TIDMAFC
AFC Energy Plc
31 March 2016
AFC Energy Quarterly Newsletter - March 2016
Dear Shareholder,
Once again, it is my pleasure to review your Company's
activities over the past quarter.
Highlights
-- Result of Shareholder Offer
-- Appointment of new Nominated Adviser (NOMAD) and Joint Broker
-- AFC Achieves Power Output of 204kW
-- Strategic Partnership Agreement with plantIng
-- 2016 Strategic Milestones and Outcomes
I initiated the quarterly newsletters following your comments
that our corporate communications needed to improve to keep you,
the Shareholder, up to speed with where we are and where we plan to
be by the end of this year. Turning now to the key highlights in
this past quarter:
Shareholder Offer
We raised GBP3.6 million, including GBP1.13 million from
Qualifying Shareholders (oversubscribed at 3.8 times) in the
prevailing challenging market conditions. This demonstrates the
ongoing strong support we have from our loyal shareholder base,
which continues to believe in the opportunities for future success
following the progress made by the Company in 2015, in particular
on the POWER-UP project in Stade, Germany.
Appointment of NOMAD and Joint Broker
As part of our progress towards commercialisation, Cantor
Fitzgerald was appointed as AFC's new NOMAD and Joint Broker. As
mentioned in the RNS (dated 28(th) January), Cantor Fitzgerald not
only provides AFC with an international reach in its broking and
research capabilities, but also a credible understanding of the
clean energy industry.
AFC Achieves Power Output of 204kW
On the 31(st) January, we announced that AFC Energy had
successfully achieved a total power output of 204kW at its KORE
fuel cell power plant in Stade, Germany. This represented the
culmination of an intense and accelerated twelve month fuel cell
development programme and provided a number of significant
technical "firsts" for the Company. Most of you will already know
that while the nameplate total output of 240kW was not achieved,
the majority of the 24 stacks trialled in Stade last January,
achieved 10kW or more of power output, which we consider to be a
substantial achievement for the Company.
Furthermore, due to our accelerated approach, we acquired a vast
quantity of operational data, which has now been fully assessed.
The second generation (Gen 2) of our fuel cell system will
incorporate many enhancements to improve the existing design.
As a point of clarification, currently the Stade facility is not
operating and as a pilot plant it will be utilised going forward to
further test our technology improvements. Hence, it will only run
intermittently in 2016.
Strategic Partnership Agreement with plantIng GmbH
As part of the increased confidence and validation of our
technology, we signed a long-term strategic engineering partnership
and services agreement with German engineering consultancy plantIng
GmbH ("plantIng"). For the past year, plantIng has played an
integral part in developing the KORE system with the provision of
engineering support and Engineering Procurement Construction
Management ("EPCM") services and this new agreement involves a
significant investment by plantIng of their time and resources in
supporting AFC Energy.
The scope of the agreement includes: assisting AFC with the fuel
cell Balance of Plant ("BoP"), so as to generate
product/package/costed solutions for optimised designs ranging from
240kW to initially 1MWe hydrogen fuel cell projects; undertaking
feasibility studies in conjunction with AFC for commercial fuel
cell projects globally. As I stated at the time (RNS dated 19(th)
February), this agreement marks a new start for the outsourcing of
non-core engineering services required for the optimisation of
AFC's fuel cell system.
2016 Strategic Milestones and Outcomes
So, finally we come to the 2016 Milestones and Outcomes. While
our 2015 milestones focused on technical and manufacturing
developments to support the Stade project, this year we are
focusing on three areas:
-- Further optimising the design of our fuel cell stack and BoP
-- Product development of plants ranging from 10kW to 1MW, and
-- Securing value added partnerships with recognised industrial
and institutional groups as well as commencing scoping studies and
securing contracts for at least two fuel cell projects.
There has been a deliberate departure from last year in that I
intentionally did not want to place tight deadlines on specific
milestones this year. By way of explanation, 2015 was about project
POWER-UP milestones, which were granular enough to report against
on a monthly basis, whereas the 2016 milestones are by their nature
strategic, as stated above. Therefore my intention is to update you
on these strategic milestones at least on a quarterly basis.
Of course, in the meantime, we continue to aggressively pursue a
number of strategic partnership opportunities and potential
commercial projects.
In order to facilitate the acceleration of potential commercial
projects, it was decided to design and deploy an entry-level single
cartridge 10kW system before the end of this year and deploy our
larger systems in 2017.
The 10kW system provides a lower barrier to a larger scale
commercial deal where the prospective partner seeks to "try before
you buy" without taking the substantial cost and risk associated
with a larger fuel cell system.
Given our push towards early adoption, this seemed a logical
decision to make, and also potentially opens up a new market space
for AFC.
However, and I would like to be crystal clear on this point, our
raison d'être, is as a manufacturer of large-scale industrial fuel
cells. This represents the largest sub-sector (stationary fuel cell
applications) in a hydrogen economy that is internationally
starting to gain momentum.
I remain confident that AFC will achieve its target of 1GW, that
is 1,000MW of capacity installed or under development, by 2020.
I thank all shareholders for their support and look forward to
the opportunity of meeting you at next month's AGM, updating you on
our future progress in the coming months and hope that you will all
participate in and benefit from our future successes.
Yours sincerely,
Adam Bond
Chief Executive Officer
This information is provided by RNS
The company news service from the London Stock Exchange
END
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