Small Cap Strategist is published by Crystal Equity Research an independent research resource on small capitalization stocks. Follow along as we discuss the most recent trends in the small-cap sector, investigate interesting companies and pan a few not-so-promising stocks.
the end of last year Sweetwater
Energy inked an agreement with Pacific Ethanol, Inc. (PEIX:Nasdaq), an ethanol producer based in California,
supply Sweetwater’s sugars for Pacific Ethanol to turn into fuel.This is all the fashion now in the ethanol
industry.Forget about expensive corn
for feedstock.Ethanol producers have
turned to beet sugars and even the industrial sugars like those made by
Ethanol’s plant in Stockton, California has a production capacity of 50 million
gallons of ethanol, but Sweetwater will supply enough sugar for just a fraction
of the total capacity.Still that
presents considerable demand for Sweetwater.No one is popping any champagne corks because Sweetwater still has to
construct its own production capacity.
has applied for patent protection for its sugar producing process.The company claims scientists from MIT have
verified their success in turning wood wastes and other plant matter with
plenty of cellulose into C5 and C6 sugars.The largest component of plant
matter is lignocellulosic material, which is a combination of lignin, cellulose and hemicellulose.
Cellulose and hemicellulose are a long chains of polymers made up of individual sugar molecules. When acids or enzymes are applied to these
long chains they are turned back to their constituent sugars.The polymer chain split into six carbon
sugar called C6 for short and five carbon sugar or C5. We know C6 as glucose and
C6 as xylose.
names might not mean much to investors, but to ethanol producers they are music
to the ears.Fermenting both C5 and C6
sugars has been proven to increase cellulosic ethanol yield by 40% to 45%.That puts money in their pockets.
may have figured out a way to put some money in its pockets as well.It has taken its sugar ‘know-how’ beyond
biomass.Sweetwater scientists have been
exploring the waste carbon dioxide as a feedstock for their sugar producing
process.In October 2013, the company
entered into a joint venture with Naturally Scientific based in the U.K.Naturally Scientific has already been working
on a modular manufacturing platform to produce sugars that can be used as
biodiesel or bio-chemicals.
seems more likely than not that investor will hear more from Sweetwater Energy
in the coming months.It is a small,
early stage company, and the field seems crowded with many aspiring industrial sugars
developers.Indeed, it is the crowd that is providing some
validation for Sweetwater as announcements of scientific accomplishments by
this or that developer provides confirmation that the group in on the right
track.It is doubtful that advanced
biofuels will be a one-solution industry even if the natural process of
maturation leads to sector consolidation.Sweetwater’s technology has a value whether it commercializes
that technology itself or sells it to the highest bidder.It is well worth
watching to see which larger, more financially capable company might see Sweetwater as a tasty little nugget and gobble it up.
Neither the author
of the Small
Cap Strategist web log, Crystal Equity
Research nor its affiliates have a beneficial interest in the companies