Cellufuel, the company developing a biomass facility at the site of the former Bowater Mersey paper mill, is working hard to finalize a $5 million funding round, half of which is equity investment from private sources.

The Halifax-based company hopes to have the demonstration facility in Brooklyn, near Liverpool, N.S., operating late this year of early or early in 2015. Cellufuel then hopes to move on to a larger commercial facility, possibly in Claire, N.S., near the southern tip of the province.

“We have the Canadian license (to the technology) and we’re looking at Nova Scotia first,” said CEO Chris Hooper in an interview last week. “We know Nova Scotia. We know the various wood baskets and the people, and that helps to de-risk the process.”

Cellufuel came to light two years ago after the Bowater Mersey plant shut down, and the provincial government announced new industry would go on the former site. It highlighted Cellufuel because it is commercializing the production of biofuel from wood-based biomass – a technology already in use in Europe.

The Liverpool-area facility, financed in part from a $1.5 million loan from the provincial government, will be the company`s first plant producing bio-diesel from wood, and it plans to establish other, larger plants if its processes prove successful.

The project is capital intensive, and the Atlantic Canada Opportunities Agency announced in March the company would receive a $500,000 loan through its Business Development Program.  Hooper said Cellufuel is now wrapping up a $2.5 million round of equity financing, which includes investment from a regional venture capital fund and a strategic partner.

Once the new financing is in place, Cellufuel plans to order the equipment for the Brooklyn plant, which should be installed at the latest by early 2015. Hooper said the company wants to run the facility for about 2000 hours of “credible operation” to hone the processes, then decide on the construction of the first commercial facility.

Once that first commercial plant is up and running, the company plans to convert the Brooklyn plant to a research and development facility. Hooper said last year the company hopes to eventually have about 10 plants within five to six years producing $200 million in annual revenue.

“If this business case is sound, there’s going to be a lot of capital to support this build-out,” he said.