There is already a huge industry in America built around converting biomass into biofuel. Most of that conversion involves sugar, corn and corn kernel starch.  These readily available feed stocks seemed to be the perfect solution as a replacement of hydrocarbon-based fuels.  What planners didn’t realize is that corn and grain prices worldwide would skyrocket as biofuels were competing with food producers and growers for a finite amount of feed. What is needed is the next generation of biofuels that don’t rely upon scarce supplies of a pricey commodity.

That is where Raven Biofuels Corporation (RVBF) comes in!

Raven’s goal is to become the leading commercial producer of fuel-grade ethanol and high value chemicals to service the multi-billion dollar North American transportation fuel and industrial chemical markets. The government is getting involved too and putting a great deal of money into the effort.

• The Energy Independence and Security Act, signed in December 2007 calls for 36 billion gallons of renewable fuels by 2022, of which 11 billion gallons must come from cellulosic, non-food ethanol.
• The American Clean Energy and Security Act of 2009 calls for $90 billion to be invested into clean energy technologies by 2025.

RVBF is perfecting a “next-generation” cellulosic wastematter process that is based on its patented two-stage dilutive acid hydrolysis process.  They call it “Biofuels 2.0″. It essentially is trying to work on breaking down cellulosic biomatter, such as wood chips, corn stover, and sugarcane bagasse into primary sugar streams that are then converted into a suite of chemicals including ethanol (a fuel), furfal (an industrial chemical additive) and lignite (a coal-like fuel).  These stocks are readily available and do not reduce feedstocks needed for human and animal consumption.

A complete description of the technology and its benefits and advantages can be found on the company website.

Raven management believes its technology is superior to other cellulosic production methods in use today.

RVBF is also different for the following reasons:

• RVBF has invested $24 million in Research and Development (R&D) over the years and has perfected the technology to such a state that it expects to build several bio-refineries over the next five years.
  
• It claims to have two projects on the drawing board:
  • The Mississippi project, which is in a federally-funded opportunity zone, would use local wood waste as feedstock and is expected to produce 33 MGPY, based on a projected 21 MGPY of fuel grade ethanol and 12 MGPY of furfural products, plus lignin cake.
  • The second project, to be located in British Columbia, Canada, intends to utilize pine beetle infested wood for feedstock. (This feedstock is readily available and unusable for other applications.)
• All of its production will come from cellulosic waste streams rather than expensive corn or sugar. Making renewable fuels from cellulosic materials can reduce the amount of carbon dioxide emissions by over 80%!

All of this information about the company is exciting, but the chart really has me excited:

• From a high of 16 cents just a month ago, the stock has given back over 50% of that gain (what a nice treat for us)
• IMO, it appears to be basing at these levels which could be a “launching pad” for the stock in the near term
• The stochastics are oversold which gives impetus to a bounce in the share price
• The MACD is still bearish, but the histogram shows the intensity of the signal is decreasing.

And, more good news!

Just a few weeks ago, RVBF announced a Canadian partner to advance its technology and develop Canadian projects.

The proposed Tk’emlups Biorefinery will require a continuous fibre supply of 500 dry tons per day in order to produce its initial output of 7 million gallons (MGY) of fuel grade ethanol and 4 million gallons of furfural, furfural alcohol, related eco-friendly derivative chemicals and lignin cake. Due to the size of the proposed location, future capacity could be increased to double or triple the plant’s production.

John Sams, President of RVBF, believes “Having a Canadian Partner will accelerate commercialization of Raven’s technology and ensure the success of the Tk’emlups project. There are many attractive elements to the Canadian project that will be appropriately managed and operated from a local level. Having the right people on the ground is the key to success.” The full release can be read by Clicking Here

It seems like RVBF has got a “tiger by the tail”.  With two projects under development and their proprietary technology, I don’t expect the stock to stay at these levels very long.

RVBF still has a long way to go to achieve all of their goals, but I definitely think that this belongs on any traders’ radar.  With this chart setup and their strong story, I wouldn’t be surprised to see this one take off right away!  At these prices I don’t see how we can lose in the short term.

Do your due diligence and make sure to bracket your trades properly — don’t let a hard earned gain ever turn into a loss!

Good luck and good trading,

Jeffrey Dean

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