Renewable Energy in Liquid Form
ENGLEWOOD, Colo., Jan. 27, 2021 (GLOBE NEWSWIRE) — 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.
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
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.
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