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Re: gurupup post# 15152

Thursday, 11/20/2014 8:50:14 AM

Thursday, November 20, 2014 8:50:14 AM

Post# of 117752
gurupup - Great idea to try and model what is potentially here. Totally agree that stock price movement is just noise except for traders. A modelling thought for you. We know that there are three components of the new fuel - gasoline, methanol, and the additive. Without knowing what will be charged for the additive, you can build some estimates of the cost to produce fuel knowing the costs of gasoline, cost of methanol, and vary the cost of the additive. My guess is that you can come up with a pretty good range. Link that to what price it will be sold for in FL, assuming purchase orders arrive. Then try and figure out how much working capital will be required to A) produce the additive sufficient to meet demand B)pay for other raw materials (gasoline and methanol - note company may not have to directly pay for these or may get terms whereby customer finances this cost). All this could lead to a gross profit margin estimate/barrel or gallon. Then marry that number to potential usage.

I believe the potential is enormous IF the company can find a way to satisfy the INITIAL working capital requirement. Subsequent product can most likely be funded from gross margin cash flow.

Good luck with you modelling efforts.

If anyone wants to correct my thinking here-feel free as the above came off the top of my head. Hopefully the above serves as a useful starting point for further refinement.