RE: RE: Mascoma Gets Offtake AgreementIts possible , indeed, any large energy producer or pulp/lumber producer could be a partner for Lignol.
Lets not forget Lignol's patents which could turn Lignol into a royalty company with all income pure cash flows without the hassle of being an actual producer.
But, ethanol production from cellulosic sources.............. while certainly a primary objective of Lignol,......is not its main focus.
Given Novozymes enzymatic suite and Lignol's best-in-class pretreatment process, commerical ethanol production perhaps at costs below that of current firsr generation ( corn-based ) producers is a reality.
But, at oil prices below $125 , it would not be profitable or competitive with gasoline.
This is why Lignol is focussing on turning the main byproduct of ethanol production.........lignin...into high value derivative products whose cost of production would be largely paid for by the ethanol sales.
Based on my research and posted earlier, high performance lignin ( HP-L ) has a market value of $1500 per ton.
The commercial biorefinery, designed by Lignol, will produce 20 million gals of ethanol and 55,000 tons of lignin annually.
To illustrate the relative contribution to annual gross sales , at $3 per gal and $1500 per ton, the HP-L products will be worth over $80 million and the ethanol worth $60 million.
Now, lets take this a little further.
Lignol will generate $60 million in annual sales as a credit against production costs of gross sales of $80 million of HP-L.
As you can see, the profit margins should be very robust.
This is why Lignol is so unique and why it offers such large upside on success.
Note that its offtake approach is for, and with, its lignin production /customers and not its ethanol production.
This is a distinguishing a key departure of Lignol relative to its peers in this niche.
More importantly, we are in the final stages of HP-L commercail evaluation.
This sector......refining/green/energy.....trades at more than 2 times its market cap to sales.
With annual sales ( HP-L and ethanol ) in excess of $125 million, the new biorefinery focussed on lignin products should give Lignol with a market cap well in excess of $200 million cf $10 million currently.
Patent royalty will add to that value.
This is why a out-of-the-park home run is a reasonable and achievable investment gain here.