VLS Velocys Plc

TIDMVLS

RNS Number : 2948J

Velocys PLC

12 December 2022

12 December 2022

News Release

Velocys plc

("the Company")

Award of GBP 27m grant for Altalto Immingham Sustainable Aviation Fuel project

Significant non-dilutive project funding from UK Government Advanced Fuels Fund to advance UK Altalto Immingham reference project

Velocys plc (VLS.L), the sustainable fuels technology company, announces that its wholly owned subsidiary, Altalto Immingham Ltd., has been awarded a grant of up to GBP 27 million from the UK Department for Transport's ("DfT") Advanced Fuels Fund for the Altalto Immingham Sustainable Aviation Fuel ("SAF") project. The purpose of this project, which is being developed under an existing Joint Development Agreement between Velocys and British Airways PLC ("British Airways") is to deliver a commercial waste-to-SAF plant in Immingham, UK. The grant will allow Altalto Immingham to deliver the Front-End Engineering Design ("FEED") stage of the project.

The grant funding will be distributed over the grant period from December 2022 to March 2025 and is conditional upon receipt of private sector matched funding. Altalto Immingham has obtained Letters of Intent from a number of existing and new potential partners for the private-sector matched funding requirement with the first tranche of private funding due to be in place by April 2023.

Velocys' cash contribution into the Altalto Immingham project over the two years from April 2023 is not expected to exceed GBP 8 million, and this sum may be reduced by bringing in additional investors into the project.

The grant funding will be used for the completion of the project FEED, which will incorporate the technology packages of the licensors (including Velocys) and develop the basis for the Engineering, Procurement and Construction ("EPC") contract. In parallel, the commercial agreements required to support the plant will be put in place. All of these will support the Final Investment Decision ahead of commencement of construction, which is targeted to occur in 2025, consistent with the UK Government's ambition. In line with its commercial strategy, Velocys will charge license fees for the utilisation of its proprietary technology at commencement of construction. Based on this timing, commissioning of the Altalto Immingham project is expected to begin in 2027.

Velocys has previously received grants for the Altalto Immingham project of GBP1.7 million from the DfT's Green Fuels, Green Skies competition and a series of grants totaling GBP934,000 from the Future Fuels for Flight and Freight competition, the predecessor to Green Fuels, Green Skies.

The GBP165 million Advanced Fuels Fund provides grants to support the development of commercial-scale SAF plants that are at an advanced stage, enabling them to become ready for investment and construction. The funding is aimed at achieving the UK Government's stated ambition of having at least five commercial scale SAF plants under construction in the UK by 2025. The key objective of the Advanced Fuels Fund is to kick-start the UK advanced fuels sector with the commercial deployment of innovative fuel production technologies that are capable of significantly reducing near-term UK aviation carbon dioxide emissions.

Henrik Wareborn, CEO, said:

"We are extremely pleased the UK Government has awarded Velocys this important grant which will deliver the FEED stage for our Altalto Immingham reference project accelerating the commercial deployment of Velocys' technology and delivering cashflow. We welcome this clear commitment from Government to having commercial SAF plants built in the UK. We are delighted that a number of large commercial companies have indicated their support for the project through indications of matched funding contribution and the provision of services to progress the project."

For further information, please contact:

 
 Velocys 
  Henrik Wareborn, CEO 
  Philip Sanderson, 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 
 

--Ends-

Notes to Editors

Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing customers with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. Synthetic fuel is the only commercially available, permanent alternative to fossil aviation fuels. The Velocys technology is IP-protected in all major jurisdictions.

British Airways has an option to acquire a share of Altalto Limited, the 100% owner of Altalto Immingham Limited, from Velocys.

Two reference projects (Bayou Fuels, US, and Altalto, UK) 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 synthetic fuel production in response to the clean energy transition, with significant additional positive air quality impacts.

www.velocys.com

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