7 July 2016 – business update

Construction of the ENVIA Energy GTL plant in Oklahoma City is said to be progressing well.  This will act as the commercial reference plant for Velocys’ technology and is therefore key to the company’s progress.  All modular process units have been set in place on site. System integration, piping and electrical work is ongoing and between 140 and 150 personnel are currently working on-site.  A subcontract with Ventech for operations, commissioning and start-up planning and execution and the  secondment agreement with ENVIA will generate over $0.7m of revenue in the current financial year.

The company continues to progress the opportunities in its commercial pipeline as outlined in its recent Annual Report. An example of this is Red Rock Biofuels, which is developing a biomass-to-liquids plant using forestry waste as feedstock in Lakeview, Oregon, USA.  Progress continues with regards to permitting, financing and offtake agreements and the jet fuel that will be produced by the plant has been fully contracted to Southwest Airlines and FedEx.  Velocys’ part of an engineering studyfor a project being developed by a national gas company in Central Asia that is seeking to develop its stranded gas reserves has been completed.  An opportunity with a major fuels player in the US also remains active, the third-party project developer is making progress and the air permit for the plant has recently been issued.  However, a project covering waxes and other products at Ashtabula has been put on hold for now.  We continue to rate the shares as a BUY.