VLS.L Regulatory News (VLS)

News release

Velocys plc

("Velocys" or "the Company")

30 October 2017

Oklahoma City plant on track to reach final capacity

Velocys plc (VLS.L), the renewable fuels company, is pleased to announce that production at ENVIA Energy's Oklahoma City gas-to-liquids plant has reached an operational capacity of 200 barrels per day (bpd), passing a key capacity milestone.

The plant will continue ramping up to its target operational capacity of 250 bpd. Finished, saleable products (premium renewable waxes, diesel and naphtha) are meeting customer product specifications and sales are being made to product offtakers.

In order to meet this milestone and support continued operations, Velocys has extended the loan arrangement it has made available to ENVIA by $0.7m to $13.4m. All other terms of the loan, which has a 10% coupon, remain unchanged.

Meeting this milestone enables the reversal, at the 2017 year end results, of the impairment of the loan facility as stated recently in the Company's interim results and once the plant is generating positive cash flows will ensure the servicing of the Velocys loan. Implicit to this achievement is that ENVIA has met the operational requirements for the long term land lease.

David Pummell, CEO of Velocys, said:

"We are pleased that ENVIA's Oklahoma City plant has reached the capacity milestone of 200 bpd. We have confidence that the talented on-site team will continue to deliver the plant improvements needed to achieve further increases in output. ENVIA's customers' tankers now arrive regularly on site and load product from the plant. The aim is now to optimise operations to maximise production and plant availability going forward, whilst always assuring safety and minimising the risk of impact to the environment.

"At ENVIA we have successfully demonstrated that our Fischer-Tropsch reactor and catalyst are performing in line with performance requirements at a commercial scale. The Velocys technology being used in Oklahoma City will be deployed in the biorefineries we and our partners are developing, significantly reducing technology risk and improving the likelihood of success at those plants."

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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.

www.velocys.com