ATLANTIS Resources is in talks with ScottishPower Renewables about combining their tidal power projects in Scotland.

AIM-listed Atlantis is the developer of the MeyGen scheme in the Pentland Firth, which has a potential capacity to generate 398 megawatts through an array of turbines on the seabed.

ScottishPower Renewables is working on schemes at the Sound of Islay and Ness of Duncansby.

The proposed transaction would see Tidal Power Scotland Holdings, the holding company for MeyGen, acquire both of the ScottishPower Renewables projects.

ScottishPower Renewables would then become a minority shareholder in Tidal Power Scotland Holdings, alongside Atlantis and Scottish Enterprise.

Sound of Islay, sited between Islay and Jura, is said to have a generating capacity of 10MW and be at an advanced stage of development. Ness of Duncansby, in the Pentland Firth and with a planned 100MW capacity, is at a much earlier stage.

A spokesman from ScottishPower Renewables said: “We are aware of interest from Atlantis Resources; however, there are no agreements in place regarding our tidal projects.”

That came as Atlantis announced it hopes to raise £2.5 million through a share placing.

It intends to place around 5.95 million shares at 42 pence each, a discount of 6.7 per cent to the 45p the stock closed at on August 19.

As well as using the funds to try to complete the ScottishPower deal Atlantis plans to put some of the money towards the next phase of MeyGen.

It is also looking at making progress on the Anglesey Skerries project in Wales and Strangford Lough in Northern Ireland.

Atlantis also said it will post a £3.4 million loss for the first six months of this year.

It said it had £2.6m in cash as of July 31 but had revenue from turbine sales, consulting revenue and grants to come in before the end of the year.