|Mission NewEnergy’s basic plan is to ship biodiesel produced in Malaysia from jatropha seeds produced in India to markets in Europe and the US. M1 and M2 are its biodiesel plants in Malaysia. Source: Mission NewEnergy. Click to enlarge.|
Australia-based Mission NewEnergy Limited, a biodiesel refiner and one of the world’s largest Jatropha plantation companies by acreage (350,000 acres in India), has entered into a binding five-year biodiesel Supply Agreement with Valero Marketing and Supply Company, a subsidiary of Valero Energy Corporation, the largest independent crude-oil refiner and marketer in North America.
The agreement further provides a subsidiary of Valero the right to purchase up to 25% of Mission at A$0.45 per common share, representing a 61% premium to the current 30-day Volume Weighted Average Price.
Under the terms of the supply agreement, Mission will supply Valero with up to 200,000 tonnes (60 million gallons) of biodiesel per year. Valero has the right to double that amount to 400,000 tonnes per year and to extend the term by an additional five years. The agreement represents gross revenue potential to Mission of more than US$3.5 billion based on prevailing market prices, maximum volume and contract life.
Over the course of the contract, Mission will supply Valero with biodiesel produced from its captive Jatropha feedstock. Subject to favorable economics, as Mission’s available stock of Jatropha matures to scale Mission will supply Valero with palm oil based biodiesel.
Mission was the first non-German biodiesel producer to be certified by AGQM, the German Biodiesel production process certification body.
Under the terms of the equity deal, Mission will issue Valero two tranches of warrants to purchase common stock. The first tranche of 81.41 million warrants will expire on 31 August 2010 and if fully exercised will provide Mission with A$36.6 million. The second tranche will be issued to allow Valero to maintain their tranche-one equity stake of 25% based on the conversion of any of the other currently outstanding Mission convertible securities.
Tranche two warrants are exercisable at a 20% discount to the 20-day volume weighted average price (VWAP) prior to the date of exercise and are capped at a maximum of 68.58 million expiring 30 September 2012.
The transactions with Valero are subject to Mission shareholders’ approval.
In order to meet its funding needs given the size and scope of the supply agreement with Valero, and to satisfy its other commercial objectives Mission is considering various financing options. The first product shipment under the Supply Agreement is expected to occur during the second quarter of calendar year 2010.
Mission NewEnergy has operations in Australia, Malaysia, India and Mauritius. Its biodiesel refineries are located at Kuantan Port in Malaysia. Currently operating a 100,000 tonne per annum biodiesel facility, Mission is building a second, 250,000 tpa (approx. 75 million gallons p.a.) plant using Axens’ second-generation heterogeneous catalyst adjacent to the 100,000 tpa plant.
Mission NewEnergy Investor Presentation Sep 2009