- Active Energy Group has announced that its AEG WoodFibre division has secured two significant new supply contracts for 2016, and that it is investing in a new softwood production line to augment its recently-upgraded hardwood processing facilities.

Under the two 2016 supply contracts, signed on 15 January 2016 with Yildiz Entegre, the leading MDF manufacturer in Turkey, AEG WoodFibre has agreed to deliver up to 300,000 metric tonnes of its proven hardwood wood fibre product, as well as up to another 200,000 metric tonnes of its new softwood wood fibre offering. These significant contracts are expected to generate revenues of over USD50 million in FY 2016.

Additional off-take supply negotiations with other Turkish MDF manufacturers are ongoing, and the Group expects to announce further contract wins over the coming months.

MDF, the material of choice for carpentry, cabinet-making and other joinery applications, is produced from a combination of hardwood and softwood wood fibre. To date, AEG WoodFibre has only provided the hardwood raw material required by its customers.

Following the difficult mid-year trading, which impacted on its overall 2015 performance and delayed the planned investment in new facilities, AEG WoodFibre has now returned to profitable operations and recorded an excellent performance in Q4:2015, for the first time delivering three bulk cargo loads in a single month at good margins.

In light of this, the Board has approved an investment of USD0.75 million to purchase the equipment to manufacture softwood wood fibre from Pine logs. The new softwood production line, which is planned to be operational by Q2:2016, will substantially increase AEG WoodFibre's manufacturing capacity and broaden its market offering, making it the only supplier in the Black Sea region to supply both of the key raw materials for MDF manufacturing from a single facility.

At 8:38am: [LON:AEG] Active Energy Group share price was +0.85p at 5.98p

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