Zenergy Power shares soar after successful test of new core product
Zenergy Power PLC (LON:ZEN) shares soared in morning trade on news that it has successfully tested a half-scale model of its new core product - the Magnetic Fault Current Limiter (MFCL) which protects power grids against damaging power surges.
The stock rose more than 26 percent to 6.2 pence by 9.40 am as the announcement was welcomed by investors who have not had much to be cheerful about regarding Zenergy this year.
The group had initially put up the ‘for sale' sign in February after realising that developing its High Temperature Superconductivity products would require investments way beyond Zenergy's capabilities.
In April, a number of shareholders stopped the sale and ousted the management, believing there was merit in going it alone with a refocused product portfolio.
A major restructuring followed, and last month the outcome was revealed, including a focus on the Fault Current Limiter product and no more investment in other technologies, a 70 percent staff cut, the German subsidiary being put into administration and cash burn reduced to £4 million per year from £12 mln.
Today the group announced the successful test of a prototype of the new core product and said work has already commenced on a full-scale demonstration MFCL.
Zenergy will immediately seek to secure sales orders and commence commercial production of non-superconducting MFCLs in voltage classes ranging from 4 kilovolts to 154 kilovolts.
MFCLs protect power grids against power surges caused by short circuits or lightning strikes while maintaining a disruption-free downstream power supply. They provide power grid operators with a new way to ensure grid reliability, cost-efficient grid expansion, and integration of distributed generation sources, the company said.
The production and testing of an 11kv superconducting MFCL unit, whose sale was originally announced last year, has now been completed. Fulfilment of this contract will result in Zenergy receiving £500,000 of cash net of costs.
Overall operating costs are now running at the envisaged level of £4 million per year.
With nearly £6 million in current cash balances, plus the additional £500,000 expected from the above 11kv MFCL, Zenergy has sufficient working capital for at least 18 months, even assuming no sales revenues.
Chairman Simon Cleaver said: "The restructuring of the group to focus on our MFCL operations was both challenging and painful, but Zenergy is now leaner and more focused and, as a result, I believe that we are on a far sounder financial footing. We still have a great deal of work to do to bring these products to market, but independent research reports confirm that we are potentially addressing a very large MFCL marketplace."
Related news
- London Mining remains on track to hit 2012 production target at Marampa
- Ceres Power Holdings reports significant improvements of its fuel cell products
- Oxford Catalysts Group shares advance as it announces first start-up of FT reactor
- Mariana Resources kicks off drilling programme at Las Calandrias gold-silver project
- Orogen Gold begins Phase 1 drilling programme at Deli Jovan
- Magnolia Petroleum on track to hit 100 wells target by end-2012
- Mwana Africa sells 15pct stake in Freda Rebecca gold mine for $405k - UPDATE
