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/

The Times

Tiddler to watch

The renewable energy group GTL Resources climbed 1p to 190p on hopes that its first ethanol plant passed acceptance tests and has started to generate revenues. Inspectors visited the facility in Rochelle, Illinois, last week to guarantee that it matched quality criteria. Their green light would mean the plant could become profitable immediately, analysts said.

Here we go

GTL Resources plc (AIM:GTL), the project development company focused on Ethanol
production in the US, is pleased to announce that its ethanol plant at Rochelle,
Illinois USA, which commenced production on 27 December, has completed its
acceptance tests on 16th January and has received its first revenues.

http://moneyam.uk-wire.com/cgi-bin/articles/200701240700440335Q.html

Morning all! Here's the full text from the RNS:

GTL Resources PLC - Operation Update
RNS Number:0335Q
GTL Resources PLC
24 January 2007


For Immediate Release 24 January 2007


GTL Resources plc

('GTL' or the 'Company')

Acceptance Tests complete and first revenue announced


GTL Resources plc (AIM:GTL), the project development company focused on Ethanol
production in the US, is pleased to announce that its ethanol plant at Rochelle,
Illinois USA, which commenced production on 27 December, has completed its
acceptance tests on 16th January and has received its first revenues.


The acceptance tests, which check that the plant is capable of meeting
production expectations, were completed over the period 10th to 16th January,
during which time the plant on average exceeded the:


* Nameplate capacity of 50 million gallons per annum

* Guaranteed ethanol yield equivalent to 2.8 denatured gallons per bushel of
corn

* Guaranteed electricity and gas usages per gallon of ethanol


The plant is now being operated by Illinois River Energy (GTL's 85% owned US
subsidiary) staff following handover by the technology providers ICM and the
contractor Fagen Inc.


All production since 27th December has met quality specifications and ethanol
shipments to both the local Chicago market by truck and the New York market by
rail are proceeding to plan. Dried Distillers Grains shipments to the rapidly
expanding Far Eastern market have also commenced with attractive margins being
achieved as a result of the plant's proximity to Chicago container terminals.


The landmark receipt of the Group's first $1million of revenue was achieved on
12th January. The plant is operating profitably and its continued ability to do
so will be assisted by risk management activities. These include the use of
financial derivatives by means of which the company has limited its corn price
exposure on 95% of its nameplate corn usage for calendar 2007. At a hypothetical
$4/bushel corn for 2007 the benefits of these hedging activities would exceed
50cents/bushel with a limited exposure to higher prices outweighed by a greater
downside participation potential.


Peter Middleton, GTL's Chairman and CEO, said

'We are very excited about the completion of our first ethanol plant, and are
particularly pleased that it was achieved on schedule and to budget. Despite
current oil and corn volatility, production remains profitable. The outlook
remains strong for well managed and well located plants such as ours at
Rochelle.'


For further information, please contact:

GTL Resources plc
Peter Middleton, Executive Chairman Tel: 020 7958 1685
Michael Brennan, Finance Director Tel: 01642 794 000

Buchanan Communications
Tim Thompson Tel: 020 7466 5000
Nick Melson


This information is provided by RNS
The company news service from the London Stock Exchange

END

Hey I know it's exciting but one thread link and two full copies of the RNS is enough even today.

Yes laurie, things looking good :)

So if the IRE plant gets 2.8 gallons ethanol per bushel of corn:

Assume ethanol price sinks to $1.8 per gallon: 1.8 x 2.8 = 5.04.

Sutract cost of corn $4 per bushel = $1.04 gross profit per bushel.

Work that back to profits per gallon of ethanol, i.e. divide by 2.8 and you get: 37 cents per gallon of ethanol.

0.37 x 50 million = $18.5 million gross profit (on turnover of $90 million).

I'd hate to hazard a guess at the running and admin costs; smaller company RVA seems to cost about $3.6 mil a year. Call it $6.5 for IRE?

Leaves $12 mil pre-tax. That's 6 mil, and about 4.6 mil after tax. Of which GTL owns an 85% share, which is 3.9

At SP 214p, you have a market cap of 49 mil, for a current PE of 12.56.

This is all just wild theory; I'm certain the analysts will soon be making some far more concrete predicitons, but at present I guess the current SP is fair or possibly even a little on the cheap side.

As long as the ethanol price doesn't keep sliding!! Atleast it seems to have picked up slightly in the last few days and the corn price has also stabilised slightly too, if the charts are to be believed.

All IMO, DYOR - if anyone thinks I'm talking misleading nonsense they are welcome to put me straight, but at least I feel I might have got a handle on the numbers at long last.

Its the big day though Laurie - There's actually been a positive movement in GTL's SP!!!!!!!!!

Sorry Laurie. However, I have so much excitement going on here in Frankfurt that I am wetting my little (German) panties with glee.

GD Potts - LOL, I was thinking exactly the same thing! My portfolio has looked so bleak recently, it's just not true.

Nice calculations Soul, I'm positive for the future - Bush's speech should help drive up Ethanol prices and the board seem to know what they are doing at GTL, unlike a fair few other AIM companies.

Also on the homepage on MoneyAM as 4th / 3rd biggest riser today!

From the article on the Bush speech:

"The president is proposing to set the amount of ethanol and other
alternative fuels to be blended into the fuel supply at 35 billion gallons by
2017, up from 7.5 billion gallons in 2012."

I don't know how much ethanol is currently being produced in the US, but that 7.5 billion figure alone means that in just six years the US wants to be consuming 150 times GTL's current output. And 700 times current output in 2017.

So what will my GTL shares be worth in 11 years?

BTW does anyone have access to a breakdown of major shareholders that they could also post on here?

I know Schroeders have bought a few, but it might be interesting to see how much mileage there could be in additional institutional interest now we are officially profitable.

Nice to see GTL rise today, makes the Share mag article on page 9 which was very negitive on Ethanol and GTL look a little poorly timed.

Share mag should have taken Mr Potts advice and included it in there Green Portfolio.

Only one mm is holding the sp back so fingers crossed for 2.30p today still.

That would be very nice, but gut feeling tells me that the fund managers will need a few more days to run their slide rules over this one before we see much more institutional buying.

Soul - Liked your calculation (Post 921), but just had a quick tinker with the figures myself.

Take into account the following extract from the last RNS:

.... the company has limited its corn price exposure on 95% of its nameplate corn usage for calendar 2007. At a hypothetical $4/bushel corn for 2007 the benefits of these hedging activities would exceed 50cents/bushel ....

I take this to mean that 95% of their corn is purchased at $3.50 per bushel and the other 5% at $4. This gives an average corn price of $3.525 per bushel.

Lets see now how that affects your figures. Using your calculation as a template:

.....................

So if the IRE plant gets 2.8 gallons ethanol per bushel of corn:

Assume ethanol price sinks to $1.8 per gallon: 1.8 x 2.8 = 5.04.

Sutract cost of corn $3.525 per bushel = $1.515 gross profit per bushel.

Work that back to profits per gallon of ethanol, i.e. divide by 2.8 and you get: 54 cents per gallon of ethanol.

0.54 x 50 million = $27 million gross profit (on turnover of $90 million).

I'd hate to hazard a guess at the running and admin costs; smaller company RVA seems to cost about $3.6 mil a year. Call it $6.5 for IRE?

Leaves $20.5 mil pre-tax. That's 10.35 mil, and about 8.28 mil after tax. Of which GTL owns an 85% share, which is 7 mil

..........................

For 22.7 million shares in issue and current SP at 213.5p (at time of posting) gives a market cap of 49 mil, leading to a PE of 7.


By comparison, Renova has a market cap of 49 mil, SP at 170p and a PE of 80.

If the market is happy with Renova having such a high PE, the implication is that GTL ought to be allowed a comparable PE suggesting a large increase in the current SP. Blimey!!!

Well that was a hectic day for GTL -
Great news that the plant has surpassed its capacity (Although seems a bit odd that it can produce more than its supposed to....)
Already selling contracts for its output and the rising corn price has been accounted for - hopefully by next year they ll be more farmers producing it - making ti cheaper as a result - More profit for GTL
Fantastic speech from the man should help boost investor and institutional faith in the sector and GTL as a result.
Then hopefully Shares can stomach their mistake, re-print their faulty report last week and give them a positive run down.

Thanks for the mention Spitfire - Well they've already put Ceramic in, all be it late and not for Ceres but at least they listened.
Maybe GTL will be next.

StarFrog, I think you could be onto something. Silly me - I'm not very well acquainted with the language of hedging. It seems you're right - 95% is purchased at $3.50 or better, while the rest will be purchased at market prices.

not sure if we'll manage a PE of 80, but say we got PE 14, times 7 mil net earnings, equals 98 mill mkt cap, or a doubling of the current SP (to around 430p).

Not bad, and with room for more growth as market conditions improve or extra capactiy comes on stream.

Let's hope the analysts agree with us and start publishing their findings!!

Okay, brain hurts now, time to switch off PC and go eat something. Night-night everyone! :o)