I have a project in Canada that is now, after being banged around by a covey of slick finance people, going to get back to the basic premise of earning money from making and selling biodiesel. The owner intends to bootstrap his operation this way:
1) He has located a property that is evaluated at $12 million, he is buying it, on a down market, for $7.5 million.
2) He will be funding it to the tune of $2 million, a down payment for which he is giving up 15% equity in his company.
3) He gets a loan for the full amount of he property, $12 million, and pays off the $7.5 million.
4) Uses the remaining cash to purchase one of my units installed on his property, which he bought with all the buildings to house the processors.
Ultimately, based on his figures and my equipment, he will be running a 200,000 Ton facility with a 1600 MT a day crushing facility in less than three years based on realistic projections and picking up every legal and illegal subsidy he can grab.
The man is a farmer and he taught me a lot of things, the most important is to always keep it simple. He is not concerned about feedstock because he knows that there will always be vegetable or animal oils around and our equipment will transform almost anything into biodiesel. He is not concerned about buyers because he has three offtake agreements, access to France through my connections and demand building from the USA. He is not concerned about jet fuels, jatropha, algae or palm trees because that is not his business. He is betting the farm that he bought for an original $2 million down and he, the banks, the investors, the government and the buying public know full well that that is the rock.
So I would like to discuss getting back to the basic building block of your project, what is the rock bottom entry point so that I can sell you a biodiesel facility? Is it the land, then you are a rancher and a farmer, rattle those cages and find a piece of land on a jetty with a couple of Quonset huts and a rail yard, make it as big as you can, but as cheap as you can find. Wangle a down payment, and leverage the hell out of it, why not? It's your land! Everything else can be finessed in some way.
You do not need to buy B1 oil for a jatropha contract, there are enough jatropa contracts and palm oil contracts and soy contracts floating around to ensure your 10 million gallons delivered to your doorstep. Offtake agreements, pick up the phone and get General Petraeus on the line, his whole fighting force is screaming for the stuff!
The main reason my Canadian is getting back to basics is because he was shafted by trying to be too smart. If he had taken the first finance package that came his way he would already have been producing for two years, and have about $17 million in pure profit after paying back all of his debts.
Find a guy with your seed money, help him plant it and get rid of him within a year, al the rest is baggage.
