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![]() OTC-BB: GRYE |
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January 23, 2009 |
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About the Authors
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What is Bio-Diesel? The idea of bio-diesel dates back to 1885 when Dr. Rudolf Diesel build the first diesel engine, designed to run on vegetative sources. The inventor noted at the time that “… the use of vegetable oils for engine fuels may seem insignificant today, but such oils may in the course of time become as im-portant as petroleum and the coal tar products of present time.” This bit of prophecy has materialized in the present day, as fossil fuels have proven dangerous and costly. Bio-diesel is a substitute for, or an additive to, diesel fuel that is derived from the oils and fats of plants, such as sunflowers, canola or jatropha. These bio-fuels can help reduce dependence on foreign oil imports and reduce the environmental impact of fossil fuels like crude oil. In fact, bio-diesel produces 80% less carbon dioxide and no sulfur dioxide emissions, which can help reduce cancer by more than 90% in some areas. These benefits have prompted many countries to incentivize the use of bio-fuels in their economies. The Philippines has been a pioneer in these initiatives and now requires all of its diesel fuel to have 1% bio-diesel, similar to the United States’ ethanol requirements. Combined, these incentives, along with the technology itself, has created enormous opportunities for companies like GreenGold. What Are Jatropha Plants? Jatropha is a plant that many experts are hailing as the next big thing in bio-diesel. The seeds from the golf-ball sized fruit contain a yellow liquid that can be converted into bio-diesel. But unlike other biodiesel crops, jatropha can be grown almost anywhere, including in deserts, trash dumps and rock piles. It doesn’t need much water or fertilizer, and it isn’t edible. Combined, these traits make for an environmentally-friendly and high-yield crop that is perfect for renewable energy. The jatropha to bio-fuel conversion process is relatively simple has been refined by companies like GreenGold. The jatropha seeds are first harvested and the oil contained within the seeds is extracted. Then, the raw oil is pressed and transesterified into bio-diesel that can be used independ-ently or blended with traditional diesel in order to help improve the environment and lower costs!
![]() The economics of jatropha plants are also very attractive compared to the alternatives. One hectare of jatropha can produce more than 18 barrels of oil that have 95% of the efficiency of diesel. This compares to around 9 barrels of oil and 91% efficiency from rapeseed oil—jatropha’s nearest competitor. Meanwhile, jatropha oil itself is competitively priced with crude oil at around $43 per barrel. Jatropha plants are also very good for the environ-ment. The trees can capture more than four tons of carbon dioxide per acre while the emissions from use of the bio-diesel have almost no harmful by-products associated with standard diesel. Because the plants reduce carbon dioxide, jatro-pha growers are often eligible to receive carbon credits at a rate of one carbon credit per ton of CO2 reduced. These credits can then be sold on the open market to companies that need to offset their carbon emissions under the Kyoto Protocol and similar programs in the United States.
![]() Jatropha Issues The full potential of jatropha is far from being realized for both technical and economic reasons. Growth and management of the plant is poorly documented and there is little experience marketing its end products. Therefore, growers often do not achieve the highest output of products that would bring the greatest reward. However, companies like GreenGold are quickly changing the landscape by creating this documentation, patenting their processes, and finding new ways to increase the plants output and monetization for farmers growing the plant. There has also been some concerns that jatropha-based fuels may harm engine performance. However, recent studies have shown that a 40 to 50 percent blend with standard diesel oil provides opti-mum performance without any engine modification and preheating of the blends. This equates to huge demand if governments begin to impose minimum blends similar to that of ethanol. News & Media Coverage
“Renewable energy, it turns out, does grow on trees. The fruit pods plucked from jatropha trees have seeds that produce clean-burning diesel fuel. But unlike corn and other biofuel sources, the jatropha doesn't have to compete with food crops for arable land. Even in the worst of soils, it grows like weeds.” - Time Magazine (01/29/2009) |
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GreenGold Ray Technologies GreenGold Ray Technologies (“GreenGold”) is a rapidly growing biodiesel, green technology and environmental energy company. The Philippines-based firm is committed to the implementation of sustainable green technologies to achieve fiscal strength based on the principle of 3Ps: Profit, People, Planet. The stock is also publicly traded on the OTC bulletin board under the symbol “GRYE”. |
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GreenGold’s current focus is on growing the high-yield, low-cost jatropha plants that it grows on its large amounts of land in the Philippines and abroad. The oils from these plants can be processed to produce a high-quality biodiesel that can be used in a standard diesel car, while the residue can also be processed into bio-mass to power electricity plants. In fact, Goldman Sachs recently cited the plant as one of the best candidates for future biodiesel production. Despite the abundance and usefulness of these jatropha plants, none of the species have been properly domesticated while the long-term impact of the plant on soil quality and the environment is unknown. However, GreenGold has been a pioneer in |
| researching the plant, developing effective cultivation techniques, increasing the plant’s yield, and making sure that the ecology is re-usable over the long-term. | |
| In February 2008, GreenGold planted its first jatropha seeds on 300 hectares of farm land with the first harvesting season expected to begin in the spring of 2009. The company is working to expand its output by partnering with indigenous tribes through profit-sharing arrangements. GreenGold is one of the few companies able to workout these agreements, which gives the company an advantage over competitors in the region, where it remains the largest producer. | “GreenGold is committed to develop the community by providing schools, healthcare centers, and after-school programs for men and women.” GreenGold Energies |
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U.S. Expansion in Corpus Christi, Texas GreenGold began 2009 with ambitious plans to expand to Corpus Christi, Texas, U.S.A. The move is designed to respond to the increased demands for jatropha biofuel products. It will also allow the company to exercise significant control in their forecast of supply and demand in the world market, which the company expects to rapidly expand as auto and air demand picks up. |
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Community Involvement A key element of GreenGold’s mission is community development—after all, jatropha farming is a major source of income for these communities. The company has worked diligently to build schools, playgrounds, and other structures to help establish a positive image and improve the communities in which they operate. |
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GreenGold Financials GreenGold Energies is well-positioned to profit in 2009 as it begins operating activities. The company has setup its first Biodiesel Processing Plant and the first harvest of its jatropha plantation is set to begin during the summer of 2009. |
| 2009 Projected Sales & Net Income | |||
| Income | Pesos | U.S. Dollars | |
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Jatropha Biodiesel Jatropha Press Cake Jatropha Residual Total Gross Income Net Income |
P230,400,000 P1,353,600 P10,828,800 P211,862,400 P72,712,200 |
$4,608,000 $27,072 $186,703 $4,237,248 $1,454,244 |
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| Price-Earnings Table | |||
| Stock Price | Earnings Multiple |
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$0.10 $0.15 $0.20 $0.25 $0.30 |
1.85x 2.78x 3.71x 4.63x 5.56x |
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| Price-Earnings to Growth Table | |||
| Stock Price | PEG Ratio |
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$0.10 $0.15 $0.20 $0.25 $0.30 |
0.02 0.03 0.04 0.05 0.06 |
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Conclusions GreenGold Energies is expecting to earn $1.45 million, or $0.053 per share, in 2009. Meanwhile, the company expects to increase its jatropha production to 2,000 hectares in 2010 and double estimated net income. Assuming a sustainable 20% growth rate, a PEG ratio of 1.0 would yield a share price of $1.07 per share—a substantial premium to the current share price. |
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Manolo Tecson President & CEO Manolo Tecson is experienced in business management, community relations, human resource development and training non-governmental organizations, mass media, and the academe. He worked as director for the Philippine Anti-Graft Council and also worked with the Mindanao Off-Grid Renewable Energy Project (AMORE), which was funded by USAID. Currently, he is not only a key officer, but also involved in R&D and other aspects. |
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Gil Salutim VP & COO Gil Salutim has many years of experience in industrial, mechanical, design-ing and maintenance project engineering. He is the Lead Technical Engineer for the R&D Department of GreenGold and was instrumental in devel-oping the bio-diesel oil conversation process refinery. This refinery is instru-mental in increasing the output of bio-fuels and its other related by-products that are also useful for fertilizers or feed. |
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Rey Oliva Ombudsman & Field Agrarian Director Rey Oliva has more than five years of experience in dealing with local government officials, community leaders, the clergy, non-governmental organizations, and other sectors in the outlying areas of the Philippines, which typically contain precious natural resources, farming and cultivation of jatropha plants. He is responsible for navigating the company through the public relations process and has been one of the keys to success at GreenGold as he understands the importance of solid alliances with the community. |
Jerry Burdeos, CPA CFO Jerry Burdeos has more than 10 years of experience in commerce and accounting management. He is a licensed and certified public accountant. Jerry brings considerable accounting and financial experience and is responsible for the certification of the company’s financial and disclosure state-ments, as he works closely with the CEO to keep quarterly and yearly SEC filings current in both the Philippines and the United States. |
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| GreenGold Ray Energies represents a strong play on jatropha and its promising future for bio-fuels. The company has taken extraordinary measures to refine the way jatropha is grown and harvested in order to maximize its output and make it economically viable for farmers. Meanwhile, the Philip-pines have proven to be a pioneer in the bio-diesel industry by requiring that it be added to diesel throughout the country, similar to ethanol in the United States. | |
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