Hello, I have been watching this one from the stands for a while...

Hello, I have been watching this one from the stands for a while but havent bought in YET.

Just my overall thoughts about the recent news:

Seems to me that there was some sort of mixup for what was to be released to Bloomberg. The release by Bloomberg is a strongly worded document noting the bond issue and plans for projects.
The writing from the company is all but a retraction of what was said. Whilst they note the US change in stance they water down the bond issue as 'being at an early stage'. My interest is how the release to Bloomberg got out of the company like that?

Looking at the Bloomberg doc I think the following are interesting comments;
Source: R Stroud over the phone

They talk about starting to offer bonds next month (Feb) and being fully issued by mid year ($200m in 4months for a company without a commercial plant??)

US Approval for $1.01 gallon tax credit for producers of algal fuel. This was coupled with the EPA increasing the requirement for bio-diesel in refined product.
--To me this is a big boost, first an increase in a mandated market and new tax incentives (not insignificant ones at that). The issue is still the cost of the creation of the bio fuel for algae tec. (Anyone with some numbers on this would be great, please?)

"Algae.Tec plans to retain a stake of more than 90 percent in the new factories, where feasibility studies will be completed this month, according to Stroud. The bond sale is “the most appropriate mechanism for this type of project providing a substantial leverage on equity,” he said."
-- Again this appears positive to me, they have thought about level of ownership to retain in each facility. It states that feasibility studies will be completed this month. It also links the bond sales with construction of facilities (rather than working cap).

It mentions a study for a site in Eastern Australia with approvals expected by the end of the quarter?? The model plant in Nowra is approved and up and running. To me this sounds like something else all together. Approvals by the end of the quarter also indicates that applications may be in?

"“Based on current commodity prices the financials around all three projects are showing strong returns,” Stroud said. Algae.Tec plans to have all three funded and under construction within 12 months. The first will take about two years to build. "
-- Indicates that there are three sites, whilst the next paragraph mentions Texas and Brazil. This leaves an unnamed location, East Coast of Aus any one??
The one concern is the length of development time. 2 Yrs
Also, further down it mentions that the expected cost is 100m per facility. A $200m bond facility wouldnt cover the full cost of three facilities. My guess is it will fund one and provide equity for the Lufthansa deal? Maybe get the second started.

Bloomberg also mention; six factories by 2015 and the deal with Deutsche Lufthansa AG. The next sentence refers to sites having been reviewed (spain noted) with a selection by end of Q1.

Does anyone have production cost figures, capital approximations? Can a 100m plant assume to return 20% net per annum? I have no idea on the economics and would really appreciate any help you other HC's could offer. Happy to work on a model with someone.

One of the things that I keep thinking is that Stroud would not be going after cash from bonds unless he thought that algae would soon have income to support some kind of coupons? Sure they may be 0 coupon bonds but not likely.

To me all of the Bloomberg article is pretty positive.

Now just to understand the economics and lets get some.

I am here to gain understanding so please feel free to shoot holes in my thoughts. I would rather have someone pick holes in my theories and not invest, than have everyone stay silent and lose money on an investment.
Also, please excuse any typo's as I am rushing this out.