Recently-public biofuel and chemical maker Gevo (s GEVO) is holding the official ground breaking ceremony for its first commercial-scale project, a retrofit of an old ethanol plant in Luverne, Minn. on Tuesday. Gevo’s business model is based on converting corn ethanol plants to enable them to turn cellulosic feedstocks like agriculture waste into a bio-based isobutanol, a fuel additive and a precursor to manufacturing plastics and other products.
Gevo’s Luverne retrofit project will be able to produce about 18 million gallons of isobutanol per year, is expected to start operating in the summer of 2012, and according to Gevo, will be the world’s first commercial-scale biobased isobutanol plant. Gevo also says with another $24 million in investment, the retrofit project could scale up to 50 million gallons per year, and for another $40 million to $45 million, the project could scale to 100 million gallons per year.
Gevo’s core intellectual property is what it calls its “Gevo Integrated Fermentation Technology, or GIFT,” which is tech to produce and separate isobutanol. GIFT contains biocatalysts that convert sugars from a feedstock (plant waste, energy crops etc) into isobutanol through fermentation, and a separation unit that separates isobutanol from water during the fermentation process.
The Luverne project is Gevo’s first commercial-scale plant, and until the plant starts producing bio isobutanol, the bulk of Gevo’s revenues will continue to come from selling ethanol (after its acquisition of Agri-Energy). For the quarter ended March 31, 2011, Gevo generated revenues of $15.28 million, and lost $9.28 million. Gevo’s stock fell almost 3 percent to $19.15 in morning trading.
It will be a long 12 months of investment and construction before Gevo can start booking those new revenues. According to Gevo’s latest quarterly financials:
The Company’s condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. For the three months ended March 31, 2011, the Company incurred a consolidated net loss of $9,283,000 and had an accumulated deficit of $95,704,000. The Company expects to incur future net losses as it continues to fund the development and commercialization of its product candidates.
But Gevo says it has letters of intent for its bio isobutanol product from customers including chemical company Lanxess, French oil giant Total’s (s tot) subsidiary Total Petrochemicals USA, plastic maker Toray Industries, airline company United Air Lines (s ual) and oil industry technology developer CDtech. Gevo also says it has been working with Cargill to develop a future-generation yeast biocatalyst specifically designed to produce isobutanol from cellulosic feedstocks. Gevo CEO Patrick Gruber told Reuters (s tri) he expects Gevo to be profitable by 2014.
Gevo went public in February of this year, on a per-share price of $15 — priced at the high end of its range — and raised $95.7 million after offering expenses. Khosla Ventures and Virgin Green Fund backed Gevo early on and did pretty well in the IPO. Gevo plans to use the IPO proceeds to acquire access to ethanol plants through acquisitions and joint ventures, and retrofit those facilities to produce isobutanol.