AMTE.L Regulatory News (AMTE)

28 July 2022

AMTE POWER PLC

("AMTE Power", "AMTE" or the "Company")

AMTE Power selects Dundee, Scotland as preferred site for first MegaFactory as part of evolved execution strategy

"AMTE Power is enabling the UK energy transition"

AMTE Power Plc ("AMTE Power", "AMTE" or the "Company"), the developer and manufacturer of lithium-ion and sodium-ion battery cells for specialist markets, is pleased to advise that the Board of Directors has approved a new execution strategy and identified Dundee, Scotland as the preferred site for its first MegaFactory.

Focusing on high value cell manufacture enables AMTE to generate good returns at a smaller scale with associated lower capital investment, and much quicker build and commissioning timeframes. AMTE considers this as a strong stepping stone towards building GigaFactories in the future.

Highlights:

· To deliver high value cells as quickly as possible, AMTE has determined to build a MegaFactory to serve the UK renewable energy storage and electric vehicle markets where the Company has already received high levels of interest for its products.

o  The MegaFactory creates a stepping stone to construct GigaFactories in the future, meeting the huge demand for battery technology.

· The Company has selected Dundee, Scotland as its preferred site for its first state-of-the-art battery MegaFactory.

o  The MegaFactory will have the capacity to produce over 25,000 high added value batteries per day, over 8,000,000 per year. Management anticipates revenue generation of over £200 million per annum at full production, based on AMTE's customer market engagement.

o  MegaFactory is strategically important for the UK renewable energy storage industry and for the electric vehicle transition.

· The total required investment in the MegaFactory is estimated to be between £160-190 million.

o  As a first step, AMTE has received an indicative offer letter from Scottish Enterprise regarding a potential package of funding and business support which is also expected to facilitate continuing discussions with other UK State owned enterprises, including the Automotive Transformation Fund.

o  The MegaFactory is expected to be funded by a combination of grant funding, as well as traditional and government assisted debt and equity.

· MegaFactory is expected to have huge economic benefits for the surrounding region, supporting the Scottish Government's National Strategy for Economic Transformation and the UK Government's Levelling Up agenda and commitment to Net Zero by creating:

o  215 highly skilled on-site jobs;

o  800 jobs in the wider supply chain during development and operations at the MegaFactory.

· The plant is expected to be operational and in production by Q3 2025 based on current planned timings.

· AMTE will utilise its in depth cell manufacturing experience gained through operating its plant in Thurso, Scotland to create a world-leading facility in Dundee.

· Thurso remains a core manufacturing facility focused on production of AMTE's cells and developing next generation cell technologies.

Strategy:

AMTE has the ambition of delivering its high value products to market quickly and efficiently. The proposed new factory at Dundee paves the way for AMTE to rapidly scale up to mass-manufacturing volumes, enabling the Company to respond to the high levels of interest it has seen in its differentiated high added value cells in the most accelerated manner. Due to the high value nature of AMTE's products, a factory can be profitable at a smaller scale than the size of factories at multiple GWh size, benefiting from quicker commissioning time, more flexibility in location, requiring less investment and a faster path to profitability.

The construction of its first MegaFactory in Dundee would act as a template and create a platform for AMTE to rapidly scale-up the production of its higher value cells through the construction of further battery plants. The model is repeatable and is expected to enable AMTE to be flexible in meeting market demand for its differentiated cells: Ultra-High Power that has been developed with the automotive industry for high performance vehicles and Ultra-Safe for the energy storage sector being the cells attracting most advanced market interest.

Dundee MegaFactory:

AMTE Power's first proposed site for a 0.5GWh MegaFactory is Dundee. AMTE has signed a binding Letter of Intent with Michelin Scotland Innovation Parc for the reservation of the site, ahead of a formal lease agreement to be signed in Q4 2022. Located at the old Michelin factory, the project is expected to help revitalise this brownfield industrial facility, boosting the local economy. The site is perfectly suited for a battery MegaFactory with a highly skilled, local workforce, good transport links and a commitment from the Scottish Government for net zero manufacturing, and enabling the energy transition in Scotland towards achieving net zero emissions of all greenhouse gases by 2045.

Minimal planning permission is required to convert the former Michelin plant into a high-tech, modern MegaFactory reducing capital costs and meaning AMTE can start construction quickly.

The Dundee site would significantly increase AMTE's cell production capacity, complementing and building on the expertise AMTE has gained at its existing facility in Thurso, Scotland, the first site in the UK to develop and produce a commercial scale battery product.

Thurso enables AMTE to perfect the manufacturing process and anticipate what challenges or opportunities large-scale manufacturing rates might bring. Thurso remains core to AMTE manufacturing capabilities in scale-up, providing capacity to accelerate the development of next generation cells and scaled production.

This is alongside its ongoing work to develop high-performance cells at the UK Battery Industrialisation Centre ('UKBIC') in Coventry and at its Head Office in Oxford, where successful progress underpins our confidence in our future development path.

Currently, AMTE is one of the only cell manufacturers working in the UK, with commercial partnerships in place to support requirements for energy storage and specialised automotive industries.

The Market: energy storage & high-performance automotive

The market demand for battery cells is huge. Bloomberg estimates that installations of home energy storage batteries will rise from 6GWh in 2019 to 155GWh annually by 2030. Currently only five per cent of the energy used to heat our homes today comes from low-carbon sources and massive growth is expected as part of the transition to net zero in the next 15 to 20 years.

In the electric vehicle market, the UK Government has set a 2030 deadline to end the sale of petrol and diesel cars. In addition, legislation is coming into force in just two years' time which will stipulate that cars made in the EU or UK need to contain up to 50% of locally sourced materials in order to avoid tariffs. This presents a significant opportunity for AMTE.

Next steps:

The MegaFactory has received support from the UK Government's Automotive Transformation Fund ('ATF') which will help to fund the detailed planning of the Dundee factory as part of the Government's ambition to develop technology for the automotive and energy storage markets.

The total required investment in the MegaFactory is estimated to be between £160-190 million with the final funding strategy to be agreed in Q2 2023. The funding is being supported through a number of channels including indicative support from Scottish Enterprise, Scotland's national economic development agency, around a potential package of funding and business support, with the expectation that the project will receive significant amounts of additional funding offers on favourable terms. The Company will be making further announcements on progress in due course.

The plant, which is expected to create 215 highly skilled on-site jobs and a further 800 jobs in the wider supply chain, is expected to be operational in Q3 2025. The MegaFactory will see AMTE increase manufacturing volume capacity to over 8 million cells per annum, enabling the Company to respond to the high levels of interest it has seen in its differentiated high added value cells.

The Company will provide a trading update on 23 August 2022.

Kevin Brundish, CEO, AMTE Power, said:

"We are excited to announce Dundee as our preferred location for our first MegaFactory, a quantum leap for AMTE. The change in our execution strategy will accelerate our journey to mass manufacture of high value added, differentiated cells. The MegaFactory will be a platform from which AMTE can harness our advanced inhouse capabilities to build manufacturing plants to meet the huge demand for battery cells - allowing us to rapidly scale up production and fast-track the path to achieving net zero.

"Battery cells are fundamental to enabling the UK's energy transition and with this investment, we will play a key role in electrifying the vehicles, homes and industries of the future. The site at Dundee is the ideal location for a MegaFactory; it has local industry knowledge and is close to our current and future market in energy storage. We look forward to updating all stakeholders on our progress."

Councillor John Alexander, leader of Dundee City Council, said:

"This is an exciting proposal which has the potential to deliver hundreds of direct and supply chain jobs. 

"All partners are committed to delivering on the vision that we had for MSIP following the closure of the tyre factory.

"AMTE's proposed MegaFactory is a great fit with that vision and would build significantly on the successes that have already been achieved in securing tenants for the Parc. We want to be at the forefront of new technologies.

"We want to have a workforce with the right skills for future needs. And, ultimately, we want to create sustainable employment for local people.

"We look forward to working closely with local and national partners to help progress AMTE's plans and secure this major investment in Dundee." 

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

ENDS

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Notes to Editors:

AMTE Power was founded in 2013 and is a leading developer and manufacturer of lithium-ion and sodium-ion battery cells for specialist markets. In March 2021, the Company listed on the AIM market of the London Stock Exchange. The Company is focused on launching a series of next generation battery cells based on new chemistries and cell structures that are designed to solve key problems in power delivery, energy performance, and safety. These new products are targeted at a range of specialist markets including the electric vehicle industry and energy storage sector. 

AMTE Power's purpose-built cell manufacturing facility in Thurso, Scotland has the second largest cell manufacturing capacity in the UK and the Company also has a product development team based in Oxford. AMTE's proposed state-of-the-art MegaFactory in Dundee, Scotland is expected to be operational and in production by Q3 2025 and will be capable of producing over 25,000 high added value batteries per day enabling the Company to rapidly scale up cell production.

For further information visit the Company's website: www.amtepower.com