TORONTO (miningweekly.com) – TSX-V-listed American Vanadium has entered into a letter of intent (LOI) with German firm DMG Mori to acquire its wholly owned subsidiary Gildemeister Energy Storage (GES), manufacturer of the CellCube vanadium-flow energy storage system.

The LOI provided American Vanadium with the exclusive right to enter into a share purchase agreement by February 29.

“With our plan to provide a CellCube finance programme, as well as to invest in scaling manufacturing and further reduce CellCube production costs, we look forward to building the business into a global energy storage leader," said president and CEO Bill Radvak on Monday.

American Vanadium was working with its advisers to develop a financing plan for the acquisition of GES. Various alternative structures were being evaluated, including the establishment of a wholly-owned subsidiary (Newco) for the acquisition and a subsequent financing of Newco. American Vanadium would release further details once plans had been finalised.

American Vanadium’s TSX-V-listed stock had been suspended from trading since December 31 at the company’s request, pending the news release. It expected the stock to remain suspended until the share purchase agreement had been executed and further details of the transaction finalised.

American Vanadium planned to create a vertically integrated business structure, combining the market-established CellCube vanadium-flow energy storage system with the future development of high-purity vanadium electrolyte from its Gibellini vanadium deposit, located in Nevada.

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The company explained that the ageing utility infrastructure, combined with the dramatic growth of renewable energy were strong market drivers towards long-duration storage, where flow batteries were expected to dominate. Applications of 4 to 12 hours are where flow batteries will provide the most cost-effective, reliable and safe solution. Such applications include integrating an increasing amount of renewable energy into the grid, enabling microgrids and offgrid power supply solutions, demand-charge reduction, as well as utility-scale grid balancing and transmission and distribution upgrade deferral.

"With 15 years since research and development began, seven years since the commercial launch of its first system and now having installed more than 100 units, the CellCube has successfully been established as the world's most commercially advanced flow battery,” Radvak stated.

American Vanadium pointed out that the energy storage market was acknowledging that flow batteries are a better solution for large-capacity, long-duration energy storage than lithium-ion and other batteries. This was recently supported by a comment from Bill Gates in his White Paper entitled Energy Innovation, which he presented at the recent Paris Climate Change Conference, the United Nations Framework Convention on Climate Change's twenty-first Conference of the Parties, where he announced his Breakthrough Energy Coalition.

In this paper, Gates made a compelling case for investing in energy innovations and examined three innovations that would help achieve an "energy miracle". These include flow-batteries that could last longer and hold more energy than lithium-ion batteries and those that could be used to help store energy created by solar cell and wind power.

With several international, successfully realised and independent reference projects, GES was a supplier of proven and commercially available vanadium-flow battery systems. Thus far, GES's installed base of CellCube energy storage systems had accumulated almost two-million hours of continuous operation.

CellCube's patented flow battery technology could deliver significant benefits to the modern energy marketplace, resulting from a lifetime of 20 years or more and unlimited cycles, achieving a low cost of electricity and low total cost of ownership compared with other storage technologies. The battery systems are specifically designed for delivering reliable power up to 10 MW, with stable energy capacity for long storage durations of between two and 12 hours.

The company advised that, as vanadium-flow batteries do not present a fire hazard and do not explode, and its vanadium electrolyte is reusable, the vanadium-flow battery is a true clean and green technology.