November 9, 2012 10:00:50 AM
Sarah Fowler - email@example.com
Local biofuel plant KiOR has started production and released its third quarter earnings.
"I am pleased to announce that we have commenced operations at the Columbus facility and have produced a high quality oil that is in line with our specifications for upgrading into cellulosic gasoline and diesel," Fred Cannon, KiOR's president and chief executive officer, said in a press release issued by the company.
According to the same press release, KiOR lost $27 million in the third quarter after reporting a $23 million-loss in the second quarter.
KiOR explained the losses by saying the company's focus had been on the start-up at its Columbus facility, along with research and development, which is "designed to improve production yields, and obtaining necessary financing for its expansion plans."
KiOR says it started production in October and plans to make its first commercial shipments before month's end.
Cannon told analysts on a conference call Thursday that the technology is working "and producing a high-quality oil. I am extremely pleased with the performance of our technology at Columbus."
KiOR uses a chemical process called pyrolysis to convert the chips to crude. Until now, the process has never been used on such a large scale. Cannon said his company is "all about changing that paradigm" by using non-food plants to make biofuel that existing cars and trucks can burn. Most biofuel in the United States is ethanol from corn or biodiesel from soybeans, and using those crops can drive up the cost of food.
Making commercial shipments would be a major milestone, because it would allow the company to start collecting revenue for the first time. Currently, KiOR is spending cash that it raised from investors, borrowing and stock sales. That includes a $75 million low-interest loan from the state of Mississippi in 2010.
KiOR had cash and cash equivalents of $74.3 million as of Sept. 30, 2012, which represents a $57.3 million decrease from the Dec. 31, 2011 balance. This decrease was primarily driven by capital expenditures, operating expenses of cash, and paying off previous business loans, partially offset by funding from the four-year, $75-million loan announced earlier this year. Net long-term debt stood at $112.5 million as of quarter-end.
Cannon said the Columbus plant is 50 times larger than KiOR's demonstration plant but that it has had only routine start-up problems so far. The plant could achieve its full output rate by late next year.
This story contains additional reporting by the Associated Press.
Sarah Fowler covered crime, education and community related events for The Dispatch.