Sparton Resources announces that its client has received full payment of approximately C$3.2 million for the commissioning of the Zhangbei Project’s 8 Megawatt Hour Vanadium Flow Battery in China.
The funds were received on June 7 from the battery’s owner, State Grid North China Company Limited.
Sparton’s China operating subsidiary, Jiujiang Sparton Vanadium Trade and Tech Co Ltd (JJSP), successfully completed commissioning of the battery and it was accepted by State Grid in late February 2016, at which time, State Grid was invoiced by JJSP’s client, the battery builder.
Proceeds of the payments will be disbursed by the client under a court-supervised payment process. After certain payments are deducted by the court, expected to be in the range of approximately C$2.6 million, the balance of approximately C$600,000 will be paid to JJSP by its client. JJSP will then repay VanSpar, Sparton’s funding vehicle for this project.
The Zhangbei Project operated by State Grid is about 180km north of downtown Beijing, near Zhangjiakou, in Hebei province. It integrates wind power, solar power, energy storage and smart grid transmission technologies. Clean power generated by this project supplies a portion of north China's energy needs. The energy storage equipment currently installed includes the 8 Megawatt Hour Vanadium Flow Battery commissioned through the efforts of JJSP.
A three-year monitoring and maintenance program for the project battery has been prepared and accepted by State Grid. This program will result in annual payments of approximately C$1.14 million, which will fully accrue to JJSP from its client. After deduction of annual expenses and estimated warranty costs, estimated at C$250,000, it is expected that payments of up to C$900,000 will accrue to JJSP and VanSpar annually under this program.
Sparton’s president Lee Barker said, “Payment by State Grid, after a rigorous commissioning program, is another positive step forward for the company. The funds received will ensure coverage of repayment for the debt financing we arranged to support this work. The ongoing maintenance program revenue over the next 3 years will also provide cash flow.
“As an extension to our subsidiary’s success in assisting with the commissioning and maintenance program, we are continuing to pursue the opportunity to become directly involved in this industry. Advanced negotiations are under way, related to funding and potential acquisition of an international vanadium battery manufacturing group in association with strategic partners.
“The payment deductions would be applied as a reduction to the purchase price of the battery manufacturer should the company proceed with this acquisition. Both of these opportunities arose out of our activities in pursuing vanadium exploration and mining opportunities in China. Those vanadium exploration and mining objectives continue to be part of Sparton’s long-term plans.”