KiOR optimistic despite third-quarter loss

http://www.cdispatch.com/news/article.asp?aid=28655&TRID=1

William Browning
November 8, 2013 10:10:16 AM

KiOR on Thursday reported a third quarter net loss of $43.1 million, or 40 cents per share. This is a $4.6 million increase in net loss from the year's second quarter.

The third quarter ended Sept. 30. 

But the Texas-based company's president and CEO, Fred Cannon, said KiOR is seeing progress at its Columbus facility. 

"We believe that we are turning the corner toward steady state operations," he said. 

KiOR's plant in Columbus is a biomass fluid catalytic cracking unit that converts biomass into renewable crude oil to produce vehicle oil. The facility produced more than 323,000 gallons of fuel in the third quarter. With that, the year's total production of cellulosic fuel at the facility through eight months stood at 508,975 gallons. 

"The number of gallons are not huge yet, but they are coming," Cannon said. 

Cannon said the company has gotten off to a good start in the fourth quarter. Last month the facility produced 167,087 gallons of fuel, he said, noting that it is the highest amount in a single month since the facility began converting wood chips to fuel earlier this year. 

"As a result, we believe that with stable production over the balance of the year, our full year production levels will exceed one million gallons," Cannon said. 

In September, the company announced its intention to build a second biorefinery on The Island in Columbus. Cannon said the recent achievements at the current plant support that plan and the company's engineering team has been "spending time on the ground" in Columbus designing a plan for what KiOR has dubbed Columbus II. 

"Based on what we have seen over the last several weeks...we still believe that this is the right path for the company to take," Cannon said during a conference call Thursday. "Bringing the plan to fruition will, we believe, enable KiOR to achieve cash-flow profitability in 2015." 

The company has received $100 million in committed equity financing from Khosla Ventures, an investment company in California that committed $85 million, and Microsoft chairman Bill Gates, who committed $15 million. Those commitments, the company said last month, will help the company move forward with the Columbus II plan. 

The current plant in Columbus, which employees roughly 100 people, is a 500-ton per day facility. Columbus II will be built adjacent to it and also be a 500-ton per day facility that could share infrastructure and employees with Columbus I, according to KiOR. 

Once started, construction of Columbus II will take approximately 18 months. 

The company's longterm plan still involves building a 1,500-ton per day facility in Natchez. 

KiOR is facing a pending lawsuit by a group of KiOR stockholders who have complained about the company's inability to meet projected production targets.  

During 2013's third quarter KiOR's total revenues were $720,000. Total revenues for the second quarter were $239,000.