Like so many small Venture-listed companies, the second half of 2014 was tough on the stock price of Viridis Energy, Inc. (TSX-Venture:VRD) as shares slipped from a high of $2.60 in July all the way to a low of 46 cents in the waning days of December.
There wasn’t a clear driver of the negative sentiment, although Viridis, a renewable energy play and manufacturer/distributor of high-grade wood pellets from wood waste, posted a widening net loss in the third quarter as compared to a year earlier.
A sizable piece of the loss could be attributed to expansion in 2014, including ramping up production at the company’s Scotia Atlantic Biomass Co. Ltd. wood pellet plant in Middle Musquodoboit, Nova Scotia. Scotia Atlantic is one of the largest wood pellet manufacturers in Canada, currently running at about 75% of its 120,000-metric-ton production capacity per year. Viridis also has manufacturing operations called Okanagan Pellet Company, based in Kelowna, British Columbia.
The stock has rebounded well off the lows so far in 2015, including a high of $1.14 in February. Shares of VRD closed ahead by 15 percent at 99 cents on Wednesday and shareholders got some good news Thursday as well. The company said that its wholly-owned subsidiary Viridis Merchants, an aggregation and trading service of wood pellets, secured a contract with an existing supplier, for exclusive distribution of up to 18,000 tonnes of 100% Douglas fir pellets. The contract value is over $6 million during 2015. Viridis forecast the contract to result in production between 14,000 and 18,000 tons of the wood pellets this year and for a renewal of the contract in 2016.
The new contract follows a contract renewal for a different Viridis Merchant customer. That contract, which was extended to March 2016, has a value of $3.5 million.
That’s $9.5 million in sales recently, seemingly putting Viridis on pace to keep growing. The company reported $19.9 million in sales through the first nine months of 2014 (the latest data released), which was an increase of $12.1 million, or 155%, from $7.8 million in the first nine months of 2013.
Since Viridis Merchants launched the Okanagan Pellet Douglas Fir brand early in 2013, sales have increased steadily from requiring only two rail cars in rotation to now between 25 and 30 rail cars hauling the premium pellets. Viridis Merchants has exclusive rights to the brand and supply in the northeast United States.
"The Okanagan Douglas fir pellets are a superior quality in the heating market and retail for 15 to 20% more than premium pellets. We are pleased with the additional volume this contract has provided as we were unable to fulfill all the demand last year," said Christopher Robertson, CEO at Viridis, in a today’s press release.
Less than 30 minutes into Thursday’s trading session, no shares of the typically thinly traded Viridis Energy have been bought or sold.
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