Algae Tec leading out of 29 Algae Companies

In an earlier post we discussed the merits of Solazyme, a company with technology that can turn algae into customized oils and biofuels. Solazyme is not the only company in the algae-to-fuel business. According to a February 2013 press release by Lux Research titled “Leading Alternative Fuel Developers Set to Ramp Revenues“,  Lux analyzed 29 algae companies in a recent study on alternative fuel developers. The press release went on to say:

Many algae companies face dim prospects. Of the 29 algae companies in the study, a whopping 23 are in the Long Shots quardrant, with low scores on both Technical Value and Business Execution. Only one, Algae.Tec, barely crossed the threshold to be classified as Dominant.

About Algae Tec

Algae.Tec Ltd, founded in 2007, is an Australian advanced renewable oil from algae company that has developed a high-yield enclosed algae growth and harvesting system, the McConchie-Stroud System. The Company has offices in Atlanta, Georgia and Perth, Western Australia. The company floated on the ASX in early 2011. With 269 million shares outstanding and a current share price of 19 cents USD the market cap is around 52 million USD. The company had no revenues in 2012 and a 6.3 million USD loss.

Technology

The following excerpt was taken from a March 2012 article published by Biomass Magazine titled “The Road to Commercialization

The McConchie-Stroud System uses enclosed steel photobioreactors (40-foot shipping containers) that are linked to solar light capture arrays and a carbon dioxide source (a power station or commercial emitter of carbon dioxide). The system provides the ideal algae growing conditions producing biomass and algal oil at prices below crude oil. The algae product is used for the production of green jet fuel and biodiesel.

Algae_Tec_Plant

Recent Events

Algae Tec made the following announcements regarding collaborations this month:

  • July 8 2013 – Algae.Tec announces biofuels refinery deal with Biodiesel Industries Australia for 50 million litres
  • July 2 2013 – Algae.Tec signs carbon capture biofuels deal with australia’s largest coal-fired power company Macquarie Generation, one of the largest in the world

Regarding the Macquarie collaboration, CEO of MacGen, Russell Skelton, said “Carbon is now our single largest cost. This technology should reduce our carbon output, reduce our carbon bill, and at the same time improve our bottom line.”

For US Investors

Algae Tec has an ADR listed on the over-the-counter exchange (OTCMKTS:ALGXY). Issues of an ADR on the over-the-counter or pink sheet markets should follow the price of the underlying stock on the foreign exchange due to arbitrage, however there will be currency exposure and low liquidity to contend with. So far the ADR has not performed well at all:

Algae_Tec_ADR

Conclusion

The company’s business plan is capital intensive and with the small amount of cash they have on hand, they will need to raise more capital soon further diluting existing shareholders. The experts at Lux Research would have performed considerable due diligence to reach the conclusion they have on Algae Tec so this highly speculative company merits watching.

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