RiceBran Technologies (RIBTW) (the "Company" or "RBT"), a global leader in the production and marketing of value added products derived from rice bran, today provided an update on the plant expansion projects underway at its Pelotas, Brazil-based rice bran oil bio-refining subsidiary Irgovel - Industria Riograndense de Oleos Vegetais Ltda.
As previously announced, RiceBran Technologies intended to direct a significant portion of the proceeds of its recent equity raise to increase capital at Irgovel.
That additional funding is being used to complete the final phase of a series of projects aimed at updating and expanding all aspects of its rice bran bio-refining facility including an increase in raw rice bran (RRB) processing capacity at Irgovel from 6,000 metric tons per month to more than 9,000 metric tons per month.
The series of related expansion and plant upgrade projects described by management as the Phase 1 Projects was necessitated by growing global demand for rice bran oil due to its known health benefits and attractive functional characteristics such as a high smoke point in frying.
The final and most important part of the Phase 1 Projects is the upgrading and expansion of the crude oil extraction plant, responsible for extracting crude rice bran oil from the RRB prior to refining, along with installation of a state-of-the-art desolventizer/toaster (DT), condensors and related equipment. Irgovel halted operations on January 16, 2014 to complete this final phase and expects to be fully operational with the increased capacity in place before the end March.
Orders for increased rice bran oil production expected from the additional capacity have already begun to be placed. Management expects strong demand for its rice bran oil to continue going forward.
W. John Short, CEO & President of RBT and Chairman of the Management Committee at Irgovel commented "We expect to complete this important expansion project by the end of the first quarter. In the second quarter, we plan to restart the plant and debug the new equipment as we ramp up production to hit planned capacity of more than 9,000 metric tons per month in the second half of 2014. Based on new orders already placed for our increased rice bran oil capacity and inquiries from both current and new customers, we are confident that demand for our degummed, dewaxed, neutralized and fully refined rice bran oil products will remain strong for the foreseeable future."
Short continued, "While the expansion will result in a short term reduction in shipments at Irgovel, we believe the significant economic benefits of this expansion in the second half of 2014 will result in improved overall sales and margin performance at Irgovel compared to 2013. We anticipate the full effect of the expansion will lead to significant improvements in financial performance in 2015 and beyond."
In addition to increasing RRB processing capacity by more than 50%, the project phases completed over the past 15 months include: upgrading the on-site water treatment plant; installation of a new, more efficient boiler that burns rice hulls to provide steam needed for operations; drilling of three wells on site to provide the necessary water sources for boiler operation; installation and upgrading of electrical systems including a new power substation; construction of new buildings and installation of a new system for receiving and storing raw rice bran; installation of new technology for cleaning and extruding raw rice bran expected to increase quality and productivity of oil extraction; construction of a new, state-of-the-art animal nutrition plant that allows both wet and dry blending of compounded animal feed aimed at domestic and international markets for dairy and beef cattle, swine, sheep and equine markets among others; installation of rice lecithin extraction equipment; and the upgrade and 50% capacity expansion of the free fatty acid distilling plant.
