Gas to Liquid
Commencement of Operations Started 28/12/2006
The strategy of GTL Resources plc is to produce liquids such as methanol and ethanol from stranded gas, corn and other feedstocks with quality counterparties. GTL manages all aspects of a project: finance, feedstock supply, production and marketing.

In line with its strategy of seeking to develop and exploit markets for alternative fuels, GTL has, since the beginning of 2001, concentrated primarily upon developing methanol projects, principally in Australia, and, more recently, ethanol project work. The Board has recognised the strategic benefits of acquiring a cash generative asset on a shorter time scale than the typical methanol construction time of three years. In furtherance of this strategy, on 6 September 2005 GTL Resources acquired a controlling interest in Illinois River Energy (IRE) to build an ethanol plant at Rochelle, Illinois, through its wholly owned subsidiary, GTL USA, which has been established for the purpose of investing in ethanol projects in the USA. GTL USA has invested in IRE by way of a subscription for units of IRE pursuant to the Unit Purchase Agreement.

This project has the advantage that the Plant is expected to produce revenues on a shorter time scale and at a significantly lower capital cost than the methanol plant in Australia.

The Company intends to further expand within the ethanol industry in the United States or other suitable markets by selective acquisition of low cost production facilities. The Company sees itself as a potential consolidator of ethanol plants in a particularly fragmented market.

FT Tip
GTL Resources, an Aim-listed company. It raised money to build an ethanol plant in the US. Raw materials costs have risen but the price of ethanol has gone through the roof. The earnings potential should be spectacular.

New Plant

Construction started at Rochelle, Illinois site in September and production from the 50 million gallon per annum ethanol plant is expected to commence in the fourth quarter of 2006. Following unusually mild weather in Illinois the project has progressed well and is on schedule and on budget. Whilst the Companys main efforts centre on the successful delivery of the US ethanol project at Rochelle, the potential expansion of that site to 100 million gallons is being investigated. In addition and consistent
with GTLs stated strategy for the expansion of its interests in the ethanol industry, other ethanol opportunities have also been identified and will be analysed. Pictures Of The Site Under Construction March 27, 2006 http://www.illinoisriverenergy.com/html/construction.html


Arden
http://gtlresources.com/documents/ArdenAnalystResearchNote.pdf
http://www.gtlresources.com/documents/ArdenAnalystResearchNote.pdf
BBC News Item On Ethanol
http://news.bbc.co.uk/nolavconsole/ukfs_news/hi/newsid_4940000/newsid_4948400/bb_wm_4948456.stm

Ethanol Priceshttp://ethanolmarket.aghost.net/
Ethanol as a Transportation Fuel
http://energy.ca.gov/afvs/vehicle_fact_sheets/ethanol.html

Annual report for 2006
http://www.gtlresources.com/documents/GTLAnnualReport2006_001.pdf
Pics from Ethanol Producer Magazine of GTL's plant.
http://ethanolproducer.com/plant-images.jsp?plant_id=302&image_id=59
Commencement of Operations Started 28/12/2006
http://www.gtlresources.com/
Economics of Ethanol
http://www.ces.purdue.edu/extmedia/ID/ID-339.pdf
2 July 2007 GTL Resources FY pretax loss narrows, plans 13 mln stg placing to fund expansion
http://moneyam.uk-wire.com/cgi-bin/articles/200707020705014067Z.html
GTL Web Site
http://www.gtlresources.com/

Stan Blunier of Forrest walks with the Livingston County Farm Bureau Ag and Zoning Committee during Fridays tour of Illinois River Energy, LLC Ethanol Facility in Rochelle. The large pile is DDGS, dried distillers rain and solubles, a bi-product of ethanol production. s.Pantagraph / STEVE SMEDLEY

http://www.pantagraph.com/articles/2007/02/23/news/doc45dfc36c37a3b351300045.txt

75 truckloads a day! Lets hope their running on Ethanol!!!

The one thing not factored into previous calculations is how much IRE (GTL) will get for the bi-product animal feed. Anyone know any figures of tonnage produced and sales figures, or is it too ealry to say??

Soul Trader

Interested in your calculations Thread 1128. I have researched debt levels for GTL and tried to factor them in also. Using your calculations.

I believe Debt = $43m = 22.9m at 6% (Arden Partners Figure) is 1.36m per year.
*Profit After Tax = 10.8m
Minus Debt repayment of 1.36m = 8.72m.
PE = 4.58
*Don't forget GTL have $29m of losses to offset against future Tax charges, so shouldn't have to pay tax for at least two years.

As long as my Debt figure is correct, it would seem that GTL is undervalued, even with a much higher debt level the forward earnings should more than offset it.

Haystack

Rather than just De-Ramping GTL, you can always come back with your own figures. Then you can show us that you are not just De-Ramping the shares and selling short ?

Yes haystack it would be good to hear why you have such a ridiculous price target for GTL - Please justify yourself - I'm open to hear your reasons, if any.

May be Haystacks has only got 100 to invest that will get him 200 shares at 50p not a bad return when they reach 8

If HS is saying 50p then i have some issue, but certainly 100p is the historic low point and might well be hit, for no other reason than GTL is currently badly out of favour, even if for no obvious reason

Buy on weakness, is what I say.

Spit, thanks for your sums. I'm glad I'm not the only one who sees this as cheap.

Eth now $2.14. Okay, corn prices are also rising, but let's not forget how well hedged we are.

Gross profit per gallon ethanol having deducted cost of corn: approx 87 cents pre gallon for the hedged corn, 52 cents per gallon for the unhedged.

And don't forget the animal food by products!

I am confused.

Normally if three people sell GTL the market reacts by dropping about 3%, however today there have been no buys and 60k odd worth of sells and it hasnt moved a bean!

My guess is that the 172.25 trades are buys. In that case buys/sells are pretty even.

even so, the way this stock has been behaving nearly every sell warrants a price drop!

ghjones2
In that case they were all buys, up tomorrow.

Silvermede

Have found the following info about the by products GTL produce.
The main one is Dry Distillers Grains Solubles (DDGS) which is sold to feed live stock. The other by product is CO2, which will be sold to a suppler to medical and industrial gases.

DDGS 177,000 tonnes each year, November 2006 price = $95 per tonne which is $16.81m or 8.8m.

CO2 151,000 tonnes each year, at $6.5 per tonne which is $981,500 or 516,578.

These figures come from research from Arden Partners, and I have cross checked the figures on other sites. I haven't added these numbers to previous calculations because thay look to good to be true. All we can wait if for a detailed breakdown from Charles Stanley.

if they look too good to be true, they almost certainly are!

Spitfire,

Thanks for that, if figures are even half of what you have found, they are still substantial and should not be ignored.

Silvermede thanks for the calculations - just wondering where or how you calculated how much of each by product will be produced?
Perhaps we could email GTL and ask if such figures were close to reality or would they just ignore it?

Have asked yesterday when subject was mentioned - No reply yet.

It was Spitfire, GD, I just asked the question. Good idea about mailing GTL.