BioAmber progresses with construction, commissioning of Sarnia

By Erin Voegele | May 08, 2015

BioAmber Inc. has released first quarter financial results, reporting construction and commissioning of the company’s biorefinery in Sarnia, Ontario, is progressing on time and on budget. The facility is expected to being operations during the third quarter.

"We have been able to execute effectively in Sarnia while reducing the risk associated with the next plant, and now we have the capital needed to undertake critical engineering and site related work on our next plant so that we don't lose time," said Jean-Francois Huc, CEO of BioAmber. "On the commercial front, the recent Bayer MaterialScience announcement is a strong endorsement of BioAmber's leadership position in bio-succinic acid and a clear signal of the growing demand for more sustainable chemicals.”

During an investor call, Huc indicated construction on Sarnia is nearing completion. We expect construction to be substantially complete by the end of the month, he said, noting that some peripheral work will continue to be completed at the site. The plant’s capital costs remains within its original estimate of $125 million, plus or minus 10 percent. According to Huc, the company currently expects the total to range from $125-$137 million. Regarding construction performance, Huc also noted site workers have achieved 550,000 hours on site without a single loss-time injury.

While construction on Sarnia wraps up, Huc said the company is advancing in parallel with commissioning and startup work. Utilities are hooked up to the building and are in service, he said, adding that the analytical lab is fully operational.

As startup of Sarnia nears, Huc also noted that BioAmber is already putting together plans for its second commercial-scale biorefinery. “Our next plant will be almost seven times the size of Sarnia, but we anticipate it will cost only for times the cap-ex of Sarnia due to economies of scale,” he said. At full capacity, the second plant is expected to generate more than $400 million per year in sales, assuming a selling price of $2,500 per ton.

“This second plant, once in operation, will drive our growth and is expected to generate the free cash flows needed to self-finance the deployment of our future plants,” Huc said.

BioAmber has set a goal to reach financial close for the second plant by the end of the first quarter of 2016, with commercial operations beginning in 2018. To achieve that goal, the company needs to reduce the risk associated with the project as much as possible, Huc said, noting progress also has to be made this year on a number of prerequisites to financial close, including site selection, government support, engineering, design, and permitting.

Regarding achievements made during the quarter, Huc noted BioAmber entered into a technology license with Johnson Matthey Davy Technologies that provides demonstrated engineering for the production of BDO and THF from bio-succinic acid. Following the close of the first quarter, the company was also chosen by Bayer MaterialScience as a supplier of bio-succinic acid for a new product line.

Revenues for the first quarter were $367,000, up from $351,000 during the same period of the prior year. The increase was due to an increase in volume sold, partially offset by a decrease in average selling price. Gross profit was $57,000, compared to $71,000 for the first quarter of 2014. The decrease is attributed to a decrease in the average selling price and an increase in the volume sold. The company recorded a net loss attributable to BioAmber shareholders of $8.3 million, or 38 cents per share, compared to a net loss of $19.9 million, or $1.07 per share, during the same period of the previous year. The adjusted net loss attributable to BioAmber shareholders was $8.6 million, or 39 cents per share, compared to $8.3 million, or 45 cents per share, during the first quarter of 2014.