Eqtec Regulatory News (EQT)

7 September 2020

EQTEC plc

("EQTEC", the "Company" or the "Group")

Co-Development and Option Agreement for Southport Hybrid Energy Park Project, Southport, Merseyside, UK

EQTEC plc (AIM: EQT), a world leading gasification technology solutions company for waste-to-energy projects, is pleased to announce it has signed a Co-Development and Option Agreement (the "Agreement") with Rotunda Group Ltd. ("Rotunda") and its subsidiary Shankley Biogas Ltd. ("Subsidiary" or "SPV") in respect of the Southport Hybrid Energy Park project (the "Project").

Highlights

· EQTEC and Rotunda enter into an agreement to jointly develop a waste management project, to be held in a Project SPV, which EQTEC has the option to acquire.

· EQTEC will be responsible for contributing 100% of the development costs pre-financial close (currently estimated at c.£500,000) and receive, at financial close, a return on the funds invested in the form of a development fee, no less than two times the funds invested by EQTEC.

· Rotunda has the option to participate in the Project's development capital and receive a proportional fee.

· Rotunda will receive a consideration of £100,000 from EQTEC, pursuant to the Agreement, in consideration for the exclusive option for EQTEC to acquire the Subsidiary, which will be treated as a development cost of the Project.

· The exclusivity period will be for 12 months and can be extended by mutual agreement of the parties.

· Under the Agreement, EQTEC will seek additional planning permission such that EQTEC's advanced gasification technology can be applied to the Project to make it capable of converting over 55,000 tonnes annually of refuse derived fuel ("RDF") waste, which would be created by the proposed plant and otherwise destined for landfill or incineration, generating an estimated additional 6-8MW of 'green' electricity.

· EQTEC estimates that the additional capacity for the thermal conversion of waste, utilising the Group's advance gasification technology, has the potential to generate additional revenues for the Project SPV of c.£70 million in electricity sales and, potentially, up to £15 million in heat sales over a 20 year period, and save over £80 million in disposal costs.

David Palumbo, CEO of EQTEC, commented:

"I am delighted to announce this exclusive partnership to develop the hybrid energy park in Southport, Merseyside, UK, which underlines EQTEC's strategy of engaging in partnerships with strong local players in energy infrastructure which are already in advanced stages of the planning and permitting process, and where EQTEC can add value with its proven, proprietary and patented advanced gasification technology and solutions. In this way, EQTEC can significantly improve both the environmental impact and the economics of many traditional waste-to-energy facilities, whilst potentially delivering attractive returns to EQTEC and our shareholders.

"EQTEC recently raised £10 million to focus on developing projects like this, which have the potential to provide local communities and companies with a credible and commercially attractive alternative to landfill and incineration for residual municipal and commercial waste with much less of an environmental impact, whilst creating local jobs. EQTEC is selectively growing its pipeline of potential projects in the UK, as well as internationally, to help ensure that it can deliver attractive risk adjusted returns for our shareholders and wider value to stakeholders."

EQTEC signed a Memorandum of Understanding ("MOU") with Rotunda, the owner of a plot of land at Watts Industrial Estate, Crowland Street, Southport, Merseyside, which currently has planning permission for a waste recycling facility, an anaerobic digestion facility, and 9MW of electrical generation with 2MW of battery storage (the "Project"), exporting 11MWe to the grid annually. The Project has qualified for the UK Government's Renewable Heat Incentive Scheme. After completing its initial due diligence, EQTEC has entered into the Agreement pursuant to which Rotunda has granted the Company exclusivity to enter into a potential transaction wherby EQTEC can obtain full ownership of the Project from Rotunda via EQTEC's acquisition of the Subsidiary.

In consideration for the granting of exclusivity, EQTEC will pay Rotunda £100,000, which, should a transaction be completed, will be deducted from the final purchase price for the Project. The exclusivity runs for 12 months and can be extended by mutual agreement. The proposed purchase price for the Project is £382,000 (£282,000 net). In addition, the SPV will lease the land from Rotunda for a period of 23 years with a potential five year extension, whereby the lease fee (approximately £400,000 per annum) will be set up as a profit share agreement. Any such transaction will be subject to further due diligence, definitive agreements and funding.

The existing planning permission for the Project provides for the construction and operation of a waste management facility for municipal, commercial and industrial waste for 80,000 tonnes of annual residual waste, an anaerobic digestion plant, biogas injection into the National Gas Transmission System and 9MW electrical generation with 2MW battery storage, and to sell 11MW to the grid.

Under the Agreement, EQTEC will now seek additional planning permission such that EQTEC's advanced gasification technology can be applied to the Project to make it capable of converting over 55,000 tonnes annually of RDF waste, which would be created by the proposed Project plant and otherwise destined for landfill or incineration, generating an additional 6-8MW of 'green' electricity.

EQTEC estimates that the additional capacity for the thermal conversion of waste, utilising the Group's advance gasification technology, has the potential to generate additional revenues for the Project SPV of c.£70 million in electricity sales and ,potentially, up to £15 million in heat sales over a 20 year period, and save over £80 million in waste disposal costs.

EQTEC and Rotunda have been in initial discussions with the local authority, which, in EQTEC's view, has been supportive and is keen to have such infrastructure as an alternative to incineration technologies.

EQTEC believes that the proposed Project, if financed and constructed, subject to entering into definitive agreements, and with the addition of EQTEC's advanced gasification technology, would significantly lower the environmental impact of large local industrial users, whilst potentially enabling these industrial users to make significant energy cost savings and creating new jobs during construction and once in operation.

Ricky Watts, CEO-Owner of Rotunda, commented:

"Rotunda secured planning on the proposed Project site some time ago and we have been looking for a partner who can deliver and operate a waste-to-energy facility to our high standards and bring employment and expertise to the local area. EQTEC's advanced gasification technology has the potential to significantly improve the environmental and economic impacts of this Project for the benefit of the local community and large industrial energy users alike. Together with EQTEC, we look forward to continuing to work closely with all local stakeholders to help ensure this project secures additional planning and gets built."

This announcement contains inside information as defined in Article 7 of the EU Market Abuse Regulation No 596/2014 and has been announced in accordance with the Company's obligations under Article 17 of that Regulation.

ENQUIRIES

About EQTEC plc

EQTEC is a world leading gasification technology partner with proven proprietary patented technology for cost effective waste-to-value applications.

EQTEC designs and supplies advanced gasification solutions that have a higher efficiency product offering and are modular and scalable from 1MW to 25MW. EQTEC's solutions are independently proven to process over 50 different types of feedstock, including municipal waste, agricultural waste, biomass and plastics. EQTEC's solutions produce a uniquely pure high-quality synthesis gas (syngas), that is capable of being used for the widest applications in the creation of energy, hydrogen and biofuels.

Proprietary technology design together with deployment and maintenance capabilities mitigate the risks when using third party equipment. EQTEC's Technology Integration capabilities enable the Group to lead collaborative ecosystems that build sustainable, waste elimination and green energy infrastructure.

The Company is quoted on AIM (ticker: EQT) and the London Stock Exchange awarded EQTEC the Green Economy Mark that recognises listed companies with 50% or more of revenues from environmental/green solutions.

Further information on the Company can be found at www.eqtec.com