Gevo, Inc. (“Gevo”) (NASDAQ: GEVO), announced key business updates
and initiatives for 2021. Gevo recently announced the concept of
Net Zero Projects to produce energy-dense liquid hydrocarbons using
renewable energy and Gevo’s proprietary technology. Gevo is
currently developing its Net-Zero 1 Project at Lake Preston, South
Dakota (“Net-Zero 1”).
On January 22, 2021, Gevo closed a registered direct offering
priced at-the-market under Nasdaq rules of an aggregate of
43,750,000 shares of common stock at a purchase price of $8.00 per
share. Gevo received net proceeds of approximately $321.7 million.
Gevo now has approximately $535 million dollars of cash and no
significant debt.
Net-Zero 1 Overview
Gevo expects that Net-Zero 1 would have the capability to
produce approximately 45MGPY of liquid hydrocarbons (jet fuel and
renewable gasoline) that when burned should have a “net-zero”
greenhouse gas footprint as measured across the whole of the
lifecycle based on Argonne National Laboratory’s GREET model. In
addition, Net-Zero 1 is expected to produce at least 350,000,000
lbs/yr of high protein animal feed. To reduce and eliminate the
fossil resources used in the plant, it is expected to have an
anaerobic digestion wastewater treatment plant that is capable of
generating enough biogas to run the plant and supply a combined
heat and power unit, capable of meeting approximately 30% of the
plant’s electricity needs. The remaining 70% of electricity to run
the plant is expected to come from wind power. Net-Zero 1 may also
obtain renewable natural gas (“RNG”) using manure from dairy or
beef cows.
Preliminary capital estimates for Net-Zero 1 are $700-$800M
(including on-site renewable energy generation). Gevo is in the
process of completing front-end engineering and project planning to
determine capital costs for Net-Zero 1 with more precision.
Key Corporate Highlights
- As of January 22,
2021, Gevo had approximately $535 million of cash and virtually no
debt. Gevo intends to use its cash to fund capital projects,
working capital and for general corporate purposes.
- Gevo now has enough
cash to fund 100% of the equity investment that is expected for
Net-Zero 1. Gevo may bring in appropriate strategic or financial
partners as equity investors if it is in Gevo’s interests to do so.
Gevo expects to establish Net-Zero 1 in a special purpose entity.
The full financing of Net-Zero 1 can only be completed after the
front-end engineering phase is completed.
- As of January 22,
2021, Gevo had approximately 198 million shares of common stock
issued and outstanding.
- Gevo has
approximately 48MGPY of contracts signed for a mix of jet fuel and
renewable gasoline products, representing approximately $1.5
billion of revenue across the life of the contracts. If Gevo
secures additional take-or-pay contracts, Gevo would have to
acquire and develop additional Net-Zero production sites.
- Gevo has optioned
the right to purchase approximately 240 acres of land near Lake
Preston, SD. This site is attractive because of its abundant
sustainable corn supply, high protein feed demand, rail
transportation, and renewable energy potential.
- Gevo is planning to
close and begin construction of its first RNG project in 2021 (the
“NW Iowa Project”). The NW Iowa Project will produce RNG by
using anaerobic digesters to convert manure from dairy cows into
RNG. RNG production is expected to begin in 2022. Citigroup is
arranging the debt financing. Gevo plans to sell most of the gas to
the RNG market in California and use some of the biogas generated
from this project at its renewable hydrocarbons plant, for example,
at Lake Preston, Luverne, and/or another site.
- Gevo hired Citigroup
to assist the financing of the Net-Zero production facilities and
the RNG project. The Net-Zero 1 financing process is dependent on
completing the front-end engineering work, expected to be completed
in December 2021. Gevo expects financing for Net-Zero 1 to close in
the first half of 2022.
Key Initiatives for 2021
- Complete front-end engineering work for Net-Zero 1 by year end
of 2021.
- Gevo anticipates signing take-or-pay contracts with additional
customers in 2021. Additional contracts are expected to
support additional Net-Zero projects (e.g., Net-Zero 2 and
3).
- Secure additional plant sites for Net-Zero 2 and/or 3 to
accommodate additional offtake agreements that Gevo may sign this
year.
- Close financing for Gevo’s NW Iowa Project and commence
construction.
- Secure investment agreements with strategic and financial
project investors for Net-Zero projects if terms are
attractive.
About Gevo
Gevo’s mission is to transform renewable energy and carbon into
energy-dense liquid hydrocarbons. These liquid hydrocarbons can be
used for drop-in transportation fuels such as gasoline, jet fuel,
and diesel fuel, that when burned have potential to yield net-zero
greenhouse gas emissions when measured across the full lifecycle of
the products. Gevo uses low-carbon renewable resource-based
carbohydrates as raw materials, and is in an advanced state of
developing renewable electricity and renewable natural gas for use
in production processes, resulting in low-carbon fuels with
substantially reduced carbon intensity (the level of greenhouse gas
emissions compared to standard petroleum fossil-based fuels across
their lifecycle). Gevo’s products perform as well or better than
traditional fossil-based fuels in infrastructure and engines, but
with substantially reduced greenhouse gas emissions. In addition to
addressing the problems of fuels, Gevo’s technology also enables
certain plastics, such as polyester, to be made with more
sustainable ingredients. Gevo’s ability to penetrate the growing
low-carbon fuels market depends on the price of oil and the value
of abating carbon emissions that would otherwise increase
greenhouse gas emissions. Gevo believes that its proven, patented,
technology enabling the use of a variety of low-carbon sustainable
feedstocks to produce price-competitive low carbon products such as
gasoline components, jet fuel, and diesel fuel yields the potential
to generate project and corporate returns that justify the
build-out of a multi-billion-dollar business.
Gevo believes that Argonne National Laboratory GREET model is
the best available standard of scientific based measurement for
life cycle inventory or LCI.
Learn more at Gevo’s website: www.gevo.com
Forward-Looking Statements
Certain statements in this press release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements relate to a variety of matters, including, without
limitation, statements related to Gevo’s ability to produce
products that have a “net-zero” greenhouse gas footprint, Gevo’s
Net-Zero projects, including Net-Zero 1, 2 and 3, Gevo’s plans and
strategy, Gevo’s use of cash, the timelines for completion of FEL 3
work and financing Net-Zero 1, the NW Iowa Project, the Citigroup
project finance process, Gevo’s ability to secure additional
offtake agreements, Gevo’s ability to finance its projects, Gevo’s
expectations regarding project capital costs, Gevo’s ability to
produce its products, Gevo’s ability to realize revenue from its
proposed projects, and other statements that are not purely
statements of historical fact. These forward-looking statements are
made on the basis of the current beliefs, expectations and
assumptions of the management of Gevo and are subject to
significant risks and uncertainty. Investors are cautioned not to
place undue reliance on any such forward-looking statements. All
such forward-looking statements speak only as of the date they are
made, and Gevo undertakes no obligation to update or revise these
statements, whether as a result of new information, future events
or otherwise. Although Gevo believes that the expectations
reflected in these forward-looking statements are reasonable, these
statements involve many risks and uncertainties that may cause
actual results to differ materially from what may be expressed or
implied in these forward-looking statements. For a further
discussion of risks and uncertainties that could cause actual
results to differ from those expressed in these forward-looking
statements, as well as risks relating to the business of Gevo in
general, see the risk disclosures in the Annual Report on Form 10-K
of Gevo for the year ended December 31, 2019, and in subsequent
reports on Forms 10-Q and 8-K and other filings made with the U.S.
Securities and Exchange Commission by Gevo.
Investor and Media Contact IR@gevo.com
+1 720-647-9605
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