VLS.L Regulatory News (VLS)

News release

Velocys plc

("Velocys" or "the Company")

26 January 2017

Establishment of a strategic alliance with TRI

Velocys plc (VLS.L), the company at the forefront of smaller scale gas-to-liquids (GTL), is pleased to announce that it has signed a memorandum of understanding (MoU) with ThermoChem Recovery International, Inc. (TRI), establishing a strategic alliance. TRI will be Velocys' preferred supplier of gasification systems for its biomass-to-liquids (BTL) plants. The agreement will see the alliance partners rapidly deploy an integrated biorefinery offering that combines Velocys' Fischer-Tropsch (FT) technology with TRI's proven gasification technology.

TRI is a leading provider of steam reforming gasification systems suitable for woody biomass and other waste feedstocks. TRI's multi-feedstock demonstration plant in Durham, North Carolina has run for over 10,000 hours, and has successfully shown that the syngas it produces is well-suited to the FT process and upgrading to ASTM-certified fuels. Moreover, its systems have been selected for and deployed on various commercial North American projects including to Norampac, a division of Cascades Paper, at its Trenton facility in Ontario.

The partners have already started a joint development of the engineering design for a 1,400 barrel per day BTL plant to produce renewable diesel and jet fuels from woody biomass. TRI will support Velocys and its partners to further optimise overall plant cost and the financing of BTL plants through, for example, accessing governmental loan guarantee processes and securing independent engineering reviews.

A key next step will be an integrated technology demonstration; Velocys will relocate its skid-mounted pilot plant from Ohio to the TRI facility in North Carolina. The joint demonstration has been selected for support as part of a competitive award granted by the US Department of Energy for the development of smaller scale integrated biorefineries.

The agreement is not exclusive on either party. The Company expects the terms of the MoU to be reflected in legally-binding documentation within the coming months.

This is the second strategic partnership that has been agreed since a review of Velocys' strategy was completed in 4Q 2016. A core theme of the new strategy is to deliver, jointly with partners such as TRI, a "one-stop-shop" offer to customers - a fully integrated and financed, cost effective and operations-ready plant solution.

David Pummell, CEO of Velocys, said:

"We are excited to be working with TRI who we believe have best-in-class gasification technology. We believe our integrated technology solution will be a proven and financeable route to cost-effective plants producing premium renewable fuels. It represents a very significant step forward in the development of a fully integrated offer to our customers, increasing our control over delivery through world class partnerships. I look forward to providing further details of this deal and other strategic alliances that will support our new strategy."

Dan Burciaga, President & CEO of TRI, said:

"We know that the close integration of syngas conversion technologies with TRI's gasification platform can yield superior integrated biorefineries and are convinced that the high intensity Velocys FT process will provide further enhancements. Multiple independent engineers have validated a number of waste to fuels projects that were proven in our demonstration plant. The TRI team looks forward to working with Velocys and its partners at an accelerated pace towards commercial renewable fuel facilities and, as part of that collaborative work, we intend to integrate the Velocys FT process into our demonstration facility within the year."

- Ends -

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Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.

Notes to editors

About Velocys

Velocys is the company at the forefront of smaller scale gas-to-liquids (GTL), 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. Standardised 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. Its commercial reference plant, which is located adjacent to Waste Management's East Oak landfill site in Oklahoma City, is currently being commissioned.

www.velocys.com

About TRI

Founded in 1996 and headquartered in Baltimore, Maryland, TRI is a global leader in steam reforming, an ultra-clean and high-efficiency gasification technology well-suited to a range of biorefinery and power generation applications. TRI's proprietary process converts cellulosic feedstocks (including post-sorted municipal solid waste (MSW), bark, forest residuals, agricultural waste, energy crops and low rank coals) into a synthesis gas ("syngas") which can be converted into biofuels, biochemicals and power. TRI partners with world-class technology and EPC providers and licenses its proprietary technologies - including feeder, gasification and gas clean-up systems - as well as providing specialised equipment and engineering services to the global renewable energy sector.

www.tri-inc.net/

About gasification

Gasification is the first stage in the biomass-to-liquids process that converts woody biomass and other solid feedstocks into premium fuels. Gasifiers convert carbon-containing materials into carbon monoxide, hydrogen and carbon dioxide. This is achieved by reacting the material at high temperatures (>700 °C), without combustion, with a controlled amount of oxygen and/or steam. The gas is then cleaned up and the carbon monoxide to hydrogen ratio adjusted if necessary to meet the specifications needed for input to the Fischer-Tropsch (FT) process. Finished fuels are produced following FT synthesis and subsequent upgrading.

http://tri-inc.net/steam-reforming-gasification/