REG - Velocys PLC - £27m UK Government grant for Altalto project

VelocysAnnouncement

12/12/2022 07:00

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RNS Number : 2948J  Velocys PLC  12 December 2022

12 December 2022

News Release

 

 

 

Velocys plc

("the Company")

Award of £27m grant for Altalto Immingham Sustainable Aviation Fuel project

 

Significant non-dilutive project funding from UK Government Advanced Fuels
Fund to advance UK Altalto Immingham reference project

 

 

Velocys plc (VLS.L), the sustainable fuels technology company, announces that
its wholly owned subsidiary, Altalto Immingham Ltd., has been awarded a grant
of up to £27 million from the UK Department for Transport's ("DfT") Advanced
Fuels Fund for the Altalto Immingham Sustainable Aviation Fuel ("SAF")
project. The purpose of this project, which is being developed under an
existing Joint Development Agreement between Velocys and British Airways PLC
("British Airways") is to deliver a commercial waste-to-SAF plant in
Immingham, UK. The grant will allow Altalto Immingham to deliver the Front-End
Engineering Design ("FEED") stage of the project.

 

The grant funding will be distributed over the grant period from December 2022
to March 2025 and is conditional upon receipt of private sector matched
funding. Altalto Immingham has obtained Letters of Intent from a number of
existing and new potential partners for the private-sector matched funding
requirement with the first tranche of private funding due to be in place by
April 2023.

 

Velocys' cash contribution into the Altalto Immingham project over the two
years from April 2023 is not expected to exceed £8 million, and this sum may
be reduced by bringing in additional investors into the project.

 

The grant funding will be used for the completion of the project FEED, which
will incorporate the technology packages of the licensors (including Velocys)
and develop the basis for the Engineering, Procurement and Construction
("EPC") contract. In parallel, the commercial agreements required to support
the plant will be put in place. All of these will support the Final Investment
Decision ahead of commencement of construction, which is targeted to occur in
2025, consistent with the UK Government's ambition. In line with its
commercial strategy, Velocys will charge license fees for the utilisation of
its proprietary technology at commencement of construction. Based on this
timing, commissioning of the Altalto Immingham project is expected to begin in
2027.

 

Velocys has previously received grants for the Altalto Immingham project of
£1.7 million from the DfT's Green Fuels, Green Skies competition and a series
of grants totaling £934,000 from the Future Fuels for Flight and Freight
competition, the predecessor to Green Fuels, Green Skies.

 

The £165 million Advanced Fuels Fund provides grants to support the
development of commercial-scale SAF plants that are at an advanced stage,
enabling them to become ready for investment and construction. The funding is
aimed at achieving the UK Government's stated ambition of having at least five
commercial scale SAF plants under construction in the UK by 2025. The key
objective of the Advanced Fuels Fund is to kick-start the UK advanced fuels
sector with the commercial deployment of innovative fuel production
technologies that are capable of significantly reducing near-term UK aviation
carbon dioxide emissions.

 

Henrik Wareborn, CEO, said:

 

"We are extremely pleased the UK Government has awarded Velocys this important
grant which will deliver the FEED stage for our Altalto Immingham reference
project accelerating the commercial deployment of Velocys' technology and
delivering cashflow. We welcome this clear commitment from Government to
having commercial SAF plants built in the UK. We are delighted that a number
of large commercial companies have indicated their support for the project
through indications of matched funding contribution and the provision of
services to progress the project."

 

For further information, please contact:

 Velocys                                               +44 1865 800821

 Henrik Wareborn, CEO

 Philip Sanderson, CFO

 Lak Siriwardene, Director of Communications

 Panmure Gordon (UK) Limited (Nomad and Joint Broker)  +44 20 7886 2500

 Hugh Rich (Corporate Broking)

 Emma Earl (Corporate Finance)

 John Prior (Corporate Finance)

 Shore Capital Stockbrokers Limited (Joint Broker)     +44 20 7408 4090

 Henry Willcocks (Corporate Broking)

 Toby Gibbs (Corporate Advisory)

 James Thomas (Corporate Advisory)

 Radnor Capital (Investor Relations)                   +44 20 3897 1830

 Joshua Cryer

 Iain Daly

 Buchanan (Financial PR)                               +44 20 7466 5000

 Helen Tarbet

 Simon Compton

 

 

--Ends-

 

Notes to Editors

 

Velocys is an LSE-listed, international sustainable fuels technology company,
traded on the AIM, providing customers with a technology solution to enable
the production of negative Carbon Intensity synthetic, drop-in fuels from a
variety of waste materials. Synthetic fuel is the only commercially available,
permanent alternative to fossil aviation fuels. The Velocys technology is
IP-protected in all major jurisdictions.

 

British Airways has an option to acquire a share of Altalto Limited, the 100%
owner of Altalto Immingham Limited, from Velocys.

 

Two reference projects (Bayou Fuels, US, and Altalto, UK) are designed to
accelerate the adoption and standardise the Velocys proprietary Fischer
Tropsch (FT) technology with an integrated end to end solution, including
renewable power and carbon sequestration.

 

Velocys is enabling commercial scale synthetic fuel production in response to
the clean energy transition, with significant additional positive air quality
impacts.

www.velocys.com (http://www.velocys.com)

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