TIDMVLS
RNS Number : 0598H
Velocys PLC
04 April 2022
4 April 2022
Velocys plc
("Velocys" or the "Company")
Velocys Business Update
Notice of results
Velocys plc (AIM: VLS), the sustainable fuels technology
company, is pleased to provide the following update.
During 2021 we saw the achievement of a number of important
objectives in our growth strategy culminating in two multi-year
Sustainable Aviation Fuel (SAF) offtake agreements; the selection
of our technology for an e-fuels project commissioned by the
Government of Japan; and a significant capital raise to be used to
increase the delivery capacity of Velocys' technology to unlock
client sales with a view to achieving our target of net positive
cashflow during 2024.
Since the year end, we have completed the sale and purchase
option agreement over the company owning the land for the Altalto
project site; appointed Andy Bensley as Global Head of Business
Development and Technology Delivery along with other key technical
role appointments at our catalysis and reactor facility in Ohio. We
are moving into 2022 with a clear focus on executing our agreed
commercial strategy.
Project update - Bayou Fuels
Worley, our international engineering contractor, has completed
the interim engineering (FEL-2) work during Q1 2022 and Koch
Project Solutions continue to provide project development support
to our SAF biorefinery project in Mississippi, ahead of
finalisation of contract execution strategy and FEED award subject
to financing.
The site landlord; the local development authority in
Mississippi, is well under way to complete the construction of the
final section of the levee protecting the biorefinery site by the
Mississippi river. Completion is expected later this summer.
We are eagerly anticipating clarity on government policy support
from both the US and UK Governments to provide sufficient long term
revenue stability for biorefineries converting sustainable residues
into renewable fuels. This is a condition for successful capital
formation for both projects. We are currently anticipating the US
Congress to pass favourable legislation including the provision of
a SAF Producer Tax Credit, indexed to the carbon intensity of the
fuel, in the summer which will allow for the launch of the Series A
fundraise for Bayou Fuels in the second half of this year. We
expect the UK Government to need some additional time to provide
matching competitive incentives, which would therefore enable
Altalto to go into a Series A fundraise in H1-23.
In anticipation of such policy support, w e have launched an RFP
process with a selection of US investment banks and advisers in
relation to services including underwriting tax-exempt municipal
bonds, mezzanine, and equity to finance the final development stage
and subsequent construction of the Bayou Fuels biorefinery in
Mississippi.
A full 15-year SAF and environmental credit offtake agreement
with Southwest Airlines and a 10 year SAF and environmental credit
offtake MOU with IAG were entered into in November 2021. As
planned, IAG and Velocys are conver ting the MOU into a fully
termed offtake agreement with a view to having that completed later
in Q2 . A further announcement will be made in due course.
Operations and business development update
We have recently secured a 15 year lease for a modern and
sustainable facility in Columbus, Ohio where we will be
consolidating our catalysis services, microchannel reactor core
assembly and technology licensing under one roof. In line with our
recent Placing Circular, this will involve a capital investment of
up to GBP1.5 million in the building enhancements to fit our
specific needs and GBP4.8 million in reactor core assembly
automation enabling steady output of at least 12 complete FT
reactors per year. This dovetails with the expiry next year of the
10 year lease of our current technology centre in Columbus,
Ohio.
We are also pleased to announce the potential sale of the
undeveloped Ashtabula site in Northern Ohio which was acquired as
part of the Pinto Energy acquisition in 2014 and was intended to be
used for a GTL plant at the time. The Ashtabula Port Authority has
provisionally agreed to acquire the site for an undisclosed price
subject to further due diligence by the purchaser.
We have deepened our collaboration with TOYO regarding biomass
to SAF (BtL) and power to SAF (PtL) solutions for the energy
transition in Japan. The commercial scale NEDO2 BtL project is
currently in FEL2 stage and progressing to plan and the Power to
Liquids demonstration project is advancing as planned. Meanwhile
our Business Development pipeline continues to grow with a number
of feasibility studies with biorefinery plant developers ongoing to
accelerate these projects, which we expect to mature into
commercial contracts in due course.
Project update - Altalto
Further to our announcement on 24 March 2022, we, together with
our partner British Airways are delighted to welcome Foresight
Group LLP into the Altalto Immingham municipal solid waste to jet
fuel project in Immingham where Velocys is providing project
development services, engineering and FTS technology.
Over the last few months, we have completed site engineering ,
geotechnical survey and integration of carbon sequestration of
biogenic CO(2) in preparation for the connection of the Altalto
plant, when built, into the new East Coast Carbon Capture and
Storage (CCS) cluster, which is being developed by a consortium of
major corporations including Drax, BP and Equinor .
This leading CCS cluster, designed to sequester 40kt of CO(2)
per day, is scheduled to come on stream around the same time as the
Altalto plant is expected to be commissioned , in 2027, subject to
funding of both Altalto and the CCS cluster. O ur application to
BEIS to participate in the East Coast CCS cluster has met the
eligibility criteria and passed through to Phase 2 of the
evaluation process to identify and sequence CCS clusters suitable
for deployment in the mid-2020s.
We have benefitted from the GBP1.9m Green Fuels Green Sky grant
awarded by the DfT in August 2021, which has largely covered our
costs for the essential site engineering and other site-related
work through to Q2/22.
Notice of publication of Velocys plc Annual Report and Accounts
2021
The Company's results for the year ended 31 December 2021 are
expected to be announced during the week commencing 16 May 2022. A
further announcement will be made nearer the time.
Henrik Wareborn, CEO of Velocys, said:
"The Velocys group is well positioned at the nexus of energy
security and the net zero transition. Through the deployment of our
patented demonstrated FT and catalyst technology, we provide
decarbonisation solutions for hard-to-abate sectors such as
commercial aviation, to supply negative carbon intensity fuels to a
irlines and
others committed to net zero targets, while also reducing import dependency on fossil fuels.
"The improved air-quality impact of the synthetic fuels our
customers produce using our patented technology is an additional
driver of growth in demand for our technology. Synthetic Paraffinic
Kerosene, SPK, produced using Velocys' proprietary super-active
catalyst and FT Synthesis, FTS, contains less than 15ppm sulphur
compared to up to 3000ppm sulphur for conventional fossil jet fuel.
This in turn sharply reduces the amount of PM2.5 (2.5 micron size
Particulate Matter) generated by the combustion of the fuel."
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as
amended by regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310.
---------
For further information, please contact:
Velocys
Henrik Wareborn, CEO
Andrew Morris, CFO
Lak Siriwardene, Director of Communications +44 1865 800821
Panmure Gordon (UK) Limited (Nomad and Joint
Broker)
Hugh Rich (Corporate Broking)
Emma Earl (Corporate Finance)
John Prior (Corporate Finance) +44 20 7886 2500
Shore Capital Stockbrokers Limited (Joint
Broker)
Henry Willcocks (Corporate Broking)
Toby Gibbs (Corporate Advisory)
James Thomas (Corporate Advisory) +44 20 7408 4090
Radnor Capital (Investor Relations)
Joshua Cryer
Iain Daly +44 20 3897 1830
Buchanan (Financial PR)
Helen Tarbet
Simon Compton +44 20 7466 5000
Notes to Editors
Velocys is an LSE-listed, international sustainable fuels
technology company, traded on the AIM, providing clients with a
technology solution to enable the production of negative Carbon
Intensity synthetic, drop-in fuels from a variety of waste
materials. SAF ('Sustainable Aviation Fuel') is the only
commercially available, permanent alternative to fossil aviation
fuels.
The technology is IP-protected in all major jurisdictions.
Two reference projects (Altalto, UK, and Bayou Fuels, US) are
designed to accelerate the adoption and standardise the Velocys
proprietary Fischer Tropsch (FT) technology with an integrated end
to end solution, including renewable power and carbon
sequestration. Velocys is enabling commercial scale SAF production
in response to the clean energy transition.
Velocys technology pathway is enabling the next generation of
low carbon sustainable fuels with significant additional positive
air quality impacts.
www.velocys.com
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