Shares of Kapolei-based Hoku Scientific Inc. jumped $3.80, or 123 percent, to close at $6.90 yesterday on news of a major sales agreement with Japan's Sanyo Electric Co. Ltd.

Sanyo will purchase up to $370 million in polysilicon from a Hoku plant that will be built in Pocatello, Idaho. The $260 million plant, operated by Hoku Materials, will produce polysilicon, which is a highly pure form of silicon and a key material used in most solar-power systems.

Under terms of the deal, Sanyo will purchase polysilicon over a seven-year period beginning in January 2009.

"This is a major step forward in our plan to launch Hoku Materials and execute our polysilicon business strategy," said Dustin Shindo, chief executive for Hoku Scientific. "We are pleased to have established this relationship with Sanyo, a global leader in the solar cell and module business."

Hoku Scientific develops and manufactures fuel cell membranes and membrane electrode assemblies for stationary and automotive proton exchange membrane fuel cells. The company is currently planning to expand its business to manufacture solar modules and polysilicon for the solar market.

The contract provides for an initial direct deposit of $2 million to Hoku and requires that Sanyo place about 30 percent of the total purchase amount in an escrow account with Bank of Hawaii.

Under the agreement, the funds will be released to Hoku in installments, subject to Hoku's successful achievement of certain production milestones and other conditions.

Reach Sean Hao at shao@honoluluadvertiser.com.