

Several of these arrangements involve shipments of HP-L™ lignin for evaluation by partners and their customers to ensure functionality and quality under a range of conditions. As per the terms of the JDAs, many of these trial results remain confidential until both parties conclude a supply contract or an off-take agreement.

The Lignol intellectual property portfolio has increased to more than 60 patents in various stages of prosecution. In June, 2011, we received confirmation from the Canadian Intellectual Property Office that our first Canadian patent application had been approved. Our approach has not only been to develop patent protection for our process but also for the outputs of our process including unique application and composition of matter patents for our HP-L™ lignin. We believe this represents considerable value to Lignol especially as this sector develops and the importance of biorefining and lignin in particular, becomes entrenched.

Our goal to develop strategic partnerships to construct a commercial demonstration plant did not materialize as we had set out to achieve at the start of Fiscal 2011.This was partly due to the fact that we did not complete our major body of engineering designs until this past spring and because we had not secured off-take agreements sufficient for a commercial project. It also became apparent that partners and investors would be seeking to invest in a commercial project instead of a demonstration scale plant. Accordingly, in July 2011 we announced agreement with the U.S. DOE to phase out work on the funding award for a demonstration project.

On April 18, 2011, Lignol announced completion of an engineering design package for a commercial scale biorefinery that would produce up to 80 million litres of cellulosic ethanol and 55,000 tonnes of HP-Lignin annually. The design package was developed with Pöyry Engineering, one of the world's leading pulp and paper and biorefining engineering companies. Additional campaigns in Lignol's pilot-scale biorefinery are ongoing to refine the design basis and equipment selection needed for scale-up in order to complete an investment grade design and cost estimate for a commercial plant. We are examining opportunities in North America for commercial projects which take into account feedstock and synergies with existing infrastructure along with financial support from various governments and prospective partners.

It has become increasingly apparent that that the timing and scope of our initial commercial projects will largely be governed by the off-take agreements we establish for our unique HP-L lignin.  As such, we have recently made a strategic shift in emphasis to focus more of our resources into delivering off-take agreements for our HP-L lignin in the coming year. During the past year, Colin South joined Lignol as Chief Technology Officer and several leading lignin researchers joined Lignol in preparation for an increased focus on HP-L applications development.

Lignol now has active development agreements in place with major companies across major elements of the value chain for our biorefinery platform. Both Novozymes and Metso have recently joined our SDTC funded industrial consortium; Novozymes, as our key partner for enzymatic conversion of cellulose to ethanol and Metso, as a developer and supplier of key customized components for our industrial process. Lignol and FPInnovations, one of the world's largest private, not-for-profit forest research organizations, recently announced a joint development and commercialization agreement to develop new, high-value applications for cellulose produced by Lignol. We have also expanded our "open innovation" and commercialization programs for HP-L™ lignin applications to include leading research institutes and universities in Canada and the U.S., thus adding breadth to our capacity and reach into novel and high-value applications.

Lignol continues to believe that the information being generated from its pilot plant provides a significant competitive advantage over those competitors who have yet to build one. Our facility represents one of only a handful of fully integrated, second generation cellulosic ethanol pilot plants operating in the world today and the only known source of producing industrial scale quantities of organosolv type lignin and Lignol's unique HP-L™ lignin and their derivatives engineered for specific industrial applications.

Another important benefit of continued investment in our pilot-scale biorefinery is that we believe it will avoid the need for a demonstration-scale plant and allow Lignol to go directly to a commercial scale project.

With so many positive accomplishments in hand and active corporate engagements in place, we believe Lignol is well positioned to attract the appropriate investments needed to achieve its primary goals for Fiscal 2012. These include:

  • Achieving the cost targets set for cellulosic ethanol with Novozymes
  • Establishing off-take agreements for our products, especially HP-L lignin
  • Strategic partnerships and government funding for initial commercial projects

At this time last year we reported that we anticipated having sufficient cash to fund Baseline Operations until May 2011. As a result of increased non-dilutive contributions received from corporate partners and government programs, together with effective financial management, we have reported on continued extensions and now report that we expect to have sufficient resources available to fund Baseline Operations to March, 2012. The recent engagement of CIBC World Markets and Capital West Partners is an important step for Lignol as we consider investment from industry and financial investors who have a strategic, long term interest in advanced biofuels, renewable chemicals and forest industry transformation. The specific form and structure of any financing will take into account discussions with financing sources and market conditions and ultimately influence our plans and objectives for 2012.

On behalf of Lignol's Board of Directors, management and all of our employees, we thank you for your continued support and we look forward to updating you on our ongoing progress.

Sincerely,

"Ross MacLachlan"

Ross MacLachlan
President and CEO
Lignol Energy Corporation

About Lignol
Lignol (TSXV: LEC) is a Canadian company undertaking the development of biorefining technologies for the production of advanced biofuels and renewable chemicals from non-food cellulosic biomass feedstocks. Lignol's modified solvent based pre-treatment technology facilitates the rapid, high-yield conversion of cellulose to ethanol and the production of value-added biochemical co-products, including High Performance Lignin (HP-L™). HP-L™ lignin represents a new class of high purity lignin extractives (and their subsequent derivatives) which can be engineered to meet the chemical properties and functional requirements of a range of industrial applications that until now has not been possible with traditional lignin by-products generated from other processes. Lignol is executing on its development plan through strategic partnerships to further develop and integrate its core technologies on a commercial scale. Lignol also intends to invest in, or otherwise obtain, equity interests in energy related projects which have synergies with its biorefining technology. For more information please visit Lignol's website at www.lignol.ca.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Caution concerning forward-looking statements:

Certain statements contained herein may constitute forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include, without limitation, statements or information about our ability to fund our Baseline Operations (as defined in the Liquidity & Capital Resources Section of the Managements Discussion & Analysis of Financial Condition and Results of Operations for the Fourth Quarter and Year Ended April 30, 2011), the development status of our fully integrated biorefinery pilot plant in Burnaby, the planning and development of our proposed cellulosic ethanol commercial demonstration plant, our ability to exploit commercial opportunities and broaden our market opportunities for a range of cellulosic derivatives and environmentally sustainable biochemicals including our HP-L lignin and lignin derivatives, our ability to produce HP-L™ lignin that meets agreed customer specifications at commercial scale, and our ability to pursue these opportunities with strategic partners including establishing off-take agreements for our products, the ability of Lignol and Novozymes to successfully work together to achieve the goal of producing fuel-grade ethanol and obtaining strategic partnership investments and government funding for initial commercial projects. Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements or information reflect Lignol's current views with respect to future events and are subject to certain risks, uncertainties and assumptions including, without limitation, our ability to establish the validity of our technology at the fully integrated biorefinery pilot plant scale, our ability to satisfy the conditions of existing government grants and to obtain new additional grants, our ability to continue to finance our Baseline Operations and to finance and complete the development of a commercial project, our ability to develop our products, our ability to obtain requisite regulatory approvals and our ability to enter into agreements with strategic partners on terms acceptable to us. Many factors could cause Lignol's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or information, including among other things, the technological challenges that remain to be surpassed in obtaining the necessary operating data from our fully integrated biorefinery pilot plant that is required prior to completing the next design scale-up of the technology, financial market conditions which will impact our ability to finance our operations and to finance the construction and operation of a commercial plant, the price of gasoline and demand for ethanol, the market pricing and demand for renewable chemicals, risks relating to the protection of Lignol's core technology from infringement and those risk factors which are discussed elsewhere in documents that Lignol files from time to time with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements or information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Except as required by law, the Company expressly disclaims any intention or obligation to update or revise any forward looking statements and information whether as a result of new information, future events or otherwise. All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

SOURCE Lignol Energy Corporation

For further information:

Lignol Energy Corporation
David Turner
Chief Financial Officer
Tel: 604-453-1241
Email: dturner@lignol.ca

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Lignol Energy Corporation

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