VLS.L Regulatory News (VLS)

News release

Velocys plc

("Velocys" or "the Company")

5th February 2016

ENVIA Energy GTL plant project progress

Velocys plc (VLS.L), the company at the forefront of smaller scale gas-to-liquids (GTL), is pleased to announce that ENVIA Energy's EPC contractor, Ventech Engineers, has signed the final major contract, covering installation of process modules, related piping and ancillary equipment, for ENVIA's Oklahoma City GTL plant to be located adjacent to Waste Management's East Oak landfill site.

ENVIA Energy is a Joint Venture, whose members include a subsidiary of Waste Management, Inc (NYSE:WM), Ventech Engineers International LLC, and Velocys plc (LSE:VLS), formed in March 2014 to produce renewable fuels and chemicals from biogas and natural gas using GTL. 

Velocys has made available to ENVIA Energy up to US$12 million of further funding as part of a stakeholder capital contribution, following which Velocys expects that this commercial reference plant will be fully funded through construction, completion and operation. Of the US$12 million committed, US$3 million is Velocys' equity contribution and US$9 million will be provided as a loan secured on the project. The terms of the loan provide Velocys the opportunity to gain a greater equity share of the project and greater influence in the commissioning, start-up and operations of the plant. The funding will be accommodated from the Company's balance sheet, which as at 31st December 2015 had £38 million of cash. This loan will have a 10% coupon, and the Company has the opportunity for early repayment of the loan after the plant is operational.

Fabrication of the modular process units by Ventech Engineers at their fabrication facility in Pasadena, Texas is essentially complete. The manufacture of Velocys' full-scale reactors and the initial catalyst charge to be used at the plant were completed in 2015. Mechanical completion of the GTL plant is expected in mid-year 2016.

David Pummell, CEO of Velocys, said:

"ENVIA's Oklahoma City project is continuing to meet key milestones. The additional funding Velocys has released demonstrates both the Company's commitment to the project, which will provide an important commercial reference plant for the use of Velocys' technology, and the confidence we have in its success."

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Notes to editors

About Velocys

Velocys is the company at the forefront of smaller scale gas-to-liquids (GTL) that turns natural gas or biomass into premium products such as diesel, jet fuel, waxes and base oils. Smaller scale GTL adds value to shale gas and bio-waste, and makes stranded or flared gas economic - an untapped market of up to 25 million barrels per day.

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. The Company's standardised modular plants are easier to ship and faster to install, at lower risk, even in the most remote or challenging locations. Together with world-class partners, Velocys works flexibly to unlock gas resources of 15,000 to 150,000 mmbtu per day, allowing more companies to take advantage of more opportunities.

Velocys plc is listed on the AIM market of the London Stock Exchange (LSE: VLS). The Company is well capitalised and has a multi-disciplinary staff of around 100 operating from its commercial centre in Houston, Texas, USA and technical facilities near Oxford, UK and Columbus, Ohio, USA. Its commercial reference plant, which will be located adjacent to Waste Management's East Oak landfill site, is expected to reach mechanical completion in mid-year 2016.

www.velocys.com

Think Smaller™. Velocys is changing the way fuels are made.

About Ventech

Ventech Engineers International LLC is a global leader in the design and fabrication of process modules for the oil and gas industry, with over 350 modules, encompassing 25 different hydrocarbon processes, built in Ventech's Pasadena, Texas Fabrication Facility. Ventech's modularized process units significantly reduce field costs and minimize work and disruption at the project site. Ventech's modularized projects have shorter schedules, better safety records, and are more cost effective compared to traditional stick-built EPC projects. The corporate office and main fabrication complex are located in Pasadena, Texas. Additional offices are located in Alabang, Philippines and Ankara, Turkey.

www.ventech-eng.com

About Waste Management

Waste Management, based in Houston, Texas, is the leading provider of comprehensive waste management services in North America. Through its subsidiaries, the company provides collection, transfer, recycling and resource recovery, and disposal services. It is the largest residential recycler and also a leading developer, operator and owner of landfill gas-to-energy facilities in the United States. The company's customers include residential, commercial, industrial, and municipal customers throughout North America.

www.wm.com