Velocys invited to apply for USDA loan guarantee

Josh White Sharecast | 19 Jun, 2017 14:07 - Updated: 14:07 | | |

Money cash dollars

Velocys Plc

36.00

17:17 18/08/17
-5.26%
-2.00
  • 12,638.82
  • -0.69%-87.44
  • Max: 12,726.26
  • Min: 12,594.16
  • Volume: 0
  • MM 200 : n/a
17:25 18/08/17
  • 999.29
  • -0.30%-3.03
  • Max: 1,002.78
  • Min: 997.68
  • Volume: 0
  • MM 200 : n/a
17:30 18/08/17

Smaller-scale gas-to-liquids and biomass-to-liquids technology developer Velocys announced on Monday that the US Department of Agriculture (USDA) had invited it to submit a Phase II application to obtain a loan guarantee for a commercial-scale biorefinery.

The AIM-traded company said the invitation was made after a successful Phase I application process.

It said the loan guarantee could apply to up to $200m of debt, as part of the total installed cost of the project.

The plant was being designed to produce approximately 19 million gallons per year (1,400 barrels per day) of renewable diesel fuel from approximately 1,000 dry tons per day of woody biomass residues in the Southeastern United States.

There was an abundant supply of low-cost feedstock sourced from this region, the board claimed, that would provide a long term strategic supply of biomass to the plant.

The USDA 9003 Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (9003 Program) enhanced the economy of rural America by providing loan guarantees to biorefineries, such as those that Velocys and its partners are developing, which produce advanced biofuels, Velocys explained in its release.

“Under this program, a material portion of the project debt is guaranteed by the USDA, accelerating the timeline and financially de-risking the project to final investment decision.

“Velocys has engaged the global leading project finance bank, Sumitomo Mitsui Banking Corporation, as the lender of record and as its financial advisor.”

The company said it would now initiate the final phase of the loan guarantee process, with the steps required under that process reportedly designed to identify and mitigate risk and complete evaluation of the project.

Those steps matched the “typical” development stages for biorefineries, Velocys claimed.

Work was already underway on Velocys' integrated technology demonstration with its strategic gasification partner ThermoChem Recovery International, and the Front End Loading (FEL-2) study with IHI E&C.

Velocys said it was aiming for its goal of completing all work packages required by the USDA 9003 Program, concluding commercial negotiations such as feedstock supply and offtake agreements, securing project equity funding, and reaching FID during the course of 2018.

“We have made strong progress in accelerating the implementation of the first stage of our strategy as we start to deploy the additional funds raised in May,” said Velocys CEO David Pummell.

“Today's announcement builds on the deployment of our technology at ENVIA Energy's plant in Oklahoma City; technology that will be used in our first biorefinery.”

Pummell said that, as well as the first plant, Velocys had identified other locations in the Southeastern US that could host plants with capacities totalling 100 million gallons over the next 10 years.

“This announcement represents an important step in the ongoing development of the integrated plant offer that we and our partners are developing for the renewable fuels market.

“We remain on track to secure a conditional commitment from the USDA and this would financially de-risk our first BTL project, creating an attractive financeable solution for project investors in what we intend to be the first of many repeatable plants.”

More news

19 Aug US close: Stocks end lower despite Bannon departure

Wall Street slipped slight lower heading into the weekend as traders tried to figure out the implications of recent events on Capitol Hill and weighed the unexpected departure of White House chief strategist Steven Bannon.

18 Aug Europe close: Stocks edge slightly higher at the end of the session

Stocks pared early losses as traders digested a terrorist attack on Barcelona overnight and monitored the news-flow coming from the White House.

18 Aug Weeky review

The FTSE 100 finished the week almost flat, up 14.02 points or 0.19%, at 7,323.98.

18 Aug London close: Risk aversion grips FTSE, stocks lower on Trump and Barcelona attacks

London's FTSE 100 index fell below a key technical level as Friday's session wore on, with travel stocks leading the retreat after the terror attacks in Barcelona and the large cabal of overseas focused companies hit by the dollar's weakness amid renewed concerns about the US Presidency.

18 Aug BowLeven appoints new director

AIM-listed oil and gas group, BowLeven announced on Friday that Matt McDonald would be appointed to the firm's board as non-executive director with immediate effect.

18 Aug Week ahead: Not everything that happens at Jackson Hole stays there

In the coming week, the spotlight will be on the Federal Reserve bank of Kansas City's Symposium in Jackson Hole, Wyoming.

18 Aug Acacia remains a 'buy' for HSBC but target price slashed

HSBC cut its target price for Acacia Mining by 47% but kept its 'buy' recommendation in place as the months-long spat with the Tanzanian government still hangs over the company.

18 Aug US open: Stocks flat heading into the weekend, political ruckus weighs

Wall Street is essentially flat heading into the weekend after the head of the University of Michigan's consumer confidence survey said recent events in Charlottesville were likely to take their toll on sentiment.

18 Aug FTSE 250 movers: Hikma still looking ill; Kaz Minerals buffs up

Hikma Pharmaceuticals shares continued their downward spiral as HSBC slashed their target price, telling clients its first half numbers contained lower guidance for generics and a tougher outlook for injectables and branded drugs.

18 Aug Calpine agrees to be acquired for $5.6bn in cash

Shares of Calpine Corporation surged after news broke that the American power generation company had agreed to be acquired by a consortium led by Energy Capital Partners.