Milligan Bio-Tech lands funding for plant expansion in Sask.

By Bryan Sims | September 27, 2011

In an effort to meet growing demand for biodiesel use in Western Canada, Milligan Bio-Tech Inc. has raised $8 million for a planned expansion of its 4 MMly (1 MMgy) production facility located in Foam Lake, Saskatchewan, Canada.

According to Milligan Bio-Tech CEO Joe Holash, the $8 million of newly-acquired capital effectively came in two forms; $4 million were issued through a private offering of convertible debentures and the remaining $4 million were obtained through a senior lending facility. He said the funds will be used initially as capital to increase production capacity five-fold to 20 MMly (5.3 MMgy) and to optimize a canola seed crushing facility that’s collocated on site to enable efficient crush  of nonfood grade canola, which is the primary feedstock in use by Milligan. Upon completion, the expansion, expected to be complete by mid-November, will make Milligan Bio-Tech the largest biodiesel producer in Western Canada.

“We’ve been built out for a long time to be capable of producing 20 MMly,” Holash told Biodiesel Magazine, adding that the impetus behind raising the capital is in response to meeting increased demand for methyl esters in Western Canada spurred on primarily by national and provincial mandates that require additional volumes in the diesel pool. “With the large increase in biodiesel mandates and the demand that results from that we’ve got a pretty substantial change in our capacity coming,” Holash continued.

In July, the Canadian federal government implemented a national B2 mandate. Saskatchewan will soon follow suit with an anticipated B2 mandate of its own slated to go into effect in July 2012. In addition to the mandate, the Saskatchewan government also instituted a lucrative rebate program aimed to help increase biodiesel production in the province. Effective April 2012, Saskatchewan will boast a five-year $26 million program that will provide a 13 cent-per-liter grant to producers that produce up to 20 MMly. Alberta and Manitoba already have mandates in place.

While he doesn’t deny that the capital markets remain challenging in the biodiesel industry, Holash said he credits the company’s longevity in the market as a testament to its credibility to lenders and financiers for obtain the funding. Since 1996, Milligan Bio-Tech has been producing methyl esters for biodiesel, first at lab-scale in 1999, and later scaled up its process technology for commercial production in 2007.

“We’ve had some folks that have been very supportive, both in terms of the banking side and the investment side, and that’s pretty exciting because there’s certainly great capability within the company,” Holash said. “We’re looking forward to seeing where this is going to take us in the long run.”



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