Scirocco Energy Regulatory News (SCIR)

09 December 2021

Scirocco Energy plc

("Scirocco Energy" or "the Company")

SCIROCCO ENERGY UK LIMITED ("SEUK") signs H2OPE System technology exclusivity with SEM Energy Limited ("SEM")

Scirocco Energy (AIM: SCIR), the AIM investing company targeting attractive assets within the European sustainable energy and circular economy markets, is pleased to announce that, its subsidiary, SEUK has signed an exclusivity agreement with leading sustainability technology provider, SEM. This exclusivity will be for the benefit of SEUK, its affiliates and its investee company Energy Acquisitions Group Limited ("EAG").

SEM (https://sem.world/), is a leading developer of technologies within the circular economy sector. It is anticipated that SEM will provide EAG with digestate management and nutrient recovery technology, known as H2OPE System.

The system processes digestate, a by-product of the biogas process, into nutrient dense, high-quality fertiliser, nutritionally balanced growth media and a sustainable peat substitute which can be used within a range of growing environments across the sector. It also produces re-usable water, and significantly reduces CO2 emissions compared to traditional practices. Trials are also taking place for the use of the material to make biodegradable plant pots for nurseries and growers, removing the reliance on single use plastic.

Key terms of the agreement:

· SEM will exclusively supply to SEUK, its Affiliates, EAG (the "Scirocco Parties"), the H2OPE System for the application to digestate generated from AD plants within the UK and Ireland;

· The exclusive period runs until end June 2023, unless extended by the parties in accordance with the agreement;

· SEUK will use reasonable endeavours to purchase or procure that the Scirocco Parties purchase a minimum of five units of the H2OPE System within the exclusivity period;

· If Scirocco Parties do not meet certain order requirements during the exclusivity period, the exclusivity may fall away, but Scirocco Parties are still able to order units of the H2OPE System from SEM during the term on a non-exclusive basis.

EAG intends to apply the technology to its operating plant at Greenan, as well as working with other owners of other operational AD plants to assess the potential benefits of funding the installation of a 'bolt-on' nutrient recovery system on a merchant basis.

The addition of the H2OPE System technology to existing AD plants has the potential to deliver an additional revenue stream through the creation of high value co-product, depending on the level of refinement required for a specific market sector while simultaneously reducing the carbon intensity of the process.

Commenting on the agreement, Scirocco CEO Tom Reynolds said:

"This represents the next step in our investment strategy supporting investment in 'Circular' within the agricultural sector, alongside our existing investment in EAG. The application of this kind of technology will help optimise the operational and environmental performance of our current and expected future AD plants, as well as providing a new revenue stream that can be scaled in line with our portfolio. The exclusive nature of the agreement provides Scirocco Energy and its investee company, EAG, with a valuable head start in deploying a value adding technology to its asset base as it grows."

Chris Kerr, MD of EAG added:

"Firstly, this technology enables EAG to implement its active optimisation programme for its current assets, driving value through each of the businesses, and also solves the issue of digestate spreading to land, which in some cases is already saturated with nutrients. Recovery of nutrients from the biogas process is the perfect opportunity to provide growers and their customers in the fresh produce sector with a sustainable and effective alternative to fossil fuel derived fertilisers.

"Reducing carbon through the food chain is something we have been focussed on for a number of years now, and we believe the end-to-end nature of the SEM technology will provide the entire fresh produce sector in the UK and Ireland the opportunity to introduce a genuinely circular economy into their business models."

John Jones, CEO and Founder of SEM Ltd added:

"Our engagement with EAG and Scirocco Energy is fantastic news for SEM. Their understanding of what the market needs are, and exactly where our technology fits within that space has made the deal straightforward. It has been really exciting working up the plans for the new plants at which the technology is expected to be deployed throughout 2022.

"At SEM we have a vision of a waste-free circular economy both now and in the future, securing our planet's health and wealth for generations to come. Our H2OPE technology is set to have a hugely positive impact on the environment, as well as on the agriculture industry, by maximising the conversion of waste co-products into valuable by-products, while significantly cutting CO2 emissions.

"Both EAG and Scirocco Energy share this vision - a common alignment which will ensure our strong future working relationship gets off to the best possible start. We can't wait to see where the next part of the journey takes us all."

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