Energy analysts like Gevo re-start, caution “Still a Long Way to Go”.

In the US, noted energy analysts have been updating their views on Gevo following the company’s announcement that the Luverne plant has resumed operations.

“After a 5-6 month hiatus to combat contamination-related production issues,” wrote Piper Jaffray’s Mike Ritzenthaler, ” the phased re-start of Luverne has surpassed its most difficult and important hurdle in our view – reliability of production. While we had fully anticipated this restart, we continue to view today’s announcement, along with significant wins in court with respect to their IP position, as unequivocal positives for the stock, and opens the door for a meaningful volume ramp over the next 12 months.

“We are evaluating the implications to our model. We are in the process of evaluating the restart timing and potential volume ramp on our model. We do believe that Gevo will sell the in-spec production through their existing offtake agreements and use modest volumes to continue market seeding. We believe that a single train is capable of a run-rate of 3-5 million gallons per year, with the full rate of 18 million gallons coming with all four fermenters running.”

At Cowen and Company, Rob Stone and James MEdvedeff wrote: “Still a Long Way to Go. We believe only a few runs have been completed, and operating metrics and production cost are likely far from optimal at this point. Additional financing should be needed within a year. Yield, productivity, cycle time, and purity levels were not disclosed, but we believe that one fermentation train produced enough isobutanol to test one GIFT separation system at full scale (which was not the case last summer). Plans appear to remain on track to bring up all four fermentation trains and all three GIFT systems by the end of the year, which would enable demonstration of 1MM gallons per month capability. If successful, a ramp to full nameplate (1.4-1.5MM GPM) could be realized by H2:14. However, we believe consistent, repetitive, volume production, at commercial metrics and cost, in all operating conditions, may be a difficult task. Unforeseen pitfalls could materialize as the complexity of multiple trains feeding three GIFT systems is added. Also, if purity is not high enough, additional distillation equipment may be needed.”