Algae.Tec announces new Arrowhead valuation report

By Erin Voegele | September 13, 2011

Arrowhead Business and Investment Decisions, a New York City-based consulting firm, has issued up an update on its Due Diligence and Valuation Report on Perth, Australia-based Algae.Tec Ltd. According to the report, which was supplied to Biodiesel Magazine by Algae.Tec, Arrowhead said it believes that Algae.Tec has “enormous growth potential with a medium risk profile.”

Algae.Tec. is working to produce algae feedstock that can be converted into biobased fuels, such as biodiesel and renewable jet fuel. According to Arrowhead, the company has successfully demonstrated its algae oil and biomass yields at an experimental scale, and is currently working to construct a demonstration facility, which is expected to be completed during the first quarter of 2012. The report also point out that Algae.Tec is in the process of establishing strategic partnerships and alliances with a number of entities, and has recently established an 18,200-square-foot Algae Development & Manufacturing Center in Atlanta.

Arrowhead states that the global market for algae is “poised for explosive growth” in the next decade. On a global basis, the report notes that the U.S. is poised to ramp up algae production first, as half of all algae activity is currently taking place within the nation. Latin American and Asia Pacific countries are expected to gain market share, however, in the long run.

The Arrowhead report also notes that Algae.Tec has developed an algae production technology called the McConchie-Stroud System, which includes both cultivation and harvesting components. “The system is scalable, has minimum land footprint and water usage,” the report states. “The technology provides competitive advantages in terms of low capital and operating costs, minimal requirement of land, low water evaporation and better recycling of water amongst other specifics, which make it commercially viable.”

Regarding risks, the Arrowhead report states that Algae.Tec has not yet obtained a patent for its McConchie-Stroud System, and there is no certainty that the patent application in Australia will be granted. The report also points out that while Algae.Tec is building a demonstration facility, “it is quite possible that the current available funds may not be sufficient for fulfilling the initial business objective,” or enable full commercialization of the McConchie-Stroud System. According to Arrowhead, an inability to obtain additional financing may require that Algae.Tec reduce the scope of its operation and scale back its expansion and development programs. 


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