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Biofuel Stock Addresses High Fuel Costs in Caribbean


Islands may provide a relaxing getaway from civilization, but being located in remote areas of the world has its drawbacks. In Anguilla, for example, electricity prices have soared to $0.63 per kilowatt-hour (“kWh”), leaving many citizens of the country unable to pay their bills. The country’s power company has even been forced to blackout certain areas of the country. 


Caribbean countries like Anguilla and Aruba face these hurdles because the majority of their power comes from diesel generators. With the rising cost of diesel fuel adding to already high importation costs, prices of electricity and transportation fuels have risen dramatically over the past several years, causing big problems for citizens and governments. 


Moving Towards Biofuels 


There are many potential solutions to these problems – ranging from solar power to biomass production – but transitioning to biodiesel may represent the easiest option. Biodiesel fuels can be produced using a variety of inputs – such as used cooking oils and other non-food based crops – and function in existing diesel generators without significant modifications. 


According to the U.S. Energy Information Administration (“EIA”), biodiesel operating costs average approximately 31 cents per gallon, exclusive of oil or grease and energy. The use of cooking oils and other waste feedstocks can help reduce the overall cost enough to make these renewable fuels very price competitive with diesel that’s priced at $4.00+ per gallon. 


BioFuel Aruba is one firm working towards addressing these concerns by promoting biofuel usage in Aruba. Founded by biodiesel activist Gregory Fung-A-Fat, the company’s goal is to convert used cooking oil from the country’s restaurants into biodiesel for use in mass-transit and transportation end markets, as well as for the production of electricity. 


Methes’ New Agreement 


Methes Energies International Ltd. (NASDAQ: MEIL), a renewable energy company that offers an array of products and services to biodiesel fuel producers, recently signed a Purchase and Cooperation Agreement with BioFuel Aruba to initially provide one Denami 600 biodiesel processor for use within the country to meet these needs. 


The Denami 600 biodiesel processor is capable of processing 158 gallons per hour of continuous flow and producing approximately 1.3 million gallons per year of biodiesel. With a footprint of just 16’ x 11’, the processor can be easily installed in any location and comes with a methanol recovery system that’s ASME/TSSA and UL/ULC approved. 


With pilot project agreements with Aruba Airports Authority and the public transit company Arubus BV, BioFuel Aruba has an existing presence that it plans to expand moving into the third quarter of 2013. The two companies are also working with the country’s government to develop a biofuels mandate to be incorporated into national energy policy. 


Investment Opportunity 


Methes Energies represents an attractive investment opportunity, with a market capitalization of just $25 million. Aside from selling its Denami processors in places like Aruba, the company operates its own biodiesel production facility in Mississauga, Ontario, Canada and is ramping up production at its new facility in Sombra, Ontario, Canada. 


The company believes that small and medium scale biodiesel producers will be the fastest growing segment in the market, which leaves it uniquely positioned with its network of customers and two of its own medium-scale facilities. Combined, these two businesses could generate significant value for shareholders over the coming quarters.



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