LIHU‘E, Kauai — Leaders at Gay & Robinson and Pacific West Energy on Friday signed what G&R’s Alan Kennett called a “term sheet” enabling Pacific West to lease the Kaumakani mill and boiler, and the Nawiliwili shipping and storage terminal.

“We’re willing to work with him (Pacific West President and CEO William M. Maloney) and lease him that if his project moves forward,” said Kennett. “We’re prepared to lease our assets to him if he moves forward.”

Maloney said Thursday night during a presentation at the Apollo Kaua‘i meeting at the Lihu‘e Civic Center Mo‘ikeha Building that the signing was expected before week’s end, and that a purchase-power agreement with Kaua‘i Island Utility Cooperative could be finalized before the end of the month.

On Friday afternoon, Maloney said he is not at liberty to discuss financial terms of the agreement signed earlier that day, but did say the document covers terms of the transaction and sets parameters for his company moving forward with ambitious, long-range plans to grow sugar for export and/or burning to produce ethanol or other forms of alternative energy, and other plans.

Lots of other things have to happen before Pacific West can move in, Maloney said.

“He needs more land,” said Kennett, adding that Maloney is negotiating with the state Department of Land and Natural Resources and state Department of Hawaiian Home Lands and private entities for acreage in addition to what is available from G&R.

Of G&R’s roughly 7,000 acres from Hanapepe to Waimea, 3,400 have been leased to Dow Agronomics for corn, with Pacific West anticipating to lease 4,250 acres to resume growing of sugar, Maloney said Thursday.

The company is also seeking to lease around 4,000 acres of state land in Kekaha and mauka of Kekaha for sugar, tree crops and other biomass plantings, and eventually seeks to lease around 15,000 acres of Westside land for the project, said Maloney.

“The land is out there,” he said.

While he would not divulge specific numbers in the agreement with G&R, Maloney did say phase one of the multi-faceted project involves investment of $100 million, at least a portion of which he hopes to secure through a low-interest loan or loans from the U.S. Department of Agriculture’s Rural Utilities Service.

The RUS loaned a Kaua‘i citizens group enough money to help them buy the island’s electric utility, then called Kaua‘i Electric and now KIUC. Officials at KIUC are assisting Pacific West in accessing that federal, long-term, low-interest financing, Maloney said.

The U.S. Department of Energy also has a loan-guarantee program, and Pacific West is also “in discussions with several potential equity partners,” said Maloney during a question-and-answer portion of his presentation at the Apollo Kaua‘i meeting.

“I don’t anticipate any problems at all in this process,” he said of financing.

Phase one projects include investing in efficiency improvements in agriculture and mill operations for improved feedstock preparation and sugar and energy yields; expanding sugar-cane cultivation to idle former sugar lands; developing biomass (trees for wood chips, etc.) on non-sugarcane suitable lands; modifying the existing G&R boiler and installing a new boiler; and installing new steam turbine generators.

Pacific West appears to have existing, in place, on Kaua‘i, just about all that is needed to make this venture a reality, Maloney said.

“The goal of this project is to make it a 100 percent Kaua‘i project,” said Maloney, who hopes to offer jobs to the 300-plus former G&R workers who lost their jobs when the last sugar harvest came in last month.

Maloney said a new ethanol-production facility at the G&R mill site could be operational by March 2011, though he was reluctant to discuss specific timelines as such timelines are dependent on various governmental approvals, including an OK from the state Public Utilities Commission.

The goal is to move production of “green” electricity from G&R’s historic total of 10 million to 15 million kilowatt-hours a year to 150 million kwh annually, he said.

The goal is also to produce 15 million gallons of ethanol a year, he said. Currently, Kaua‘i drivers buy between 3.5 million and four million gallons of ethanol a year at the pump, and the state imports 40 million to 45 million gallons of ethanol a year, said Maloney.

State law mandates that gasoline sold at service stations be at least 15 percent ethanol. Residents and visitors use between 45 million and 50 millions of gas a year, so the proposed Kaumakani ethanol plant could provide all the ethanol needed for Kaua‘i gas stations and then some, he said.

The business plan for Pacific West is one that always maintains the possibility of either making ethanol or producing sugar, or both, “based on relative economics,” said Maloney.

The Nawiliwili sugar-storage terminal is needed for Pacific West’s plans either for sugar for export, or for storage purposes, he said.

The sugarcane operation would be a bit different than what Kaua‘i is used to, as the cane will be harvested in a green state, and won’t be burned in the fields as was historically done on the island, he said.

All water used in the process will be recycled for irrigation purposes, and the new growing and harvesting process will use less water as well, he said.

A fertilizer produced during the ethanol-production process restores needed potassium to the soil, he said.

Carbon dioxide produced by the burning of bagasse may be in demand by those growing algae as an alternative-energy fuel, he said.

Maloney said he has been working on this plan for 10 years. “One of my great regrets is how long this has taken,” he said.

“Good luck,” said one of the 20 people attended the Apollo Kaua‘i meeting.

“Thank you. I know we’re going to need it,” Maloney said.