Operational Update

RNS Number:4902R
Libra Natural Resources PLC
03 April 2008


Press Release                                                                           3 April 2008



                          Libra Natural Resources plc

                            ("LNR" or "the Company")



           Acquisition of leading North American wood pellet company

                     Expansion into Chinese biomass market

                 De-merger of remaining non-wood pellet assets

                      Proposed name change to FibreGen plc



Libra Natural Resources plc, the international waste-to-energy company, today
announces a series of major strategic moves which create a focused
biomass-to-energy business, and provide the platform for the accelerated
development of a significant force in the international renewable energy
marketplace.



Highlights


*    Acquisition of Coeur d'Alene Fiber Fuels Inc ("CAFF"), a leading, profitable US producer of wood
     pellets, for U$3million, rising to U$9million on profitability milestone achievements between 2009 and
     2014.
*    This acquisition approximately doubles LNR's wood pellet capacity, revenues and EBITDA, and brings
     modern, state-of-the-art pellet facilities with in-situ scale up potential. The Company is now 2nd
     largest producer in North America, 6th largest in the world.
*    Heads of Agreement signed with leading Chinese and Canadian partners, creating a joint venture vehicle
     to provide biomass pellets to the Chinese power station market.
*    De-merger of all remaining non-wood pellet operations to Evergreen Securities plc, completing the
     transformation of the Company into a pure biomass-to-energy entity, as previously outlined.
*    The Company proposes to change its name to FibreGen plc, reflecting the creation of a major, focused
     force in the biomass-to-energy sector.



Glenn Smith, Chief Executive Officer of Libra Natural Resources plc, said: "With
today's announcement, the Company completes its promised transformation into a
focused international biomass-to-energy business. The acquisition of Coeur
d'Alene Fiber Fuels Inc, which almost doubles the size of our core business,
represents a powerful statement of intent to become the world's leading producer
of wood pellets for bio-energy generation. The proposed formation of our Chinese
joint venture, with strong in-country and experienced partners, emphasises the
Company's commitment to prudently grow our business internationally, where the
right opportunities present themselves.



"The Board intends to make FibreGen plc a major force in one of the most
exciting sectors of the international renewable energy marketplace. We will
continue to focus on developing a global presence in the wood pellet and
biomass-to-energy market, and to offer shareholders a company which delivers
environmentally friendly profitability and growth. Today's news represents the
start of the development of the Company into a major global force in the
international renewable energy sector, and the Board looks forward with real
confidence to the future."



                                    - Ends -



For further information:


Libra Natural Resources plc
Glenn Smith
Mark Campanale


Landsbanki Securities (UK) Ltd

Nominated Advisor
Gareth Price/Simon Brown, Corporate Finance                               Tel: [phone]
Liberum Capital - Broker
Ellen Francis / Simon Atkinson, Corporate Finance                         Tel: [phone]





Media enquiries:
Abchurch                                                                        Tel: [phone]
Joanne Shears / Justin Heath                                                    Tel: [phone]
[e-mail]                                                 www.abchurch-group.com






Existing business

The Company already operates three profitable wood biomass fuel businesses in
North America with a current total capacity of 131,500 tons of wood pellets and
100,000 tons of wood chips:
*    a plant at Princeton, British Columbia, Canada which has capacity of 74,000 tons of wood pellets and
     which was acquired in March 2006;
*    a plant at West Bank, British Columbia, Canada, which has a capacity of 57,500 tons (of which 80% is
     wood pellets and 20% is wood shavings) and which was acquired in December 2006;
*    a wood chip production facility in Louisa County, Virginia in the US which currently has a 100,000 ton
     annual wood chip capacity, and which was acquired in October 2007. As announced in December 2007, key
     equipment has been ordered and is currently being manufactured for delivery later this year. Wood
     pellet operations are due to begin at the beginning of 2009 with a capacity of approximately 70,000
     tons.



The Company also owns the development rights for a wood pellet production
facility at West Kootenay, British Columbia, Canada which was acquired in August
2007.



Following the transactions below the Company is expected to have a total
capacity by the end of 2008 of 321,500 tons of wood pellets and 100,000 tons of
wood chips



Acquisition of Coeur d'Alene Fiber Fuels Inc



Background to, and reasons for, the Acquisition



It is the stated intention of the Board to position LNR as the leading producer
of wood pellets by the end of 2010. To achieve such an ambitious objective
requires carefully targeted, synergistic acquisitions and greenfield
developments where the appropriate long-term feedstock and off-take agreements
are in place. The acquisition of CAFF represents an important next step in the
achievement of this goal, bringing with it a major increase in LNR's overall
market presence, significant potential synergistic benefits and enhanced
operational and management expertise.


*    CAFF's forecast 2008 production of over 95,000 tons will almost double the size of LNR's existing wood
     pellet operations, moving the Company from being the 9th to the 6th largest producer in the world;
*    The proximity of CAFF's plants to LNR's existing British Columbia-based facilities will potentially
     provide significant feedstock supply, customer and management synergies. CAFF's Omak, Hauser and
     Shelton plants are all within two to three hundred miles of LNR's existing Princeton and Westbank
     facilities and less than 100 miles from LNR's proposed West Kootenay project in British Columbia;
*    CAFF plants have traditionally been very strong in the important bagged fuel market along the west
     coast of the United States, and area where LNR has historically had to rely on indirect, third-party
     distributors;
*    CAFF, although active in the animal bedding and baled shavings markets, does not have the market
     presence of LNR in either market, and may benefit from utilising the Company's significant presence in
     both of these high margin, niche-sectors.
*    LNR has reached agreement with Mr Eric Hanson, CAFF's majority owner and CEO, for Mr Hanson to assume
     a senior management role within the enlarged LNR.





Information on Coeur d'Alene Fiber Fuels Inc



Coeur d'Alene Fiber Fuels Inc ("CAFF") was established in 1986 and conducts
business under the trade names of Atlas Pellets and Atlas Industrial.  CAFF
operates 2 wood pellet production facilities located in Omak, Washington (which
has a capacity of 25,000+ tons per annum) and Hauser, Idaho (which has a
capacity of 40,000 tons per annum), with a third facility under construction in
Shelton, Washington of 55,000 tons (N.B. already fully financed and due to
become operational in late Q3 2008).  The business is family owned and managed,
employs 45 staff, and is an S -Corporation registered in Idaho.



CAFF produces several brands of high quality wood pellets for the bagged fuel
market, which are sold in the western half of the USA to several hundred long
term customers who buy on an annual basis.  CAFF also produces small quantities
of animal bedding, and baled shavings.



In its unaudited results for the year ended 31 December 2007, CAFF generated
turnover of U$8.9m and EBITDA of U$1.5m. Net assets were U$3.34m at that date.
These results cover a full 12 months of production for CAFF's Omak facility, and
approximately 6 months for the recently commissioned Hauser plant (N.B as
stated, CAFF's Shelton plant is under construction, and is due to come on stream
during 2008).



Principal terms and conditions of the Acquisition



The maximum total purchase price is $9million, $3million of which will be
immediately satisfied by the issue of 23,566,379 new Ordinary Shares (the "CAFF
Consideration Shares") in LNR. The number of New Ordinary Shares to be issued
was determined on the basis of the volume weighted average price ('VWAP') of LNR
shares over the ten business days prior to today's announcement. The vendors of
CAFF have agreed to certain orderly market restrictions on the sale of the CAFF
Consideration Shares for the first six months after issuance.



In addition to this initial U$3million, a conditional deferred consideration of
up to a maximum of U$6million will become payable if CAFF meets certain
increased trading and profitability targets for the twelve month periods ending
31 December 2009 to 30 December 2014 (the "earn-out years"). Such conditional
deferred consideration will be payable, in tranches of U$1million per annum, in
each of the earn-out years in the form of additional New Ordinary Shares. The
issue price for any such deferred New Ordinary Shares issued will be determined
by reference to the VWAP over the 90 consecutive trading days prior to December
31st of the relevant earn-out year.



Expansion into Chinese biomass market



LNR has reached heads of agreement for the formation of a joint venture company
with Heilongjiang SY Renewable Energy Co. Ltd ("SY Energy") of Heilongjiang
Province, China and SBC International ("SBC") of British Columbia, Canada



The purpose of the Chinese joint venture is:
*    initially in the Jiangsu Province of China , to construct, commission and own a series of facilities
     for the production of biofuels from corn residues, rice husks, rice stalk, agricultural straw-based
     biofuels and other woody biomass products;
*    to market and sell the output for use in the generation of energy or ancillary services from
     biomass-fired and coal-fired power plants, initially in the Jiangsu Province of China and
*    to market and sell any and all environmental attributes (principally carbon) resulting from the
     production, sale and use of products produced.





Key operational and strategic details
*    LNR will own approximately 25% of the equity of the joint venture;
*    LNR will provide marketing and sales services to the joint venture, relating to all carbon related
     credits or attributes ascribed to the operations of the joint venture. SY Energy and SBC will provide
     operational management, logistics and administrative services to the joint venture and each of its
     operational facilities;
*    To reflect the relative ongoing management and operational contributions, and the capital
     contributions to date, made by its proposed partners, LNR will provide up to 34.8% of the future
     capital requirements of the joint venture;
*    SBC has constructed and commissioned a 50,000 tons per annum demonstration facility (the "
     demonstration facility"), on land owned by the proposed off-taking power utility, in the city of
     Baoying, Jiangsu Province, China. The demonstration facility, ownership of which will be assumed by
     the joint venture, commenced operations on March 1, 2008, with development costs provided by SY Energy
     and SBC;
*    It is the intention of the joint venture to further develop this demonstration facility into a 100,000
     tons per annum operational plant, with full production in place by the end of 2008;
*    The estimated total initial investment (including development costs to date) for this first 100,000
     ton operational plant is 8,500,000 Chinese Yuan (U$1.15m);
*    Off-take, 'take-or-pay' contracts for an initial 100,0000 tons output are under detailed negotiations
     with a local power company and owner of 22 power generation plants in Jiangsu Province, 17 of which
     are 100% biomass fuelled;
*    Full terms of any off-take agreement will remain commercially sensitive, but initial indications
     suggest potential for very attractive profitability and ROI and scale-up
*    The strategy of the joint venture is to produce 1 million tons of biofuels by 2010, moving to 5
     million tons by 2012.





De-merger of remaining non-pellet assets



Further to the announcement of 18 December 2008, LNR is pleased to announce that
it has signed binding Heads of Terms with the AiM-listed renewable energy
company, Ethanol Investments plc ("EI"), for the sale of LNR's entire 11.55%
stake in Prometheus Energy. In addition to this sale, LNR has agreed to sell EI
certain other minority stakes, comprising the remaining non-wood pellet
investments held by the Company. The sale of these stakes, which is subject to
EI shareholder approval, values LNR's non-core assets at £2.68 million, and
leaves LNR entirely focused on its core biomass-to-energy operations As
consideration, LNR will receive new EI plc shares, giving the Company an
estimated stake of approximately 24% in Evergreen Securities plc, the new name
for EI following its scheduled re-listing on AIM next month.  LNR has undertaken
not to dispose, other than in certain specified circumstances, of the EI shares
to be issued to it as consideration for the sale of these assets, for a limited
period following their issue. It remains, however, the intention of LNR to
reduce this holding over time, as EI expands its operations and dependent upon
LNR's ongoing financing requirements.



Proposed name change



To reflect the completion of the re-positioning of the Company as a focused
biomass-to-energy company, it is proposed to seek shareholder approval at the
next Extraordinary General Meeting to change the name of the Company to '
FibreGen plc'.



Issue and Admission of New Shares



Further to completion of the acquisition of the West Kooteney development rights
and Virginia plants referred to in the description of the existing business
above, the Company has issued 450,451 new Ordinary Shares and 436,927 new
Ordinary Shares as share consideration in relation to each acquisition
respectively.  The Company has also issued 1,076,588 new Ordinary Shares to an
ex-employee as part of a settlement contract upon leaving the Company.
Application has been made to AIM for the admission to trading of these 1,963,966
new Ordinary Shares as well as the 23,566,379 CAFF Consideration Shares. The
aggregate 25,530,345 new Ordinary Shares, which will all rank pari passu with
the existing Ordinary Shares, are expected to be admitted to trading on 9 April
2008. The total number of shares in issue will, following these issues, be
232,605,191.



                                    - Ends -


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

MSCBIGDSSGGGGID