Annual general meeting (AGM) statement
Velocys plc (VLS.L), the company at the forefront of smaller scale gas-to-liquids (GTL), is hosting its AGM today at 10.45am. At the AGM, David Pummell, CEO will make the following comments:
"2016 was a busy year of change for Velocys. We invested significant effort into the commissioning and start-up of ENVIA Oklahoma, we identified our new growth strategy and have made considerable progress with its implementation. Internally we have driven greater simplicity and focus on what we do and we believe we have created the required platform to deliver future shareholder value.
"Fischer-Tropsch (FT) product is being produced at ENVIA and we are pleased that the operational data from the FT units meet the set performance requirements at commercial scale. We are expecting production of first saleable product shortly and ENVIA will continue to ramp up production to full capacity over the coming months.
"Our new strategy is for Velocys to be at the heart of building plants that convert woody biomass to high specification renewable diesel and jet fuel for the US market, our primary focus market. We have a world class, proven technology and highly skilled operations and engineering teams that, with our partners, will successfully design, build, commission and start up these commercial plants. Our route to the production of renewable fuels from woody biomass uses cost effective, abundant and entirely sustainable feedstock, allowing our solution to be highly scalable to meet the increased demand for renewable fuels. All of this contributes to our differentiated value proposition to the market.
"We believe our business model will enable Velocys, with its strategic partners, to build a supply leadership position in this market over the next 10 years, by delivering economically differentiated, financed, operations ready plants, and do it reliably again and again.
"The US renewable fuels market is a high value market with substantial potential for volume growth, now, and for many years to come. The estimated consumption of renewable diesel in California in 2016 was around 300 million gallons. By 2030 around 1 billion gallons of the total diesel supply would need to come from renewable diesel to meet State obligations. Increasing pressure from public opinion and legislation to curb greenhouse gas emissions and reduce pollution drives this market. This has led to long term structural incentives for renewable fuels in the form of fuel credits at both federal and state level, greatly enhancing the revenues from a Velocys plant. Successful delivery of the Velocys strategy will result in the construction of multiple plants, to meet this fundamental need to replace fossil fuels.
"There is strong momentum within the business. On the engineering front we have engaged IHI E&C to carry out the pre-FEED engineering study for our first biomass-to-liquids (BTL) plant and this remains on track. We have selected TRI as our strategic partner for gasification technology and we are now in the process of selecting other licensed technologies. We recently announced that the US Department of Agriculture (USDA) has invited Velocys to participate in Phase 2 of its loan guarantee programme for up to $200 million of debt for our first BTL plant. Securing this commitment would financially de-risk plant 1 and create an attractive platform to secure the required additional equity from investors. A key requirement for the USDA qualification is the successful completion of a joint demonstration of our FT technology combined with TRI's gasification technology; our FT system is now on site at TRI's facility in North Carolina where the demonstration will take place. We have engaged the global leading project finance bank, Sumitomo Mitsui Banking Corporation (SMBC) as the lender of record and financial advisor. SMBC will lead the syndication of the debt funding portion in 2018. All these carefully planned initiatives have the aim of securing project equity funding and reaching final investment decision during the course of 2018.
"The Company is transforming - moving away from being 'a FT technology company' to being Velocys, 'the renewable fuels company'. The time is now right for Velocys to take forward a bold growth strategy and I am confident that we are the right company, with the right technology, at the right time to enter this attractive market and deliver sustainable growth. In five years' time I want Velocys to be known as the company that delivers renewable fuels plants to its customers, cost effectively and at low risk. Much work still needs to be done to successfully deliver our strategy but we continue to work towards our goal with confidence and in a focused and professional way."
For further information, please contact:
Velocys
David Pummell, CEO
Susan Robertson, CFO
+44 1235 841 700
Numis Securities (Nomad and joint broker)
Alex Ham
Stuart Skinner
Jamie Lillywhite
Tom Ballard
+44 20 7260 1000
Canaccord Genuity (Joint brokers)
Henry Fitzgerald-O'Connor
Ben Griffiths
+44 20 7523 8000
Camarco (financial communications & PR)
Billy Clegg
Georgia Edmonds
+44 20 3757 4983
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
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. 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.
