Powerhouse Ener Regulatory News (PHE)

9 August 2013 PowerHouse Energy Group plc (the "Company" or "PowerHouse" or "the Group") Powerhouse completes acquisition of the remaining 70% of Pyromex to create global waste to energy group * Powerhouse completes acquisition of the remaining 70% of Pyromex not already held by the company. * Powerhouse and Pyromex combine to create best of breed Waste-to-Energy solutions to focus on small to medium sized modular efficient waste solutions deliverable on a global scale. * The acquisition allows for the rapid commercialisation of the technology and early cash-flow with the first waste to energy units to be sold by Q1 2014. * Focus on upgrading of the Munich Waste-to-Energy plant, to expand cash-flow, and create a show-case facility. * New opportunities are anticipated with increased growth in Europe & Asia with an office opening in 2014 in Singapore Powerhouse is pleased to announce that it has entered into a contract toacquire total control of Pyromex Holding, AG and its subsidiaries. By combiningthese companies together Powerhouse is launching a global Waste-to-Energysolution group, utilising patented modular Ultra High Temperature gasificationtechnology. By focusing on near-term sales of 5 tonne and 25 tonne-per-day Pyromex units,and expanding into larger build-own-operate ventures over the next 12 months to24 months, the new combined company is poised to create an aggressive, dynamic,business model with significant growth prospects. Powerhouse is positioned to see early cash-flow based upon the sale of thesmaller 5 tonne per day Pyromex units which Powerhouse have two (2) unitsalready near completion, with one undergoing factory testing. The founder of Pyromex, Peter Jeney, says, "I believe that the Pyromex UHTreactor is a world-changing technology. We needed a strong partner that wouldjoin with us and help us create the commercial success we have been working forover the past 15 years. We believe we finally have that in Powerhouse. Havingshared challenging times, and having rebuilt our foundations, we are convincedthat working together with Powerhouse we can build the world-wide organisationnecessary to bring our solutions to the market. We are ready to deliver thistechnology on a massive scale." Keith Allaun, Executive Chairman of Powerhouse says: "This is the first step inthe process to fully realise the commercial potential of the Pyromex Ultra-HighTemperature (UHT) gasification technology and bring the best of renewableWaste-to-Energy products to the market. "We are convinced that a Powerhouse and Pyromex merger, can bring the greatestvalue to our customers and our shareholders whilst building a much largercompetitive company capable of delivering waste to energy on a global scale." Background Pyromex UHT is a novel technology that smokelessly converts municipal,industrial, and hospital wastes (among others) into a valuable synthesis gas. This "syngas" can be utilised in the creation of highly commercial products(many of which currently use fossil fuels in their creation); it can becombusted to create clean electricity; and it can power the regeneration ofhydrogen fuel cells in the delivery of hyper-efficient electrical service. Thedemand for high-quality synthesis gas has been increasing and the ability tocreate this gas, efficiently and economically from waste, in this wayPowerhouse believes is a significant breakthrough. The efficiency of the Pyromex system is such that it is extremely favourableand profitable when compared to most other "renewable" options on the market.This efficiency, coupled with the economic advantages of diverting waste fromlandfills, and eliminating transport costs, makes the Powerhouse/Pyromexsolution very compelling, and potentially very profitable. One of the first points of focus for the company will be the commercialisationof their 25 tonne per day Pyromex waste gasification operation that is locatedat an environmental waste transfer facility in Munich. Having operated as apilot and demonstration plant for several years, the Eitting (Munich) UltraHigh Temperature Gasification facility is undergoing an over-haul to implementthe latest advances in the Pyromex reactor technology. It will be commissioninginto full commercial operation by Q3 2014. Plans are also under way to doublethe size of the Munich facility over the next two (2) years which will greatlyexpand the company's cash flow. The Waste-to-Energy market is growing due to increased environmental awarenesswith new multi-million dollar projects being announced on a monthly basisaround the world. However it isn't only the largest of projects that areappropriate for a Powerhouse/Pyromex solution, but rather the growing need for"enterprise" and "community" based solutions that economically fit the needs ofa corporation, a hospital, or a neighbourhood. Based on continued growth in Asia, and the maturing of EU waste regulations andU.S. climate mitigation strategies, a recent report by SBI Energy claims thatby 2021 the annual global market for waste to energy technologies will exceed$27 billion. Each year the world generates more than 1.9 billion tonnes of waste, most ofwhich end up in landfill, allowed to decay and release methane, carbon dioxide,odours, groundwater quality pollutants, or dumped at sea. However, according to SBI Energy, locked inside that waste is approximately24.5 quadrillion Btu (718,024 GWh) of energy - enough heat to generate about10% of the electricity consumed annually around the globe. Barry Weir, Pyromex's Director of Operations says "Cleanly creating electricityto power a community, while eliminating the need to truck waste to landfillfacilities, is only one of our strengths. "The Pyromex process is completely free from smoke, noxious emissions, andtoxins. Our UHT reactor eliminates them and our down-stream syngas handlingallows us to generate electricity with a significantly lower CO2 and NOx impactthan competing solutions." Deal Terms The Company has entered into a contract to acquire Pyromex from Mr. Peter Jeney("the Seller") purchasing the remaining 70% interest in Pyromex Holding AG notalready held by the Powerhouse Group (Powerhouse already holds 30% of Pyromex).For the consideration comprising €500,000 in cash and 60,172,400 new OrdinaryShares, equivalent to 21% of currently issued share capital in Powerhouse ("theConsideration Shares"). In addition, the Company has granted to the Seller a fee of 10% calculated byreference to the manufacturing costs of the gasification reactor (only)excluding all other equipment in the facility. The Fee (known as the TechnicialAdvisor Fee) shall be paid over a period of five (5) years and shall not bepaid in the event where the Seller is also otherwise entitled to any othercompensation arising from the sale of any unit by the Company or anySubsidiary. Additionally, no Technical Advisor Fee shall be owed with respectto the sale of the first initial two (2) five-tonne-per-day Pyromex units. The Seller will gain a board seat (single seat only) on the Powerhouse Board,for so long as the Seller holds 15% or more of the issued share capital of theCompany in which case, he shall nominate an appropriate non-executive director,not being himself, to the Board. Issue of Consideration Shares Under the authorities granted to the directors at the Annual General Meeting on8 November 2012, the directors have the power to allot 59,998,900 new OrdinaryShares. Accordingly, 59,998,900 of the Consideration Shares have been allotted,conditional on admission to trading on AIM, to the Seller, and the balance ofConsideration Shares for the Pyromex purchase will be allotted after the nextgeneral meeting of the Company at which time an appropriate resolution will beproposed to enable such shares to be allotted to the Seller. Application has been made for the 59,998,900 new ordinary shares to be admittedto trading on AIM. Admission of such shares is expected to become effective anddealings are expected to commence on AIM on 16 August 2013. Application for theadmission to trading on AIM for the remaining 173,500 Consideration Shares willbe made in due course. Funding The Pyromex merger has been fully funded via the existing convertible noteagreement that Powerhouse has with Hill-Grove Investments Pty Ltd (aspreviously announced by Powerhouse). The loan is unsecured, repayable on 18 June 2014 and carries interest of 15%per annum. Hill-Grove has the option at any time to convert the loan in part orwhole at a conversion price of 1p per share. Under the terms of the facilitythe principal amount can be increased at the sole discretion of Hill-Grove. Hill Grove Investments has already provided the further €500,000.00 under thisfacility, which is used to satisfy the cash consideration of the Pyromexpurchases and agreed that the Company may draw down further sums to meetworking capital requirements per the terms of the convertible loan. "This is a long awaited outcome" says Mr. Allaun, "It's the outcome on whichwe've been working diligently for months. I'd like to thank our partners atPyromex for the tremendous effort they've made and our commercial team forbringing this transaction to fruition. Opportunities are expanding in theWaste-to-Energy market, and the future looks great for the unified team ofPowerhouse and Pyromex. I look forward to updating you on future projects asthey develop." Information on Pyromex Holding AG Pyromex Holding AG, which is based in Zug, Switzerland, owns the rights to apatent-pending low emission waste to energy gasification system and is theholding company of Pyromex AG, its principal subsidiary. Further details of thePyromex system are contained in the Admission Document published by the Companyon 31 March 2011, a copy of which is available on the Company's websitewww.powerhouseenergy.net. Prior to this acquisition, the Group owned 30 per cent. of the issued sharecapital of Pyromex Holding AG. None of the accounts for the years ended 31 December 2011 or 31 December 2012for Pyromex Holding AG or Pyromex AG have been audited. In the year ended 31December, 2012 the draft unaudited management accounts of Pyromex AG showedthat the company incurred a loss of CHF 569,225. The Directors of PowerHouseconsider the commercial continuation of Pyromex would be at risk without theinfusion of the working capital provided by Powerhouse. Accordingly, theDirectors consider that the value of the assets of Pyromex Holding AG wouldhave been negligible at 31 December 2012. For additional information please contact: PowerHouse Energy Group plc Keith Allaun +44 (0) 20 7079 4402 Sanlam Securities UK Limited (NOMAD and Broker) David Worlidge +44 (0) 20 7628 2200

Website: www.powerhouseenergy.net.