Australia-based Frontier Energy has entered into a binding agreement to acquire Canada’s Waroona Energy.

Under the deal, Frontier Energy will purchase the remaining 80% stake it does not already own in the Canadian company in an all-stock transaction. 

The shareholders of Waroona will receive one new Frontier share for every 4.27 of Waroona shares held at a price of C$0.069 ($0.05049) per Waroona share.

After the closure of the deal, shareholders of Frontier will own around 69% of the new company while the remaining 31% stake will be held by Waroona’s shareholders.

The merged entity will hold development approvals for a total solar generation capacity of 355MW, including Frontier’s 114MW stage-one solar capacity and Waroona’s 241MW solar capacity.

Based on freehold land ownership and grid connections, the merged company will have the potential to expand capacity to more than 1GW.

Frontier Energy managing director Sam Lee Mohan said: “Frontier shareholders are a step closer to realising significant value from this transaction, with the terms of the Letter of Intent now documented in a binding agreement, with the implementation date remaining December 2023.

 “Combining Frontier and Waroona sets the scene for a final investment decision in 2024 and provides the opportunity to develop a larger project in the fastest and most capital efficient manner, while also creating the critical mass required to secure financing.”

The new company is expected to have A$22m ($14.03m) in cash, which will help it to be fully funded until the final investment decision is taken.

The combined entity also aims to create a fully integrated green hydrogen and renewable energy project with initial early cash flow coming in from the solar plant’s development.

Waroona Energy chairman Tony Wonnacott said: “Waroona and Frontier have been working extremely closely through a Collaboration Agreement since re-listing, that has seen significant work completed on both companies’ respective projects, including the advancement of our respective solar projects, Frontier’s green hydrogen production strategy and their Australian Government Hydrogen Headstart submission, and more recently the study commenced by Waroona to develop a green hydrogen peaking plant, which is due to be completed later this year.”