Velocys signs amended agreement with Red Rock Biofuels
2/14/2019 1:48:32 PM
Velocys plc (VLS.L), announced it has agreed on a series of amendments in its licensing contracts with Red Rock Biofuels LLC (RRB), regarding RRB’s license of Velocys Fischer-Tropsch reactors and proprietary catalyst for the RRB biorefinery under construction in Lakeview, Oregon, USA. The amendments are at RRB’s request and allow it to complete the biorefinery on their desired timeline.
The amended agreement will see Velocys accelerate delivery of the first of four reactors and first four charges of catalyst. It will also reduce the firm commitment for reactors from six to four but RRB will retain an option to acquire reactors 5 and 6 until the end of 2020, for delivery at the existing contract price. These changes have a positive impact on Velocys’ near-term cash flow of an estimated $1.1 million and a decrease in revenue of nearly $3 million (out of a total contract value of approximately $15 million). Should RRB exercise its option to purchase the two additional reactors the total contract value will return to approximately $15 million. RRB remains committed to purchase a total of six charges of catalyst in 2019.
Henrik Wareborn, CEO of Velocys, said:
“We collaborated with RRB to re-optimise the original agreement to help them complete the biorefinery on their desired timeline. This is an opportunity for us to demonstrate our commitment to delivering for our client the central processing unit in their biorefinery that will convert woody biomass to renewable jet fuel and diesel in Oregon.”
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