RED.L Regulatory News (RED)

THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 596/2014

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1 November 2019

redT energy plc ("redT", the "Company")

Interim funding secured

Proposed merger with Avalon Battery Corporation and fundraising progressing

redT energy plc (AIM:RED), the energy storage technology company, is pleased to announce that, further to the announcement on 25 July 2019 of the proposed merger with Avalon Battery Corporation ("Avalon") (the "Merger") and the proposal to raise at least US$30m (£23m1) of new funds (the "Fundraising"), redT has agreed an interim loan of up to US$2.5m (£1.9m) (the "Interim Loan") from Avalon to fund ongoing working capital requirements and expenses relating to the Merger via a monthly drawdown schedule. The Interim Loan from Avalon is funded by up to US$5m (£3.9m) being made available to Avalon by Bushveld Minerals Limited ("Bushveld"). Bushveld is an integrated primary vanadium producer based in Johannesburg and traded on the AIM market of the London Stock Exchange ("AIM"). Its subsidiary, Bushveld Energy Limited, is an energy storage solutions provider that supports a number of companies in the vanadium redox flow battery sector.

As announced in July, the Merger will constitute a reverse takeover ("RTO") under the AIM Rules for Companies, which involves considerable expense and also time during which redT will continue to consume cash. The Interim Loan will enable redT to complete the due diligence process, finalise the negotiation of the Merger and progress the Fundraising. redT's Board expects that, with the Interim Loan in place, the Company and Avalon will move swiftly towards completing the Merger and the Fundraising and, as a larger and financially robust business, embark upon its exciting development and growth strategy. The merged business will be a leading player in the growing energy storage market. With operations in North America, Europe, and Asia and sales offices in Australia and Africa, the merged business will have a global footprint able to capitalise on the significant opportunities for energy storage presented by the worldwide shift to renewable energy.

In addition to the Interim Loan, redT has entered into a separate agreement with Bushveld (the "Bushveld Agreement") under which, if the Merger completes successfully, the US$5m provided to Avalon by Bushveld will convert into ordinary shares in the merged business ("Ordinary Shares"). Bushveld will become a shareholder in the merged business on the same terms (subject to certain conditions) as other investors participating in the Fundraising. Bushveld will have the right but not the obligation to invest further funds into the merged business as part of the Fundraising and on the same terms as other investors, at a maximum price of 1.65p per Ordinary Share.

Bushveld will, upon completion of the Merger and the Fundraising, receive a commitment fee of 20 per cent. of the principal amount of its loan to Avalon (the "Commitment Fee"). Bushveld will also receive interest at a rate of 12 per cent. per annum which, together with the Commitment Fee, will roll up and convert into Ordinary Shares on completion of the Merger and the Fundraising. The Ordinary Shares received by Bushveld will be issued at a maximum price of 1.65p per Ordinary Share and on the same terms as other investors participating in the Fundraising.

redT has also agreed, subject to the completion of the Merger and the Fundraising, to grant Bushveld a right of first refusal to supply vanadium products to the merged business for two years, and thereafter subject inter alia to Bushveld continuing to beneficially own at least five per cent. of the issued Ordinary Shares. Bushveld will also, subject to it continuing to beneficially own at least five per cent. of the issued Ordinary Shares, have for one year from completion of the Merger and the Fundraising, the right to nominate a member of the Board of the Company. Bushveld will retain that right after one year provided it beneficially owns at least 10 per cent. of the issued Ordinary Shares. In addition, for so long as Bushveld beneficially owns at least 20 per cent. of the issued Ordinary Shares, it shall have a right to nominate two members of the Company's board.

In the event that the Merger and the Fundraising do not complete successfully, the terms of the Interim Loan provide that the principal amount of up to US$2.5m, together with interest at 12 per cent. per annum, becomes repayable to Avalon six months after any announcement by the Company that the Merger is no longer proceeding. redT has granted security over certain of its assets to Avalon as part of the Interim Loan.

Trading in redT's ordinary shares on AIM will remain suspended until either the publication of an admission document in relation to the Merger or confirmation is given that the Merger is no longer proceeding. The parties remain committed to publishing the admission document as soon as possible.

Based on redT's latest cash flow forecasts, which assume the full Interim Loan of US$2.5m is received, the Board expects that the Company will have sufficient cash to complete the Merger and the Fundraising process in the first quarter of 2020.

The Merger and the Fundraising remain subject inter alia to further due diligence by each party, definitive legal agreements being reached and a successful Fundraising to provide the necessary funds for the enlarged business. The Fundraising and the Merger will be subject to the approval of redT's shareholders and the Merger itself is also subject to the approval of the shareholders of Avalon.

Further announcements will be made in due course.

Information on Avalon and the combined business

Avalon Battery Corporation is a Delaware Corporation with offices in the San Francisco area, operations in Vancouver and a low-cost manufacturing presence in China. Avalon's technology is very similar to that of redT and the combination of the two businesses will enable the merged business to reduce costs and accelerate product development, combining the best features of each company's products and reducing the costs of manufacture. Both companies already have a substantial sales opportunity pipeline, which the combined business will be well placed to supply with its world-leading products.

Neil O'Brien, Executive Chairman of redT commented:

"I am delighted that we have secured this interim funding. It enables us to progress the Merger planning with Avalon together with our fundraising and I hope and expect that we will be able to embark on this exciting new phase in the Company's development soon. We believe the market for storage assets to support renewable energy targets is developing rapidly and the combination of redT and Avalon will be a leading player in this market. We are looking forward to working with Bushveld as a partner and strategic investor once we have completed the merger."

Larry Zulch, Chief Executive Officer of Avalon commented:

"The merger of Avalon and redT has become only more compelling as we learn about each other while working through the merger and due diligence process. Bushveld Energy provided funding to Avalon with the intention that some would be used by redT to support this transaction, an example of Bushveld Energy's broad support of the vanadium redox flow battery market. We are grateful for Bushveld's support and look forward to building a business that conclusively realizes the potential of our combined capabilities in renewable energy storage."

1 US$ denominated amounts converted at US$/£ rate of £1.293 on 31/10/2019

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Notes to Editors

About redT energy

redT energy plc are experts in energy storage, specialising in the design, manufacture, installation and operation of energy storage infrastructure which creates revenue alongside reliable, low-cost renewable generation for businesses, industry and electricity distribution networks. Using patented vanadium redox flow technology to store energy in liquid, redT's own energy storage machines can be run continually with no degradation: charging and discharging for over 25 years, matching the lifespan of renewable assets in on-grid, off-grid and weak-grid settings.

redT's energy storage solutions, developed over the past 15 years, address today's changing energy market by providing a flexible platform for time shifting surplus renewable power, securing electricity supplies and earning revenue through grid services. The company has customers in the UK, Europe, sub-Saharan Africa, Australia and Asia Pacific. redT energy plc is admitted to trading on AIM (AIM:RED) and has experts located in the UK, Europe, Australia and Africa. For more information, visit www.redtenergy.com

For sales, press or investor enquiries, please contact the redT team on +44 (0)207 061 6233.

About Avalon

Avalon Battery was founded on the principle that productized vanadium-based flow batteries will revolutionize energy projects and play a critical role in a renewable energy future. With operations in Fremont, California, USA and Vancouver, Canada, and a low-cost manufacturing presence in Suzhou, China, Avalon produces dependable, safe, and economical energy storage systems.

Avalon believes the foundations of its product excellence are its technology and engineering team. Since 2005, its team has been one of the global leaders in design, production and deployment of vanadium flow batteries2; the team now counts over 140 years' experience in vanadium flow battery development, has been involved in the deployment of over 15MWh of vanadium flow batteries since 2005, and has invented over 50 related independent patents. www.avalonbattery.com

2 Based on searches of the US DOE Global Storage Database for electro-chemical, vanadium flow batteries understood to be in operation as at 29 October 2019.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

MAR

The information contained within this announcement is considered by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No.596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information will be considered to be in the public domain.