Velocys invited to apply for USDA loan guarantee

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

Money cash dollars

Velocys Plc

48.00

12:29 29/06/17
-0.52%
-0.25
  • 12,922.67
  • -0.57%-73.57
  • Max: 13,167.21
  • Min: 12,895.26
  • Volume: 0
  • MM 200 : n/a
16:44 29/06/17
  • 964.05
  • 0.05%0.52
  • Max: 967.63
  • Min: 963.68
  • Volume: 0
  • MM 200 : n/a
16:59 29/06/17

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

17:03 Mayan sees full-year loss increase on Mexico impairments

Mayan Energy reported increased full-year losses as a result of impairments against the value of its US-based and its investment at Shoats Creek, Mexico.

15:48 Utilitywise takes financial hit due to energy under-consumption

Independent utility cost management consultancy Utilitywise announced on Thursday that it had been made aware of “apparent material levels of under-consumption” in certain contracts placed with one of the major energy companies dealt with by the group.

16:06 Supergroup posts FY profit rise early after employee theft

Supergroup has been forced to release some highlights from its preliminary results for the year to 29 April as an external party may have had sight of a draft of the numbers following a random theft from an employee.

15:41 Wey Education launching online language school

Educational services provider Wey Education announced on Thursday that it was planning to expand its activities by opening an online language school using the IT platform newly developed for its mainstream online schools business, in September.

15:30 FTSE 250 movers: DS Smith rallies on acquisition; JD Sports out of fashion

London's FTSE 250 was down 0.8% to 19,312.45 in afternoon trade.

15:25 FTSE 100 movers: Banks and miners rally; Micro Focus hit by CS note

London's FTSE 100 was down 0.4% to 7,359.69 in afternoon trade.

14:35 Sector movers: HSBC lead banks higher after US unit passes stress tests

Banks pushed higher, tracking gains in their North American peers overnight on the heels of the latest US central bank stress test results and as government bond yields around the world continued their march higher.

14:16 Walgreens ditches Rite Aid acquisition

Walgreens Boots Alliance has ditched plans to buy rival Rite Aid, agreeing instead to buy 2,186 stores from the company and three distribution centres and related inventory for $5.2bn in cash.

13:41 Ilika granted three US patents

Solid-state battery technology and materials developer Ilika announced the grant of three patents covering catalysts for hydrogen fuel cells in the US on Thursday.

13:35 Initial US weekly jobless claims edge higher

Layoffs in the US continued to hold at record low levels last week, the latest set of official weekly figures revealed.