Soaring Gevo Rocks to $2B Valuation – What Happened? How?

by Jim Lane (Biofuels Digest) ... The management kept costs trimmed, laid out a plan for deployment, and waited for the storms to pass. And as was said in Casablanca, “waited and waited and waited.”

The stock dipped to just 49 cents a share last summer, after a series of dilutions, as it assembled a series of impressive offtake agreements, ultimately reaching $1.5B late last summer, and the company raised $50 million in a new share offering. A Praj partnership expanded, and a Koch partnership appeared. The company’s shelf of Whitebox debt was repaid.

And, finally, the stock began to rise as the prospects that Gevo would finally deploy at the scale necessary for thriving, not just surviving, seemed at hand. Gevo announced its Net Zero Project.

Just as the world took notice that all these Net Zero promises coming from companies of late could not be satisfied by a mountain of wind and solar, because those technologies have very small carbon footprints but they are not zero. For every wind and solar project, you need to offset with something carbon negative, and that’s something found in biology. Not to mention, renewable fuel projects can be low carbon, too, even when they are not carbon negative, and the investment returns can look pretty darn good when you sell the resulting fuels into low-carbon markets.

And so, Gevo began to rise, and rise and rise and rise. Back to a dollar a share by November. Four dollars a share in December, and $13.24 a share as of January. A market cap soaring to $2B this past week.

As Gevo outlined recently, it plans to build 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. Gevo management said they expect Net-Zero 1 would have the capability to produce approximately 45 million gallons per year 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 using manure from dairy or beef cows.