Welcome to Gevo's Fourth Quarter 2021 Earnings Conference Call. My name is Kevin and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will be conducting a question-and-answer session. Please note that this conference is being recorded.

I'll now turn the call over to Heather Manuel, Vice President of Investor Relations & Communications. Please go ahead, Mr. Manuel..

Good afternoon, everyone, and thank you for joining Gevo's fourth quarter 2021 earnings conference call. I would like to start by introducing today's participants from the Company. With us today is Patrick Gruber, Gevo's Chief Executive. Officer, Lynn Smull, Gevo's Chief Financial Officer, and Paul John Richardson, Gevo’s Investor Relations Manager.

Earlier today, we issued a press release that outlines the topics we plan to discuss today. A copy of this press release is available on our website at www.gevo.com. I would like to remind our listeners that this conference call is open to the media and that we are providing a simultaneous webcast of this call to the public.

A replay of today's call will be available on Gevo's website. On the call today and on this webcast, you will hear discussions of certain non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP.

Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in the press release distributed today, which is posted on our website.

We're also making certain forward-looking statements about events and circumstances that have not yet occurred, but not limited to projections about Gevo 's net 01 project and our operating activities in 2022 and beyond.

These forward-looking statements are based on management's current beliefs, expectations, and assumptions and are subject to significant risks and uncertainties, including those disclosed in Gevo's Form 10-K for the year ended December 31, 2021. That was filed with the U.S.

Securities and Exchange Commission and in subsequent reports and other filings made with the SEC by Gevo, including Gevo's quarterly reports on Form 10-Q. Investors are cautioned not to place undue reliance on any such forward-looking statements.

Such forward-looking statements speak only as of today's date, and Gevo disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise.

On today's call, Pat will begin with a discussion of Gevo's business developments, Lynn will then review Gevo's financial results for the fourth quarter of 2021. Following the presentation, we will open up the call for questions. I will now turn the call over to Pat..

Thanks, Heather, and thank you all for joining us. We have had a great and very busy quarter, what I like everything but our stock price. Today, I'll be using a slide deck, please refer to it. And I'll let you know when to turn the pages as I go through it. And we'll start on slide number 3.

Recently, you've had some very important announcements today I'll be talking about how these announcements fit together towards our goal of properly producing 1 billion gallons of stable fuels by 2030. A lot of what we will discuss today will focus on achieving that goal while de-risking the strategy as much as possible.

The axens ethanol for sustainable aviation fuel technology for SAF that alliance is all about axens exclusively licensing their ethanol the SAF technology to Gevo United States. The ADM MOU is about converting large scale capacity for ethanol into SAF. The Colmar supply agreement is about firm demand for staff in other hydrocarbons.

Gevo’s RNG project in Northwest Iowa is about execution of an energy transition project that is expected to bring in meaningful revenue starting later this year. Now, before we get into the details of those announcements, I want to admit it the refresh everyone on Gevo’s overall business and how investors should view it. Please turn to slide four.

Gevo is focused on properly converting renewable carbohydrates into SAF and other renewable hydrocarbons. Gevo has been one of the leaders in these technologies over the years.

In the US, it's a vertically integrated system that includes primary processing of corn, a fermentation to alcohol process, and a chemical process to make renewable hydrocarbons like SAF.

Vertical integration should allow a Net-Zero plant to achieve a very low or even potentially negative carbon intensity or CI score for SAF using the scientific Argonne group model for measuring carbon emissions.

Being vertically integrated from primary processing of corn to fermentation to hydrocarbon production provides an advantage for driving carbon scores down due to integration of systems.

For example, integrating wastewater and generating biogas on site is expected to enable the displacement of fossil based natural gas that we would use to power the facility. Setting a plant we're going to have to fossilise electricity is critical. Because of the large footprint that grid electricity would mean to CI score.

By working with farmers, we believe we can enhance soil carbon capture, which should translate to improve CI scores.

So by reducing and eliminating fossil based energy and Gevo businesses, in particular, and by choosing feedstocks lively, Gevo believes it can achieve Net-Zero SAF, meaning Net-Zero for capturing CO2 at the farm to the exhaust of a jet engine.

To provide the transportation industry with real decarbonizing options, it is critical that we offset the exhaust emissions fully with the carbon absorbed in the fuel production process.

We have established and are developing a business called Verity and Tracking that uses blockchain technology to track carbon and other sustainability attributes for renewable carbon sources through the use. We expect that we will separate Verity and Tracking out as a standalone company at some point perhaps as early as 2022.

We think that the way to deal with all controversy around sustainability is to just document facts, use science and be transparent. And that's what already tracking is all about. Moving on how we're developing a proper business, remember that we had set a goal of a billion gallons of capacity and sales for Gevo’s business system by 2030.

Let's go to slide five. We struck what we believe a good financial offtake agreement with Kolmar. This agreement brings us to nearly 100 million gallons per year of offtake agreements. We expect to get more offtake contracts done relatively soon. Our contract pipeline, where we are negotiating terms is greater than 1.5 billion gallons per year.

As SAF contract momentum picks up, we need more production capacity and likely sooner. Going to the airline industry, airlines themselves have made bold statements about eating SAF and I believe them.

The Chart on the upper left shows that SAF towards the California renewable diesel market by 2030 assuming a 10% SAF blend level, the market would be roughly 13 billion gallons per year. We believe that the economics work for investment and the pricing people can offer works for customers.

Now it's all about building out production capacity to scale, to match the offtake agreements we have in place and the offtake agreements that we expect to ink in the future. Please turn to slide 6.

In the fourth quarter of last year, we did a deal with Axens that grant Gevo the exclusive license in the US to develop and commercialize their technology to convert ethanol to SAP and other hydrocarbons. Now we had been working with Accents on Gevo's isobutanol hydrocarbon production process.

As we got to know each other, it became clear that there was a lot of synergy. We know how to decarbonize feedstocks and production plants and alcohols using our net zero concepts and Axens had proven technology to convert ethanol and other alcohols into hydrocarbons, including staff. Axens is well known in the chemical and refining industries.

Is an outstanding technology and engineering company. The hydrocarbon process technology to make jet fuels from Olefin has been commercialized in the petrochemical industry many times. It's really a strategic relationship. We complement each other.

In addition to Greenfield plants we're developing, we see the opportunity to convert certain existing ethanol plants to net zero staff. We'll work together with Axens to try to make that happen. We all want to grow and faster. We have made the decision to use ethanol as a building block for staff rather than Iva at our net zero one plan.

We believe we can make more money, produce more staff and have a complete engineering package that would work with existing ethanol plants.

Currently, the capital cost for a net zero plant is projected to be about $900 million, fully installed in a non-recourse project financed and that zero one project EBITDA estimates are approximately $150 to $200 million per year. Based on the current assumptions of commodities and all the rest.

Ethanol plants are well known in terms of cost and operating reliability. On the hydrocarbon process. Axens is doing the engineering it will provide certain process guarantees for converting the ethanol into hydrocarbons.

This is a derisk production system as much as we can make it and in the current more cautious environment for financing the right way to move forward. The engineering designs modules integrations are planned to be cookie cutter for deployment at other sites and ethanol plants.

A great deal of the engineering work and designs that we already have completed for NZ-1 will be utilized for NZ-1 using ethanol Axens technology. The fermentation section of the plant will be smaller and we will have to add additional equipment as part of the chemical processes.

We expect NZ-1 to be mechanically complete in 2024 and operating in 2025. We expect to order long lead equipment in 2022 and begin site preparation work later this year. Please turn to slide 7. Many of you may recognize this chart. It's basically the same as before. Although the amounts and product mix has changed there's more SAF being produced.

The total capital expenditure has remained about the same. The IRR is projected to be better using ethanol rather than isobutanol deploying renewable energy and infrastructure to drive down CI is still critical to success. Please turn to slide 8. The Axens relationship in our plants to grow help to put the ADM MoU announcement into perspective.

ADM has some of the biggest and most efficient ethanol plants in the world. We think there's an opportunity to convert those plants into SAF plants and other hydrocarbons. ADM theater has one of the few operating CO2 sequestration sites in the US. We're in the midst of figuring out the how to with them.

We expect that we will be able to leverage the engineering work we are doing with Axens for NZ-1 into any transaction that we would do with ADM. We are also exploring other opportunities with existing ethanol plants and we are currently in discussions with several plant owners.

The idea here is that we can bring our decarbonization partners Juhl Energy, the SAF plant designs and our off take contracts to the table. The value proposition for the ethanol plant owner is simple they would make more money, more reliably by feeding ethanol to a SAF plant. They also would need to be decarbonized along the lines of a Net-Zero plant.

We have a very open business model and look forward to working with many ethanol operations over time. But we stress that Net-Zero 1 is our priority. Ultimately, to reach our 1 billion gallon goal, we expect to build multiple Greenfield sites.

We have several sites in development already, they're at least as good if not better than the Lake Preston site. The advantage of Greenfield sites is that we can optimize the key parameters for long run success.

In addition to raw material costs, we also take into consideration access to the fossilized energy and potential for carbon capture sequestration. In a strategic sense, it is always good to have options. For example, the plant layout that we have developed from Lake Preston to be used at another piece of land of similar size.

We believe that the site we select would require minimal changes to the engineering work. Please turn to Slide 9. We announced that we have begun the startup of Gevo’s RNG project in Northwest Iowa. When our RNG project comes fully in line is projected to be the fifth largest dairy RNG project ever done in the US.

This project has over 20,000 cows and is expected to produce 355,000 million BTUs annually or there abouts. There are three dairies involved at this point. You can see the pictures of the digesters at each of the dairies. The upper right picture is the gas upgrading injection site.

The picture in the middle shows the relative locations of the digestion system that we built, and our Gevo pipeline that connects them to the upgrading system. We expect that the RNG project EBITDA would be approximately $16 million to $20 million per year, across the year of 2023.

I give a range because the RNG project EBITDA will depend upon a variety of assumptions including how carb scores, the CI for each of the dairies.

Now to get a CI score, we have to achieve a steady state, sending an application, wait for the approval to get the full value from carbon California, we'd expect to get those scores in late 2022 or early 2023. Carb is backed up these days with lots of applications.

RNG provides an exciting opportunity for Gevo, we see it as strategic for GEVO because we have to decarbonize our SAF plants and we do like the idea of being able to take RNG up to our Net-Zero 1 plant and drive our CI scores lower if we so choose. We like adding RNG and biogas in our portfolio as an option.

In the meantime, we can make good money, meeting demand in California for our partner, BP. Please turn to Slide 10. This is a rendering -- an engineering rendering of our hydrocarbon plant currently built by Praj in India. We expect that this plant will be delivered to our production facility in Luverne, Minnesota in the latter part of 2022.

We are currently making execute in Luverne this hydrocarbon plant could convert isobutanol into a variety of hydrocarbon products we also expected to be able to produce or to take ethanol and make various hydrocarbon products. We expect to use Luverne as a development site for new products and to improve and refine the IBA production processes.

We may deploy isobutanol in a side by side configuration in the future, for example, as an add on to a Net-Zero plant. Now I'll turn it over to Lynn..

Thank you, Pat. We finished 2021 with the strong cash and cash equivalent position of $40.8 million, as well as $95.2 million of short and long-term restricted cash. Our highly liquid and readily convertible short and long-term marketable securities totaled $339.7 million and are available for capital and operational needs.

Our long-term debt outstanding related to Northwest Iowa RNG was $67 million. Our corporate spent was approximately $18 million for 2021 net of non-cash stock-based compensation.

During 2021, we invested significant capital into our preliminary and advanced stage projects, including approximately $23 million into our flagship Net-Zero 1 project, $52 million into Northwest Iowa RNG and other capital projects, as well as approximately $12 million into strategic patents and licences.

As Heather noted, our full financial statements are available in our earnings release and our Form 10-K both available on our website. I'd like to stress that we substantially advanced the company with our expenditures last year.

We have continued to staff experienced talent to bolster our corporate management platform and to prepare for successful execution across a range of critical functions including stronger design engineering capabilities, continued R&D around our technologies, deeper commercial contract solicitation and execution capabilities.

The development of Verity and the Gevo growers program substantially improved capabilities around investor relations, significant advancement in the integration of our ERP system into current and future operations to enable intelligent automation and reliable internal and external reporting, successful implementation of SOX 404(b) compliance requirements without any deficiencies, and improved financing and financial management capabilities.

We strengthened our balance sheet to provide financial resources to support the development of our one billion gallon-initiative, the equity investment in Net-Zero 1, RNG execution and operational and R&D activities at Laverne.

We advanced the development engineering, and expected non-recourse debt terms and attainability for Net-Zero 1 and we substantially constructed the Northwest Iowa RNG project.

As a result of this progress and our work with institutional investors, there was an impressive shift in Gevo institutional stock ownership from 10% at the end of 2020 to 46% at the end of 2021. We may still be considered a pre-revenue company as our revenues have been intermittent, and mostly were related to testing and R&D activities.

But that will begin to change in 2022 given that we have begun the Northwest Iowa RNG project startup, we expect to start generating revenue and cash flow later this year once the biogas production ramps up and stabilizes.

Initial revenue recognition and cash flow realization for any RNG project in the marketplace lags actual RNG production due to California carbon scores and EPA RINs certification processes. But we will push hard to realize value in 2022.

Upon full RNG operations and certifications, we would expect to see RNG project EBITDA flows in the range of $16 million to 22 million a year, depending on the project certified carbon index outcome and market prices for commodities and environmental benefits.

As we flesh out our one billion-gallon initiative, and how much staff we expect to produce and when, we expect to communicate these plans to our shareholders. Everything we are planning to do is supported by a comprehensive financial enterprise model.

We are happy to be in the growth phase of our business and we are delighted that our capital deployment opportunities should result in excellent returns. We would expect any future capital reasons to support this growth to be accretive. Now, I will turn this call back over to Pat to wrap things up..

Excellent. Let's open up the call for question.

Operator?.

[Operator Instructions] Our first question comes from Shawn Severson with Water Tower Research..

Thanks. Good afternoon, everyone. Hey Pat, could you maybe start with a 50,000 foot view picture here and what's going on with demand for SAF and kind of an update on where the airlines are taking this and any other industry items we can point to in terms of increasing demand there.

Hello?.

Here we go. Sorry. These what we're seeing is because of the government discussions about wanting to see SAF because of some of the policies that are being talked about put in place, because the airline's themselves are making pretty bold goals as to how much has to be replaced by 2030.

We're seeing a definite uptick in SAF, and that we're seeing a shift -- definitely a shift. Before when people pass, it's like, hey, it was hard to tell, now it's clear cut, it's a shift. All of our existing customers are on board with what we're doing. They get it and moving forward with us. And it's pretty darn interesting to see.

So SAF is the one thing everyone can agree upon, that no one's going to -- we got to have hydrocarbons to fly jets over long hauls, nobody disputes that one. And so that makes it much, much easier, and now the momentum is definitely shifted that way. So, our goal is to make more of it, and do it faster and grow bigger.

Hence, we like the idea a lot of being able to leverage existing assets..

And along those buy how does that de-risk the business and talking about in terms of EPC guarantees, cost of capital, obviously a very matured, well developed ethanol market.

So, how is that going to affect the economics for you?.

Well, using an ethanol route, obviously, there's no risk involved in the fermentation systems around that, unlike we're using isobutanol, we would be the guy -- we would be the people who have to guarantee it. And you look at that, and you look at how many gallons you get, how much profitability. The costs are similar using SB on the cost per gallon.

And isobutanol isn't fully optimized. Ethanol cash cost-wise, it's good enough to put out there. But gosh, you add it all up, and you get more gallons for the same kind of capital members. And you know that means you make more profit.

And so you look at all that, and it serves the market need, where the market is heading, and with our other customers that are coming down the pike that we can see. And so then you look at and say, well, how fast can we grow? Well, it turns out this net zero concept that we've been working on pretty translates directly over into using ethanol.

So it's not a big deal from a technical standpoint to substitute. And the engineering overlaps hugely. And so, that makes it a lot easier to go about this. And the thing is, we didn't – two-thirds working closely with actions. We didn't have all the mass and energy balances to be able to figure out what kind of CI scores we could get.

And do they make sense and all that kind of stuff, because really, you have to integrate these things. Well, we had already done that work on isobutanol. And that's where X install we had done an XY team together with like, shoot, we could do this not just that a greenfield plan, but we could also do this at existing ethanol plants.

And that means a faster path for growth given all the demand..

My last question is on process really wasn't -- could you explain a little bit more about what was going on there? What was equipment transfer?.

Yes. So process practice building that plant for us. That's the -- that things in partial construction, and they'll deliver it later this year. It's a alcohols hydrocarbon plant. And it'll be a relatively small one to 3,000 tonnes and it's a plant. So we can make a variety of products.

We can make hydrocarbons, the gasoline products, we can make jet fuel products, we can make diesel products, we can make olefins, we can make feedstocks for doing Appalachian units, we can do a whole variety of things. And so we commissioned this last year.

We suggest people heard us talk about this as the skin, okay, when you put it in an artist's rendition like this or an engineering rendition. It looks a little bit bigger than a skin, it will be several skins stacked on top of one another. But that in fact has been under construction and we'll see it delivered to rubber..

Thanks. Bye. I'll take the rest of the questions offline..

Cool..

Our next question comes from Derrick Whitfield with Stifel. .

Hey, Derrick..

Good afternoon all and thanks for taking my questions. Perhaps for Pat or Paul, you’re referencing slide 8, you're indicating that you're still evaluating site selection for Net-Zero 1.

As there are several greenfield sites that are at least as attractive as Lake Preston?.

Yes..

Can you perhaps elaborate on the degree of economic improvement that is possible at another location?.

Well, it's a -- there's a couple things that come into play, one, obviously, you have to have the land and it's got to be transportation, good corn price, raw materials. You got to have access to renewable energy, at least with wind or, and we also like the idea of access to sequestration. We think Lake Preston will have that too.

But we still have other sites, if we're picking them carefully, it could definitely happen. And that will be interesting in the future, and useful in the future. Along with that, expand upon as we develop the sites, we have been developing sites for actually quite a long time. Because you always have to have alternatives in case somebody gets accused.

And you try to go and deploy something like Lake Preston. You're always going to have alternatives. And so we've been keeping that in mind the whole way, we still talk about it very much. So we have a couple sites that are attractive and some -- and sometimes they come with economic incentive.

And so what we won't -- you won't see us do is trade off a new site if it impacts the timeframes to commercialize, we won't. Unless the payments upfront are so great that we'd have to say yes, but I don't have one of those in hand yet. But those are the kinds of things that can come into play and how we would think about it.

We know that we're going to need multiple sites available, decarbonizing a net zero. Greenfield plant is we think probably easier than doing a existing ethanol plant.

So learning how to do that well, and translating it, it teaches us a how to just deploy the stuff, cookie cutter stuff, but it also gives us the insight as to tricks we can use with existing ethanol..

Great. And perhaps for Pat or Lynn, I know you guys have been working hard on the enterprise financing plan, which you referenced in your prepared remarks to support the 1 million gallon initiative. Could you just speak to the progress on that, and then kind of your latest thoughts on that initiative..

Lynn, you want to come in..

Sure, I'll jump in. That model is substantially complete and useful now. It's a very large model. And it incorporates a lot of flexibility to make different assumptions around growth in capital deployment, the pace, the cadence. And, of course, all of the costs involved and assumptions around revenue streams.

And it does it in a way that then rolls up into a traditional three-statement format. So it's quite advanced. The underlying assumptions that have gone into it, I think, are pretty robust.

And everything that goes in terms of the project level assumptions, you know, is based on everything we're doing it at net 01 and looking at other potential ETJ opportunities. And all of those returns are very attractive. So when we roll-up and look at the impact on the stock price, it's -- it's pretty appealing.

So we'll be sharing some thoughts around that in the future..

Great. Let's….

Sorry, what's fascinating about this is we get one of the things that's attractive about this is when we bring the decarburizations people, everybody wants to deploy renewable electricity or gas or biogas or ingestion. They want to do the -- or sequestration or whatever. All those things are fair game, right.

So we have a bunch of partners who want to work with us to do that put up capital, that's great. Love that. And then we have working with on the ETJ side, with actions, and we are designing modules. So that this is like literally it will be 100 million gallons of ethanol in to make the product hydrocarbons coming out.

So we're designing it so that it literally can go anywhere. And that's a pretty interesting model. We think we can grow faster with that and that solves one of the problems and I got to say it does the risk the heck out of it. Because otherwise, you're left going people does it all work together, well, I got news.

There's no question ethanol could be made. There's no question that the ethanol into hydrocarbons work. And so that completely changes then how people view the risk associated with an appointment of this..

That's great. And then really last for me. With the understanding that you don't have a formal announcement today on Archer Daniels, Midland or Chevron.

Could you just share comments on how your dialogue with those companies are -- is progressing and a reasonable timeline for the disclosure of commercialization plans?.

The conversations are going well with both. And so it's a matter of getting all the pieces together. Obviously, what has to happen, if we're talking about decarburization of, you know, ADM got 900 million gallons of ethanol. That takes a serious chunk of capital. So there's lots of discussions going on in the background. We got to put them all together.

And we can't do it all at once, obviously. And so that's why we comment that we stay focused on net 01. We're going to learn all those stuff. We have to have a concrete focus for that. But we know that everything we're learning applies to these other things. And so we just – we are working at all those pieces out and how to do it.

But obviously, it's way bigger than us -- by ourselves. So, you know, the Chevron what they've been into the project level, we have other people interested in Gevo corporate.

We have, you know, the ADM is they've been very cooperative in trying to sort this out in it, because it is a change of look figuring out all the details of economics, mass and energy balances and all that kind of stuff. And how does it all work and fit together? So we're in the midst of all that.

And remember, we've only had access to the detail from we've only had access to the accent details, all in the last few months. As we sort of sorted it out. You know, so we're making pretty darn good progress. And I like where it's headed..

It's great. Very helpful. Thanks for your time, guys..

Next question comes from Prashant Rao with Citi Group..

Hi. Good afternoon. Thanks for taking the question. I wanted to start some of the RNG side, when something you said about the inflection there and it'll become revenue. The revenue -- going I kind of honing in on that a little bit.

The guidance that you gave the 16 million to 22 million of EBITDA, could you help us walk through, put some color on those on that post-summit range, what sort of CI score you need to get or what sort of credit assumptions and then also a little bit on the off-take, I know, you are working with BP, so I just wanted to understand how that arrangement works, if there's any credit sharing in that 16 million to 22 million, just kind of help us walk through how we should be thinking about that, so we could put that in our models with sincerity..

Yes, I believe the BP agreements posted on an 8-K, but just to summarize that it's a – there is a sharing arrangement and BP places that gas directly into dispensaries in California through their distribution networks. We’re ramping up now.

As we commenced the physical production, we're ramping up the coordination on accumulating the right level of data for the applications with carb. So that we can get that process rolling as quickly as possible, and try to get their approvals for LCFS credits on the CI score as soon as we can.

We do have alternatives for the nearer-term to use temporary pathways, and to go ahead and bring revenues in sooner, but we want to assess, you know, the risk around doing that. And maybe for going higher, higher CI or I should say lower CI outcomes because that temporary is that seem to be a 150, a negative 150.

So, we'll be producing steady state about 355,000 MMBtu a year. And you can kind of do the math on the price of RNG these days with LCFS and RINs. To get to a revenue number. Our EBITDA is at this point, we don't think about leverage, because we financed that project with an LC backed, private activity bonds issuance.

But we will refinance that, probably this year to go ahead and do it on a non-recourse basis. So that we can release that cash collateral back to Gevo for our own use. I'm not sure, Prashant, anything else that I can help you with..

No, I think perfect, that's good. My – appreciate that. My follow-up is sort of related to that. Pat, you talked about, the numbers of yields sort of being updated on that Tier 1 to be more SaaS and you've got that $150 million to $200 million target there.

Just wondering, a lot of moving parts but what does or what does that not need from the credit markets for sale further incentives or other subsidies in order to achieve that $150 million to $200 million? What are you sort of risking there? We've had a lot of talk over the last few months, and there's a lot of positive momentum.

But everything from upsizing the BTC credit to looking at RIMs, multiples, things like that. Can you just help us sort of think about what you think is sort of the, the odds on risk profile for that for that number on Tier 1 that'd be helpful, at least on the revenue side..

Yeah, sure. So I'll start and Lynn you can pile on it. Yeah, so we don't leave you with budget $1 a gallon BTC. Because we think that that’s appropriate number, it's good, I would just like stability in it. And so we can predict it over a longer period of time.

It doesn't need to be more none of us needed to be more – its nice if we could all make more money if it is, but it's not going to cause anyone to shift anything or do different behaviors or anything like that. So that just says that stability is good.

On the RFF side, you know, there's – this is the year where the EPA gets to do its set process, so there'll be some finagling around how RFS works. And I think what we're going to windup with something that's a lot like what we got, except for the power enhancements, that takes into account. Steps for lower carbon scores and things like that.

But it's going to be, I think, the same basic system. So that's kind of what we assume going forward with that we actually predict going forward the same sort of this today. And then, in LCFS, we just model out the long-term predicted carbon scores. We have consultants who advise us. We actually have a bunch of people who do this.

And advise us what that would look like. And then, we incorporate that into our model. But one thing I really like a lot about the way the system works, is that we got three different bites and apples, and the chance of all three of them going down is pretty low.

And so you get, okay, so right now, LCFS in California is 150 bucks a tonnes carbon, okay, that's a fractional thing to us, because that's one part of the green, just one-third of the green value. RFS and the blended tax credit, makeup the other two-thirds. So I like that approach.

We do see that the LCFS tight markets are going to increase we think, because you got different states putting their policies in place. And also in Canada, we have a lot of interest, because they haven't LCFS. But Oregon, Washington, are good, are going now. New York's in the rulemaking state, stage of their LCFS.

And then, you got the Midwestern states are working at it, too. So we'll see which one of those goes first. So all of that creates bigger markets, where there's extra profit? And of course, then there's still business we can do in Europe.

So Lynn, do0 you want to add anything here?.

Yeah, I was just note that these -- those numbers are based on long run projections by independent experts under the debt case. So, we're not as focused on today's corn or today's a carbon price or RINs price. And some are higher than what we have, some are lower.

But over the long-run, we feel like these numbers will be -- we feel that these numbers are definitely achievable from the $150 to $200 million level, definitely..

Okay..

So the way to think of it, when he talks about that debt paid for everyone else was listening. I know you get a Prashant. But the debt case is the cynical case. And when we're talking about what really happened, that's more of an equity case. And it's the higher side. That's what we believe..

Yeah. Got you.

And just one last one, if I could sneak it in the preliminary results of the FDA testing, I was just curious, there's a lot of steps here for those of who are sort of in front of the needle on going from there to what that means in terms of getting certified pathways or even provisional pathways, not just in California, but you mentioned Patrick, a bunch of the other jurisdictions that have their own LCFS flight programs ramping, can you just give us a sense of what's that gets you right now having that preliminary analysis and this peer review process, does that move you materially closer? How does it really you materially closer to any of the jurisdictions you have, so thinking of is end markets? And I'll leave it there.

Thanks..

Yeah. So what happens is that, a lot of the people who are developing their LCFS type policies, they start with the Argonne GREET Model, which is the gold standard of models, and then they start modifying it usually for political reasons or convenience.

In California, does take the GREET Model and they modify it a bit, need to say all corners the same and the discussion. And so well, it's not all the same, it depends. Argonne GREET Model takes that into account. Now in our economics, we just model for the carbon scores that we get in California with whatever their assumptions are.

And this is one of the complications of a business like ours is that every jurisdiction has some variants of the GREET model that you got to take into account and plan into your economics. That's just the way it is. We think that at the national level, we should have Argonne GREET model be the standard, because everyone takes it and uses it.

And then they start tweaking it. But it is the one that is the science based one. So what's your see us doing, it try to educate people about what the facts actually are, there's huge opportunity to capture soil, carbon, the actual CO2 in terms of roof systems, when you're doing locol or not, they build up carbon each year.

You know what we'll do is, we're going to measure field by field and prove it to people. And so, we know that the people who do LCFS, say, tell us that, hey, if you can prove it in your business system, we would consider that. Now, the other way to find out if that's true or not, is to actually go do it. That's what we've worked on.

That's part of what our Verity Tracking is all about. And then, of course, the carbon sequestration offers another opportunity. That's like 30 to 35 CI points lower. And we're friends with the pipeline companies. And so, it's just a question of who we work with and when we announced that kind of things. So those are all possibilities too.

So it's a pretty interesting game and the Argonne GREET model is the one that everyone turns to for the fact-based science-based systems..

Thank you very much. Appreciate the time. I’ll turn it over..

Yes. Thank you..

The next question comes from Amit Dayal with H.C. Wainwright..

Good afternoon, everyone. Thank you for taking my questions.

Patrick, with respect to sort of the financing environment, given recent market developments, interest rate, discussions, etcetera, that are taking place, how has any of that changed for you? Any color on that? And, again, you had highlighted mid 2022, as sort of the target days to complete the project financing side of the story.

Any update on those would be helpful. Thank you..

Sure. So I'll come in first and Lynn jump in. But I had Lynn go out with Citi and do the market testing to see who -- what kind of money is available and what kind of quantities and what kind of price, so we could make sure we update our numbers. But the world is a little weird right now. And so, we went and did that. Lynn came back with nice results.

We like it. There's lots of money who are interested in investing in these projects, having a -- be able to say, no, look, everything exists is an advantage. No, there is no newness here. It's about putting it together in a way that hasn't been done. But the actual -- there's not a risk around fermentation, on risk around the hydrocarbon technology.

That's pretty cool. So I feel pretty good about that. We'll probably close. I’ll let you comment on that Lynn. It's a – I’ll let you comment on that and add any more color to this question? Go ahead..

Sure. Probably given the desire to maintain our schedule, and we'll be deploying capital this year more equity, but the debt closing will probably occur in Q1 of next year. The debt format will -- because we have changed from the ethanol configuration -- sorry, the isobutanol configuration to ethanol.

We are back at the table examining eligibility for private activity bonds. But the work that we did in December was Citi that Pat mentioned was not private activity bonds, it was oriented towards long term institutional debt under more of a mini perm structure. And the terms were absolutely attractive.

Definitely, interest rates are sliding up a little bit, but nothing that would make a good debt financing not achievable..

Okay. So none of this -- the shift out, almost like two or three quarters, does not impact the work you are doing to move everything forward.

Is that how we should read?.

No, that's what you should read. Yes, what's driving us is everybody wants to see us when are you going to commercialize? When is it going to be operating in 2025? Can if we complete in late 2024? It's a tight timeline. So, in these projects, we always build slack anyway, read up some of our slack time.

And I wish I had -- had that close relationship with Axens sooner, we could have sorted this out sooner, but we didn't. And we didn't have the emphasis on SAP wasn't what it is -- a year ago, there wasn't -- it was interesting. It was nice and had potential, but it's not like it is now. The majority of the new demand we're seeing is shifting to SAP.

So, we're adjusting to it. I like -- we see that, it has tremendous long run potential, our folks are modifying the bug. And we'll be -- sort of drops into an ethanol plant, that'd be kind of cool. And -- but we have time to do that now, because we have such a strong intellectual property position.

Before we were pushing it out into the marketplace, what we'd derisked this now, by doing the ethanol route and the jet route.

And with the part that is hard for everyone to grasp, I think is because we're doing this net zero concept where we're decarbonizing these plants, it's not easy to do, you have to know all the details -- and the engineering details. Well, that's what we know.

That's why we're able to do it, and how to incorporate renewable energy and with all the levers. That's not -- you have to go fight for that and figure that out. And that's what we've done. And you know what, it works and it applies to other plants..

So, the front end engineering design work that was being done in the last quarter, say, Q4 2021, is that still applicable or do you have to restart some of that work?.

Most of it is applicable, like all the stuff around, the grind and site work, tankage should be updated, but that's minor. The back end of -- the hydrocarbon process itself overlaps, like 50% or more. Was that? Probably, it's the same.

And so that's what actually got us going in the conversation, because a couple of unit operations that have to be done, and then it is about the -- substituting out the isobutanol fermentation for an ethanol fermentation. That's the work being done right now. And of course, this time, we really are designing to make it module.

That's the work being done right now. And so we have more work to figure that out. We want to see modular ISIS, I worry about supply chain stuff. And I worry -- the world is weird and so I think that we're better off manufacturing one of these in the works if we can do it. And that's what we're working on with Axens right now..

Okay. Understood.

And with respect to the equipment or the plants that -- is building for you guys, just a word, how should we think about revenues, et cetera, from that plant?.

I think, I hate it when people think about taking -- it's really -- a really nice small plant, and we're going to be doing it to develop new products. So, I hate it when people start talking revenue, because then the expectations get blacked out, because we'll run it as we want to run it or not.

And depending on what we're trying to do, and what catalysts we're testing, or what unit operations and stuff like that. So, I hate to set any kind of an expectation of revenue around that because it's misleading, I think. Now, that could change. There's a bunch of specialty products that people want – want to us to make.

And we'll see what's true and what isn't, once they sign a contract. And if that's the case, then we would turn around and report it, like you're asking for it revenue and tell people what it is and what to expect. But I hate doing it in advance of that. Even though, I know what we sell the product that we make from it.

I just hate set an expectation around that..

Understood.

How much – what's the sort of CapEx or the investment that is going into this Raj related plant?.

About 15 million or so..

Okay. Understood..

And we spent a lot we spent, it's been, we started this project quite a while ago..

Okay. Understood, understood. Yes..

So it's already incorporated. It's already incorporated into our financials, that money has been spent on it. So it's not like a new, I don't remember what – what percent it is already spent. But committed, but it's well along..

Yeah, very little, very little left to go. So our cash balances won't be dragged by that to complete..

Okay. Got it. And just one last one with the shift to, you're going to ethanol versus isobutanol for the SAF product. Is this – is this sort of permanent shift to ethanol? You know, let's say net 02.

Would you still consider isobutanol, or would you eventually stick to ethanol? As you get to the second, third, fourth plants?.

I think what we – my assumption right now is the first few plants are going to be ethanol oriented, because we can deploy them quicker. And we don't have to prove anything to anybody. It's clear. And I also think that, doing working with existing ethanol plants that's in the cards for us. So we got to go do that and strike those deals and get them done.

That's part of – that's what we got to go do this year. That is one of the things we got to go do, because that's part of the business model about how we can grow, right? Taking ethanol down into where to get into SAF through an existing plant, so you don't have to invest the capital in the fermentation side of things.

I can tell you, though, that there are some very nice, Greenfield sites where you know what we might want to build Greenfield to build new fermentation, because bouy, they're really good sites. And so that's different. The way that we think about isobutanol is you could add it on and side-by-side, we can do that any time.

And right now, we just – we will see isobutanol, I believe it will be back. And we have the possibilities of building isobutanol plants too. But I would rather this point that made earlier about we had technology on a cash cost basis that to perform and get us about the same kind of cash cost in ethanol budget. Now ethanol is 100% optimized, it's done.

The ethanol process is not fully optimized. There's lots of cost improvements that can be done. And I'd rather go do those and design it, so it drops in easily to an existing ethanol plant, particularly one of my greenfield Net-Zero plants.

And we could switch it, because remember what I said about the hydrocarbon process, they're substantially the same from alcohol into a hydrocarbon, the product mix is different. The olefin mix is different.

And so when you're thinking about us, and we've talked about this in the past Amit, you have to think about us as an olefin company, we're decarbonizing olefin most of the primary building blocks to make plastics, chemicals and all the rest. And so people want those things. Well, that's in part what we're going to do with this price in Laverne..

I’ll take my other questions offline. Thank you so much..

You bet..

I'm not showing any further questions this time. I would like to turn the call back over to Patrick Gruber for closing remarks..

Well, it's been very exciting. I think this year can be quite a year as we just drive and are focused on getting this thing deployed, this sorting through the fermentation system and how to make it more reliable in this light in this uncertain world that we have, I'd like it, derisking is great.

And I also like the ability that we have working with accidents where we get to use proven technologies that I wish I had known it sooner.

Remember, we've been using -- we've been developing ethanol technology making hydrocarbons for the last decade at least, we call it ETO and so there's lots of synergies here, as we start to combine things and think about what can be, in the meantime, we drive to Net-Zero 1.

That's the focus, get that done, I want that capital equipment belong lead stuff, purchases here, I want to move some, get the ground prepared so that we can build an earnest in next year. And if we want to get that renewable natural gas project, I mean, it's astounding. This is fifth largest plant ever done in the states.

That's something and it looks like a great project. So that'll be interesting, too. We got to get that thing operating and making money. So we got lots to do this year, but it's primarily focused on, you know, it's going to be all about Net-Zero 1.

It's going to be about bringing on board into this business system, other ethanol plants to work with us, so we can grow faster, and drive the RNG, get her done. So with that, I appreciate it. Thanks for joining us. Thanks for your interest and your support in Gevo..

Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day..