Site confirmed for first U.S. biorefinery

RNS Number : 1700U

Velocys PLC

20 October 2017

 

News release

Velocys plc

("Velocys" or "the Company")

20 October 2017

Site confirmed for first U.S. biorefinery

Velocys plc (VLS.L), the renewable fuels company, is pleased to announce that it has signed a site option agreement with Adams County in the State of Mississippi for its first U.S. biorefinery to be located in Natchez, Mississippi.

Velocys has been offered economic development incentives from Adams County estimated to be worth the equivalent of $42 million. The project expects to qualify for additional incentives worth up to $15 million, provided via Mississippi's Advantage Jobs Act and other statutory tax incentives. These incentive packages would reduce the company's future tax liabilities and are subject to Velocys meeting certain minimum requirements for capital investment and local employment opportunities.

Velocys has also received commitments from Adams County worth approximately $4 million (relating to the land and upgrades to the site) and $1 million site upgrade commitments from local utility suppliers, further increasing the attractiveness of the site.

The site and local area benefits from:

·   an attractive regulatory and tax regime;

·   the availability of an abundant local supply of low cost forestry residue that will form the feedstock of the plant;

·   advantaged transportation infrastructure including barge, rail and road;

·   accessible utilities;

·   land that meets all the required criteria including space and terrain to support an industrial development;

·   a local workforce skilled in servicing the forestry industry; and,

·   a local community with facilities and amenities that will attract additional skilled personnel during construction and ongoing plant operations.

The 100-acre Natchez site was confirmed after the Company analysed a broad set of operational and tax considerations at twelve possible sites in four States in the Southeast United States. Due diligence, including site visits, was completed at each of these sites and incentive offers were received from each State in question.

The analysis lays the foundation for future biorefineries: Velocys is maintaining its list of other advantaged sites in the region, which could host plants with capacities totalling 100 million gallons over the next 10 years. Velocys remains in close contact with the economic development officials in these other States regarding the locations and timing of future renewable fuels facilities.

This announcement completes one of the work packages required for the U.S. Department of Agriculture (USDA) loan guarantee application announced in June 2017. Site permitting activities have now begun for the Natchez site.

David Pummell, CEO of Velocys, said:

"This is an important step towards the development of our first biorefinery in the U.S. to address the attractive and growing renewable fuels market. We welcome the significant support for this plant at the local level, including the future financial support that further enhances plant economics. Velocys and its partners are continuing to make significant progress towards completing other work packages needed to deliver a successful USDA loan guarantee application, which we are targeting in 2018. We look forward to updating our stakeholders on the progress of this transformational project in Mississippi."

Billy Klauser, Chief Economic Development Officer of the Mississippi Development Authority, said:

"The Mississippi Development Authority wishes Velocys continued success in their new venture in Natchez and Adams County. With its strategic location and close proximity to a major waterway, Natchez was a natural fit for this proposed capital investment of several hundred million dollars."

Mike Lazarus, President of the Adams County Board of Supervisors, said:

"We are pleased to have Velocys join our growing industrial family. These quality jobs, significant investment and purchases of area forestry products will have a huge and meaningful impact on our area and local economy."

- Ends -

For further information, please contact:

Velocys David Pummell, CEO	[phone]
Numis Securities (Nomad and joint broker) Alex Ham Stuart Skinner Jamie Lillywhite Tom Ballard	[phone]
Canaccord Genuity (Joint broker) Henry Fitzgerald-O'Connor Ben Griffiths	[phone]
Camarco (Financial communications & PR) Billy Clegg Georgia Edmonds	[phone]

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.

 

END

 

 

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