Operational update

7 April 2021

SIMEC ATLANTIS ENERGY LIMITED
("SAE", the "Company" and, together with its subsidiaries, the "Group")

Operational update

SAE is pleased to provide the following operational update across its business.

Uskmouth Power Station Conversion Project

Following the decision by the Welsh Government to 'call in' the planning application at Uskmouth, and their announced moratorium on all new energy from waste projects, SAE remains fully committed to the project and is confident the project complies with all relevant Government policies and legislation.

Built in 1959, the Uskmouth power station operated using coal until 2017, when it stopped operation, in preparation for a fuel conversion to move away from coal and return to operation using a new, more sustainable fuel, made from non-recyclable material, originally destined for landfill. The converted power station could be an important asset to Newport and Wales and the global fight against climate change. There are over 2000 coal fired power stations operating around the world today, and this number is set to increase. The ability to accelerate the global transition away from coal has significant implications and SAE is proud to be a leader in this field. Uskmouth power station will halve the carbon emissions from when it operated using coal. In comparison to other thermal technologies operating today, the project will be one of the lowest emitters, on par with the most efficient combined cycle gas plants.

SAE was pleased to announce (17 March 2021) that it is a delivery partner in the South Wales Industrial Cluster, which has successfully secured grant funding from Innovate UK. The funding enables SAE to carry out feasibility work on carbon capture usage and storage (CCUS) which would result in the converted Uskmouth power station becoming carbon negative. This would make Uskmouth a leader in both coal replacement technology and carbon capture and utilisation technology.

The conversion of the Uskmouth project will deliver critical power to Newport and the National Grid. Newport continues to attract new industrial companies, with many requiring dependable, sustainable and dispatchable power, which currently is unable to be met by renewables. A converted Uskmouth would be the lowest carbon solution and avoid the need to build new fossil fuel powered stations to meet these requirements. With the opportunity for CCUS on site, Newport could lead the world in attracting and powering green industries.  

The planning application is for external infrastructure required to transport, store, and convey the fuel pellets, which the planning officer for Newport City Council had recommended approval of planning permission. On 24 March 2021, the application was "called in", which means the application will now be determined by the Welsh Minister and not the local Council. SAE will continue to engage with Welsh Government to understand the timeline for a decision and will update the market when details of the expected timeline are provided.

On environmental permitting, SAE made its final submission to Natural Resources Wales (NRW) on 19 March 2021 and is confident it demonstrated the project's compliance with all relevant legislation. SAE will continue to work with NRW to address any issues if raised. A decision from NRW is expected in Q3 this year.

Tidal

SAE continues to work with UK Government to secure the necessary support mechanisms to allow the further rollout of tidal stream technology, especially the next phase of the MeyGen project. Once operational, this project will be the largest tidal array ever built and continues to be both a pioneer and a flagship for both the industry and the technology globally. We expect the buildout of MeyGen will unlock significant international opportunity for further projects and continue the reduction in the levelized cost of energy from tidal generation towards that of more established forms of renewable generation. The UK Government has indicated that it will announce the details of the support mechanisms this summer, with the auction round taking place towards the end of the year. Operationally, MeyGen continues to provide vital learning to help the design and development for our future projects. Currently, three of the turbines have been moved to our workshop in Nigg to allow the team to complete onshore service works. We expect one of the turbines to be returned to service very shortly with the other two scheduled to be returned to service later in the year, once their service works are completed.   

Project development for SAE's Raz Blanchard demonstration array, located between Alderney and France, is making good progress as it looks to vary the existing site consents and permits to enable deployment of the next generation of SAE's tidal turbine which is designed to enable a step change reduction in the levelized cost of energy from tidal generation. The project will include four turbines, connected through a subsea hub, with a single export cable back to shore. The subsea hub has now been proven through its successful installation at MeyGen in 2020 and the design of the array will implement lessons learned from this deployment. Additional offshore site surveys are planned for Q2 2021, which will allow for more the detailed resource modelling required for the site-specific detailed design. 

SAE welcomes the recently announced French legislation, which will help provide the necessary revenue support through a competitive power purchase contract for the project. SAE and its project partner, Agence de Développement pour la Normandie, will continue to work closely to progress this important project.

Hydro

SAE is currently managing the construction of three interlinked hydro projects, with a combined total installed capacity of 5.8MW.  The first project was commissioned in March 2021, with the second and third projects due to be commissioned in the next few months.

A separate fourth project commenced construction in January with commissioning and first generation due in November 2021. 

Following commissioning of these projects, SAE's Operations and Maintenance team will take over the day-to-day management of each of these schemes. The SAE team continues to manage a broad portfolio of hydro assets and is working on several innovative and challenging refurbishment and optimisation projects to maximise the performance and economics across the portfolio.

Recent Press

SAE notes recent media reports involving its largest shareholder, SIMEC UK Energy Holdings ("SUEH"), a GFG Alliance member.

SAE does not comment on press speculation relating to the operations of its shareholders, but, given some misstatements, the Board wish to make clear that SAE is an independent company whose shares are admitted to trading on AIM. SAE understands SUEH currently owns approximately 43% of the issued share capital of SAE.

SAE is not a member of the GFG Alliance and has no connection with any of the funding mechanisms used in that organisation. SAE is the sole owner of the Uskmouth Power station.

We look forward to continuing to update the market on our exciting portfolio of projects in the coming months.

For more information please contact:

Notes to Editors

SIMEC Atlantis Energy

Atlantis is a global developer, owner and operator of sustainable energy projects with a diverse portfolio in various stages of development. This includes a 77 per cent. stake in the world's largest tidal stream power project, MeyGen, 100 per cent. of the 220MW Uskmouth Power Station conversion project and 100 per cent. of Green Highland Renewables, a leading developer of mini-hydro projects.

https://www.simecatlantis.com/

More on the MeyGen Project: https://simecatlantis.com/projects/meygen/

More on the Uskmouth Project: https://simecatlantis.com/project-development-operation/simec-uskmouth-power/