19 Jun 2017 07:00
News release
Velocys plc
("Velocys" or "the Company")
19 June 2017
Advancing towards U.S. Dept. of Agriculture Loan Guarantee
Velocys plc (VLS.L), the company at the forefront of smaller scale gas-to-liquids and biomass-to-liquids (BTL), is pleased to announce that the U.S. Department of Agriculture (USDA) has invited Velocys to submit a Phase II Application to obtain a loan guarantee for a commercial-scale biorefinery. This invitation was made after a successful Phase I Application process. The loan guarantee could apply to up to $200 million of debt as part of the total installed cost of the project.
The plant is being designed to produce approximately 19 million gallons per year (1,400 barrels per day) of renewable diesel fuel from approximately 1,000 dry tons per day of woody biomass residues in the Southeast U.S. There is an abundant supply of low-cost feedstock sourced from this region that will provide a long term strategic supply of biomass to the plant.
The USDA 9003 Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (9003 Program) enhances the economy of rural America by providing loan guarantees to biorefineries, such as those that Velocys and its partners are developing, which produce advanced biofuels. Under this program, a material portion of the project debt is guaranteed by the USDA, accelerating the timeline and financially de-risking the project to final investment decision (FID). Velocys has engaged the global leading project finance bank, Sumitomo Mitsui Banking Corporation (SMBC), as the lender of record and as its financial advisor.
The Company will now initiate the final phase of the loan guarantee process. The steps required under this process identify and mitigate risk and complete evaluation of the project. These steps match the typical development stages for biorefineries. Work is already underway on Velocys' integrated technology demonstration with its strategic gasification partner ThermoChem Recovery International (TRI), and the Front End Loading (FEL-2) study with IHI E&C, an internationally-recognized Engineering, Procurement and Construction (EPC) company.
Velocys has the goal of completing all work packages required by the USDA 9003 Program, concluding commercial negotiations such as feedstock supply and offtake agreements, securing project equity funding, and reaching FID during the course of 2018.
David Pummell, CEO of Velocys, said:
"We have made strong progress in accelerating the implementation of the first stage of our strategy as we start to deploy the additional funds raised in May. Today's announcement builds on the deployment of our technology at ENVIA Energy's plant in Oklahoma City; technology that will be used in our first biorefinery. As well as the first plant, Velocys has identified other locations in the Southeast U.S. that could host plants with capacities totalling 100 million gallons over the next 10 years.
"This announcement represents an important step in the ongoing development of the integrated plant offer that we and our partners are developing for the renewable fuels market. We remain on track to secure a conditional commitment from the USDA and this would financially de-risk our first BTL project, creating an attractive financeable solution for project investors in what we intend to be the first of many repeatable plants."
- Ends -
For further information, please contact:
Velocys David Pummell, CEO Susan Robertson, CFO
| +44 1235 841 700
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Numis Securities (Nomad and joint broker) Alex Ham Stuart Skinner Jamie Lillywhite Tom Ballard
| +44 20 7260 1000 |
Canaccord Genuity (Joint broker) Henry Fitzgerald-O'Connor Ben Griffiths | +44 20 7523 8000
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Camarco (Financial communications & PR) Billy Clegg Georgia Edmonds | +44 20 3757 4983
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Notes to editors
About Velocys
Velocys is the company at the forefront of smaller scale gas-to-liquids (GTL) and biomass-to-liquids (BTL), providing the bridge connecting stranded and low value feedstocks such as natural gas, landfill gas or biomass with markets for premium products such as renewable diesel, jet fuel and waxes.
With its partners, Velocys aims to deliver the most economically compelling conversion solution; a fully integrated offer that can be deployed at scale into the growing, attractive markets on which it focuses. Velocys technology, protected by several hundred patents in over 30 countries, is specifically designed for smaller scales, combining super-active catalysts with intensified reactor systems. Standardized modular plants can be deployed readily in a wide range of locations, and Velocys' capabilities and extensive experience deliver a proven route to operation.
Velocys plc is admitted to trading on the AIM market of the London Stock Exchange (LSE: VLS). The Company has a strong, multi-disciplinary staff operating from its commercial centre in Houston, Texas, USA and technical facilities near Oxford, UK and Columbus, Ohio, USA. First product has been produced at its commercial reference plant, which is located adjacent to Waste Management's East Oak landfill site in Oklahoma City.
www.velocys.com
About the USDA's Biorefinery Assistance Program
USDA 9003 Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program was authorized by Congress under the 2008 Farm Bill. It provides loan guarantees to capitalize on the growing opportunities in renewable energy provided by advanced biofuels. The Program is designed to assist with the commercial deployment of production technologies to produce advanced biofuels, and thereby increase the energy independence of the United States; promote resource conservation, public health, and the environment; diversify markets for agricultural and forestry products and agriculture waste material; create jobs and enhance the economic development of the rural economy.
https://www.rd.usda.gov/programs-services/biorefinery-renewable-chemical-and-biobased-product-manufacturing-assistance