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Conditions Precedent Lifted in Power Purchase Agreement between Landsvirkjun and United Silicon

Landsvirkjun, the National Power Company of Iceland, and United Silicon hf. announced today that all conditions precedent had been lifted with regard to the power purchase agreement (PPA) signed by the two parties last March. The boards of both companies have confirmed the agreement.

Landsvirkjun, the National Power Company of Iceland, and United Silicon hf. announced today that all ...

Landsvirkjun, the National Power Company of Iceland, and United Silicon hf. announced today that all conditions precedent had been lifted with regard to the power purchase agreement (PPA) signed by the two parties last March. (Photo: Business Wire)

According to the contract, Landsvirkjun will provide electricity to power a metallurgical grade silicon metal plant being built by United Silicon in Helguvik on Iceland's south west coast. The facility is expected to begin operations in early 2016 and will require 35 MW of power.

All the conditions of the agreement which included the issuance of permits, electricity transmission contracts and financing have been fulfilled.

Arion Bank hf. has worked together with United Silicon hf. and concluded financing for the project, which has been secured through senior bank debt and a forthcoming bond issue.

United Silicon intends to begin construction on the silicon metal plant in July and ground preparation work is already underway in the area. Operations are expected to begin on the 1st of April, 2016.

“We have cooperated closely with United Silicon in the last few months and the confirmation of this power purchase agreement marks a significant milestone in the development for the silicon metal industry in Iceland. We celebrate this milestone and the move towards a more diverse customer base in our growing portfolio of customers. We are confident that silicon metal production will thrive in Iceland as conditions are particularly favourable to the industry. The project will strengthen the development of industry in Iceland and it is very positive that such a project should become a reality in Helguvik where conditions are suitable for this type of operation,” commented Dr. Hordur Arnarson, CEO of Landsvirkjun.

“The lifting of all conditions precedent today, pertaining to the agreement, is a major milestone. We are definitely moving forward with the metallurgical grade silicon metal production plant in Helguvik which has been under preparation for the last two years. United Silicon hf. is taking a step that will ensure the future development of this industry in Iceland, bringing extensive knowledge and technology to the country. Our cooperation with our European partners will ensure secure employment for the coming generations in Reykjanes in the production of metallurgical grade silicon metal in Iceland. We would like to thank the key parties in Iceland for their support, especially Landsvirkjun and Arion Bank who have shown the project their invaluable support,” commented Magnus Gardarsson, the newly appointed CEO of United Silicon hf. in Helguvik.

“Arion Bank is very pleased to play such a large role in developing a project of this size and magnitude with regard to the construction of a metallurgical grade silicon metal production plant by United Silicon in Helguvik. The project will strengthen export from Iceland, increase the economy’s foreign exchange income and will positively affect employment opportunities in an area which has struggled in employment matters,” commented Höskuldur H. Ólafsson CEO of Arion Bank.

About Landsvirkjun

Landsvirkjun is the National Power Company of Iceland, was established in 1965 and is a state owned company. Landsvirkjun’s role is to maximise the potential yield and value of the natural resources it has been entrusted with, in a sustainable, responsible and efficient manner. The Company produces electricity from renewable resources such as hydropower, wind power and geothermal energy producing 75% of all electricity in Iceland. The Company is also a leader in sustainable energy generation and supports increased expertise, innovation and technological development.

About United Silicon hf.

United Silicon hf. is a new company established by a conglomerate of silicon industry participants in Europe, which have taken the initiative to establish a silicon production plant for the growing consumption of their customers in Europe. Following the decision to establish the plant in Iceland, United Silicon finalised the purchase of all shares in the Icelandic company Stakksbraut 9 ehf (the owner of the land in Helguvik) and had already concluded the Environmental Impact Assessment for the Plant, approved by the Icelandic Planning Agency (Skipulagsstofnun) in May, 2013. The Environment Agency of Iceland issued an operating permit to the company on the 3rd of July (two years after work began on the EIA). The company thereby enters into a fully developed project and concluding the Power Purchase Agreement with Landsvirkjun makes it possible for the company to start construction on the plant this summer. Arion Bank hf. is working together with United Silicon hf. on financing the project, which is expected to take place both through a senior loan as well as junior bond.

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