Gevo, Inc. (NASDAQ:GEVO) restarted manufacturing of isobutanol at its production center in Luverne in March 2016. All businesses, comprising the distillation system, are up and working. During 3Q2016, the company produced nearly 145,000 gallons of isobutanol, while in FY2016, the firm has manufactured a total of around 240,000 gallons of isobutanol.

The highlights

In terms of its issued FY2016 projection, Gevo reported to produce nearly 500,000 gallons of isobutanol at its Luverne Plant for the fiscal closing December 31, 2016, close to the low-end of the initially reported range of 500,000-650,000 gallons. It intends to decline the variable expense of manufacturing isobutanol at its Luverne Plant to $3.00-$3.50/gallon, permitting isobutanol to be manufactured at a positive contribution margin, dependent on an anticipated mean selling price for isobutanol around $3.50-$4.50/gallon.

Gevo intends to increase isobutanol sales into core markets like the renewable ATJ fuel, off-road, marina, solvents markets and isooctane. It wants to record average quarterly EBITDA burn rate of $3.5 to $4.5 million. This corporate-wide EBITDA burn rate is computed by adding back non-cash stock compensation and depreciation to GAAP Loss from Operations.

In the coming periods, the company will focus on work optimization to enhance the Luverne Plant at its existing scale, but importantly with a stance towards considerably expanding the Luverne Plant. They intend to optimize the production procedures with the intent of improving consistency and robustness of production, enhancing production volumes, and probably generating specific grades of isobutanol custom-made for specific applications. These optimization efforts could result requiring to add more equipment processes or systems in the coming period at the Luverne Plant.

Regardless of the production ramp-up interruptions, Gevo predict that by the close of 2016 to have the capacity to achieve production run rate of 1.5 million gallons annually at the Luverne Plant. Although the company project to have this capability, they currently predict to work at a rate of less than 1.5 million gallons annually as they scale up and asses new process enhancements to further minimize expenses and optimize production, mainly at the Luverne Plant with a stance towards considerably expanding production capacity in the upcoming period.