Final Report Eco Australis - 2nd Generation Ethanol_CV_Panama vFinal131014

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Final Report
Economic Feasibility Study - Utilization of Cellulosic Biomass at SER Alcoholes
v.1.0 rev.0 – October 2014

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Daniel Lapidus Fernando Portela
International Agricultural Development Specialist President
Office of Capacity Building and Development Eco Australis Latinoamerica
U.S. Department of Agriculture / Foreign Agricultural Service Andes 1293
1400 Independence Avenue, SW, Stop 1033 Piso 10, Oficina 1003
Washington, DC 11100
20250 Montevideo
United States of America Uruguay
Final Report - Economic Feasibility Study for the Utilization of Cellulosic Biomass at SER Alcoholes
Montevideo/Buenos Aires/Panama, October 13th, 2014
Dear Mr. Lapidus,
You will find hereunder the Final Report of the Economic Feasibility Study that has been elaborated
the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) bfor the benefit of y
Eco Australis/IBS/ecosur america.
This study was performed with the kind assistance of IDIAP, CleanVantage and SER Alcoholes
personnel, as well as the valuable inputs and guidelines of the USDA/FAS Specialists and Experts.
This present Report was drafted according to the Financial Results obtained through the Project
Financial Models included in the Excel Spreadsheet attached to this Study.
Both Documents constitute the two components and deliverables of this Economic Feasibility Study
and were developed for the exclusive benefit of the USDA/FAS.
This Final Report will be revised and/or modified according to your comments and suggestions
within the next two weeks.
Sincerely,
Fernando Portela
President
Eco Australis Latinoamérica S.A.
Attachment: << Economic Feasibility Study - 2nd Gen Ethanol CV_Panama_131014.xlsx>>

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Outline
Notice. p. 3
Executive summary. p. 4
Presentation of the project. p. 6
Local Ethanol Market Information. p. 8
Technology Description. p. 9
Evaluation of the Available Feedstock & All Related Cost. p. 15
Brief Legal Analysis. p. 21
Financial & Sensitivity Analysis of the project. p. 23
List of Figures & Tables. p. 30
References & Sources. p. 32
Contact. p. 33

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Notice
This document has been prepared exclusively for the benefit of the U.S. Department of
Agriculture’s (USDA) Foreign Agricultural Service (FAS), and its Senior Officers and Specialists.
It has been elaborated by Eco Australis/IBS/ecosur america on the basis of information made
available by IDIAP, CleanVantage, USDA/ECPA, SER Alcoholes, as well as other private and/or
publicly available sources believed to be reliable.
Eco Australis/IBS/ecosur america make no representation or warranty as to the accuracy or
completeness of the information contained in this report, which has not been independently
verified, and nothing in this report shall be deemed to constitute such a representation or warranty.
Nothing contained in this economic feasibility study is a promise or a representation of the future or
should be relied upon as being so. The valuations presented in this document and its attachments
are based on estimations and/or market conditions which are subject to change. Eco
Australis/IBS/ecosur america disclaim any liability arising from any use of this document or its
contents or otherwise arising in connection herewith.
This economic feasibility report and its attachments do not include nor constitute a Financial or
Technical Due Diligence of the herein mentioned project.

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Executive Summary
The purpose of this Study is to evaluate the economic feasibility of a project that aims at utilizing
cellulosic biomass to produce additional ethanol at SER Alcoholes distillery in Las Cabras, Panama
(Formerly known as Alcoholes del Istmo), by means of a bolt-on 2nd generation ethanol production
technology.
This Study was conducted by Eco Australis/IBS/ecosur america on the basis of information made
available by IDIAP, CleanVantage, USDA/ECPA, SER Alcoholes as well as other private and/or
publicly available sources believed to be reliable.
The feasibility of developing and executing the 2nd Generation ethanol production bolt-on Project
in SER Alcoholes, Panama is based on the following assumptions and local conditions for its study,
and analysis:
1. The Project is being integrated to an existing 1st generation ethanol distillery, with idle
operating capacity to integrate additional sugars to its fermentation process during the
whole year.
2. The Project includes two different production Models, in order to use all biomass available
during 345 days which are the total operating days in one year, and to match
CleanVantage systems capacity. Both alternatives are explained and compared in the
Financial Analysis section of this Report and in the attached Spreadsheet.
3. Project CAPEX:
a. Evaluating the required capital expenditures for a new technology is always
challenging and more if it requires scaling up and extrapolating data from a
pilot plant to a commercial one.
b. The study has been elaborated from the BOSS (Biomass to Sugars) Block
Diagram provided by CleanVantage, with inputs and outputs of streams and
flows.
c. It is assumed that CleanVantage’s technology is fully developed and that
CleanVantage is in capacity of scaling up the existing pilot plant to an
industrial, commercial scale project as considered in this Study.
d. The cost of land for the project implementation, as well as storage buildings
and warehouses were estimated at $0,00 considering the fact that they are
part of SER Alcoholes’ Industrial Site.
e. Most equipment providers contacted for this Study provided estimated
equipment values considering the possible discrepancies that could arise
when a detailed project is developed and presented to them for quotation.
f. The Total Project Investment required for the project as evaluated by this Study
are:
i. Model 1: $17.3M., for an additional ethanol production of 15.8M. liters/y.
ii. Model 2: $12.8M., for an additional ethanol production of 9.2M. liters/y.
>> The current ethanol production of SER Alcoholes is 40M. liters/year.

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4. Project OPEX:
a. The operating expenditures of the entire 2nd generation ethanol production process
are greatly reduced by the current distillery operational conditions as it has idle
production capacity to handle the bolt-on project operation and can deliver steam,
water, electricity, personnel etc. at a marginal cost.
b. Cost and available biomass have been determined according to IDIAP gathered
data and SER Alcoholes experience in biomass for steam production in its boilers along
the past 10 years.
c. One of the key factors to maintain control on OPEX is the cost of Enzymes for the
hydrolysis process. For this Project, CleanVantage is able to obtain a lower price than
the standard market price usually offered by Novozymes.
d. The Total OPEX of the Project as determined by this Study are:
i. Model 1: $ 0,833 per Liter of Ethanol Produced (LAP).
ii. Model 2: $ 0,838 per Liter of Ethanol Produced (LAP).
>> The current official price of ethanol in Panama is $0,79/liter.
5. Benefits from Panama’s Law 42:
The most relevant benefits arising from Law 42 are the exemption of Duties relating to imports,
tariffs, fees, contributions and levies pertaining to all machinery, manufacturing equipment and
plants, production equipment, supplies, etc. for a period of 10 years, as of the start of commercial
operations; as well as an income tax exemption for a period of 10 years, from the start of
commercial operations.
6. Financial and Sensitivity Analysis:
a. The Project has two main sources of income; revenues coming from Ethanol and by-
product sales, specifically C5 sugars.
b. The Project Study, started with an Ethanol Price of $4,62/gallon but the Government
has set a new price for Ethanol of $2,98/gallon from August 2014 to August 2015.
c. Other than OPEX in the Project cash flow, there are two other cost to be considered
and are:
i. Ethanol transport from distillery to Petrol Stations which is included in
Ethanol Price
ii. CleanVantage fee, which is 4% of all revenues from Ethanol Selling price.
d. The Project Financial results, as calculated in the attached Spreadsheet, show that
with the current price of ethanol the Project is not feasible, even when lowering all
CAPEX and OPEX in unrealistic proportions.
e. SER Alcoholes is discussing with the Government to reach a new price closer to $4,00
/gallon. The negotiations were still ongoing at the time of completing this Study.
f. The Sensitivity Analysis included in this Report shows that the lowest ethanol price, to
make this Project feasible should be higher than $3,50/gallon. With this price we can
have positive returns doing minor adjustments on other key issues, such as CAPEX and
biomass cost, but as it can be observed in the Sensitivity Analysis, small changes in
ethanol prices, make big differences in returns for the Project.
g. The minimum financial return expected from an investment is a subjective criterion
and as such, it is difficult to determine the project’s financial inflection point. However
a minimum IRR of 13.75% would require a price of ethanol of $3.5/gal. for the Model 1,
the most interesting operating scenario of the two included in this Study.

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Presentation of the Project
This economic feasibility study was conducted by Eco Australis/IBS/ecosur america on the basis of
information made available by IDIAP, CleanVantage, USDA (FAS)/ECPA, SER Alcoholes, as well as
other private and/or publicly available sources believed to be reliable.
The project aims at utilizing locally available cellulosic biomass to produce additional ethanol at
SER Alcoholes distillery in Las Cabras, Panama (Formerly known as Alcoholes del Istmo), by means
of a bolt-on 2nd generation ethanol production technology.
1. Location
The SER Alcoholes industrial complex, comprising Alcoholes del Istmo’s alcohol distillery, Ingenio
San Carlos’ Sugar Mill and Campos de Pesé’s ethanol distillery, is situated close to the small town of
Las Cabras, in the Pesé District, Province of Herrera in Panama. Offices and factories are located
32 kilometres away from the city of Chitré, at 250 km from Panama City.
2. SER Alcoholes
Alcoholes del Istmo S.A. was incorporated in November 1997, although its history goes back to
1977, when it started operating as a sugar mill and alcohol producer as “the Corporación
Azucarera La Victoria“, a public-private partnership aimed at boosting the local development of
the rural region of Herrera.
Its main activity is the production of clear distilled liquor and alcohols coming from sugar cane
molasses provided by sugar mills of the region. Alcoholes del Istmo is the largest distillery of Panama
and has operated as an independent company until 2009, when it became part of Grupo Pellas.
Since then, Alcoholes del Istmo changed its brand name for SER Alcoholes and a new sugar mill, -el
Ingenio San Carlos- together with a brand new ethanol distillery were implemented and
commissioned in early 2013. SER Alcoholes is one of the largest ethanol producers of Central
America and the only ethanol producer in Panama.
Figure 1: Map of Panama

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3. View of the Industrial Complex
Figure 2: SER Alcoholes Industrial Complex in Las Cabras
GPS coordinates
Latitude 7°52'20.20"N
Longitude 80°32'15.74"W
Figure 3: SER Alcoholes Industrial Site in Las Cabras

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Local Ethanol Market information
The aim of all biofuel programs and mandates established worldwide is to mitigate greenhouse gas
emissions by replacing part of our fossil fuel consumptions with renewable, cleaner fuels. According
to the EPA, 28% of the total GHG emissions in the US come from transportation, which almost equals
the sum of Industrial and Agricultural activities GHG emissions.
The Ethanol market in Panama was established by Law 42 of April 20th, 20111 which promotes the
national production of biofuels and sets the general guidelines of the national policy for promoting,
encouraging and developing the production and use of biofuels […].
As of May 2013, the transportation gasoline sold in 175+ petrol stations participating in the national
ethanol program has a mandatory blending of Ethanol that was raised from 2% in April 2013 to the
current level of 5% (since April 2014), will hit 7% in April 2015 and should reach 10% by April 2016.2
The market is entirely regulated by the National Energy Secretariat which is the responsible entity
for developing, promoting and executing the strategic programs and projects established by Law
42.
The Government is technically the only source of demand for ethanol, therefore political and legal
risk will prevail over standard market risk.
Legal analysis from different sources in Panama indicate that there should be no change in the key
legal aspects defined by Law 42 and its subsequent amendments and modifications, which are
basically tax exemptions and incentives aimed at promoting investments that will allow national
production levels to reach the required ethanol percentages in gasoline.
Notwithstanding the above, the Government has the right to fix ethanol final prices paid to
distilleries, which brings a lot of risk and uncertainty to the industry.3
As a matter of fact, the newly established Panamanian Government decided on August 22nd 2014
to lower the purchase price of ethanol by 35% from $4,62/gal down to $2,98/gal.
This decision was unexpected and no stakeholders’ consultation was conducted prior to
establishing the new price of ethanol.
Following this sudden price decrease, the local ethanol market was frozen due to the fact that SER
Alcoholes became unable to operate under these conditions and stopped production and sales
to the State. Since then, the gasoline that is retailed in the country does not include any
percentage of ethanol and this situation is likely to continue until a new price for ethanol has been
agreed between the Government and SER Alcoholes.
The national ethanol mandate has however not been put into questioning and the necessity to
keep the mandatory blending of 5% ethanol in the national gasoline was recently confirmed by
the National Energy Secretariat4. Making the use of ethanol optional was deemed unfeasible due
to the required investments petroleum companies would have to make to allow a combined
offering of both E5-95octane and pure 95octane gasoline in the 175+ petrol stations that
participate in the program.
1
www.gacetaoficial.gob.pa/pdfTemp/26770/32564.pdf
2
3
www.energia.gob.pa/noticia-secretaria-de-energia-numero-219.html
4
www.prensa.com/impreso/economia/gobierno-avala-etanol/379086

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Technology Description
1. Ethanol Production, From 1st to 2nd Generation
The 1st Generation ethanol is based on Technologies utilizing crops rich in starch, e.g. corn, grain
and sugar cane. The majority of large scale ethanol production in the world at present is based on
1st generation technology which means ethanol has been produced using digestible (C6) sugars
from corn, wheat, sugar (beets/cane) etc., based on a fully mature fermentation technology.
There are very few uncertainties involved in the process, raw materials, and the corresponding
markets. These types of plants generally have a greater value as food sources rather than as fuel
sources but there are some exceptions to this, such as Brazil which uses its huge crops of sugar
cane to produce fuel for its transportation needs, and the U.S. fuel ethanol industry which is based
primarily on the starch in the kernels of feed corn, America's largest agricultural crop.
As the need for (fuel) ethanol grows and prices of 1st generation ethanol increase, producers look
for alternative sources of biomass to produce their biofuel. This alternative can be found in biomass
products, bagasse, corn cobs, wheat bran, grasses, and rice straw or wood chips.
The Cellulose is the fibre contained in leaves, stems, and stalks of plants and trees – the most
abundant organic compound on earth. This is why Cellulosic ethanol is called “2nd Generation
Ethanol” and is expected to be less expensive and more energy-efficient than today’s ethanol
production technologies, simply because it can be made from low-cost and largely available
feedstock.
The success of cellulosic ethanol will depend on how fast the technology is commercialized and
how much it costs compared to the alternatives.
2nd Generation biofuels have many advantages to consider, such as:
a. The abundance of available feedstock, in this case biomass residues, as a major source of
lignocellulose; additionally, 2nd generation biofuels can be produced from a wider range
of feedstock than 1st generation biofuels.
b. It will ease the stress on corn as a non-competitive alternative to food production as the
ethical question of using food for fuel has become more and more relevant.
c. When processing cellulosic biomass which contains lignin, although it cannot be
converted to ethanol, it can serve as an energy-rich boiler fuel to provide all the energy
needs of an ethanol production facility.
d. The distilleries, especially those producing sugar cane-based ethanol, will operate all year
round using their full installed capacity.
e. It will enhance rural economic development.
On the other side, 2nd Generation ethanol has some disadvantages, part of them are:
a. It is not a mature technology and basically all 2nd Generation ethanol distilleries currently in
operation worldwide are demonstration projects, not commercial ones.
b. Operational costs are uncertain especially as regards biomass provision and enzymes
costs. There is an inconsistency in the cost of enzymes for biofuel applications which
seriously hampers robust techno-economic analysis of biofuel production processes.

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c. Some of the waste coming out as by-product needs more investment to take advantage
of its value and adds uncertainty in decision-making at many levels for current producers.
d. For the time being, 2nd Generation biofuels such as ethanol, need strong subsidies to be
investor-friendly and overcome the initial investment risk.
2. The Project
This Project is based on a 2nd Generation ethanol production technology provided by
CleanVantage5.
CleanVantage was founded in 2010 to commercialize the technology and know-how originally
developed by BioContractors, a Danish technology company owned by Dr. Birgitte Ahring.
A vision of the biorefinery as a “carbon slaughterhouse”, where the full-value of the biomass is
realized, has resulted in the BioChemCat process, in which CleanVantage owns or has exclusive
rights to all intellectual property necessary for commercialization of the process.
BioChemCat is a hybrid system incorporating both biochemical and thermochemical processes.
BioChemCat uses an innovative pre-treatment technology, which produces an easily fermentable
hydrolysate without the use of acids or bases, followed by fermentation to produce platform
molecules.
Through catalysis, CleanVantage platform molecules can be converted to infrastructure ready
fuels and green chemicals. Concentrated stocks of these platform molecules do not degrade
even with extended storage. The key to CleanVantage’s industry-wide highest yields is the efficient
conversion of all parts of the biomass to platform chemicals, including the majority of the lignin. The
key to CleanVantage’s low operational costs is the use of a stable, robust microbial consortium
during fermentation that does not require sterile conditions6.
There is a BioChemCat pilot plant located at Washington State University’s Center for Bioproducts
and Bioenergy in Richland, WA. This $1.5 million pilot plant project was developed by
CleanVantage, in collaboration with Washington State University Tri-Cities, the Port of Benton and
Pacific Northwest National Laboratory. The pilot plant is designed to test all process steps for
producing CleanVantage platform molecules from up to 200 kg of biomass material per day.
Figure 4: CleanVantage’s Pilot Plant In Washington (DC)
5
http://www.cleanvantage.com/Company.aspx
6
http://CleanVantage.com/Technology.aspx

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For the present study, all aspects considering technical limitations/challenges on pre-treatment
production up to C6 sugars ready to distillation, -which are key issues for this 2nd Generation
technology- are not discussed. All other technical limitations will only be considered under
production costs such as lignocellulose feedstock, transportation, efficient enzymes, grinding
equipment, evaporation, presses, etc.
3. CleanVantage - Block Diagram BOSS - Bagasse to Sugars
Before the biomass is pre-treated, it has to be delivered and stored at SER Alcoholes site. Storage
in SER Alcoholes site is part of the Project, but not of the BOSS description hereunder.
Feedstock storage will be done in an open space as it is assumed that if it is well packed in bales,
seven to ten rows high, in which case rainfalls will not be an issue for afterwards use of the biomass.
A minimum of 20 days of storage is needed, for which there is enough space in SER Alcoholes, for
either project models. The needed surfaces are as follows:
Feedstock Storage
Model 1 Model 2
12 thp 6 tph
Daily Biomass consumption 332,1 166,0 tons
20 days stock 6.641,6 3.320,8 tons
Density 0,3 0,3 tons/m3
Volume 26.566,4 13.283,2 m3
Height 5,0 5,0 m
Storage Surface 5.313,3 2.656,6 m²
Figure 5: Feedstock Storage Requirement
Block Diagram of BOSS Bagasse to Sugars:
Figure 6: Block Diagram of BOSS Bagasse to Sugars (CleanVantage)

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BOSS diagram, inputs and outputs + internal streams
Figure 7: BOSS flow diagram – Detailed streams
Pre-processing
From storage to process, biomass enters in a Handling and conveying operation. Biomass goes
through a size-reduction step to make it easier to handle and to make the ethanol production
process more efficient.
There is a grinding process to achieve a uniform particle size (6 to 12 mm) and then it goes through
a conveyor to the AWEx system. In the grinding process there is specific equipment for dust
collection.
All equipment for these three steps, grinding, dust collection and conveying are standard
equipment. There are companies in the market which can provide a turnkey solution for the full
project, or it can be purchased in parts, but in either case, having a complete and accurate
CAPEX calculation, would require a complete design of this pre-processing part.
Making a grinding system suitable for all types of feedstock and their different characteristics,
would require a thorough analysis, and many times it is recommended to start with a bench scale
test before purchasing the proper grinding equipment.
C5 Sugar Separation
AWEx Feed:
Pre-treated Bagasse:
956 kg solids +1694 kg Water
Total 2650 Kg
Solids = 36%
Evaporation Unit
Hydrolysis
AWEx condensate vent:
Solids 4 kg + Vent 258
Total 262 kg
Water 592 kg
Evaporator condensate A
10 kg solids, 2375 kg water
2385 kg total
Pre-treated solids –
665 kg solids, 1232
kg water, 1897 kg
total (35% total
solids)
Raw C5 sugars
305 kg solids, 3687 kg water
3992 kg total
C5 product – 292 kg solids, 542 kg
water, 834 kg total (35% total solids)
Enzymes 22 wt%
(18 kg)
Hydrolysis feed:
668 kg solids,
2002 kg water.
2670 kg total
(25% total solids)
Evaporator condensate B
3kg solids, 770 kg water,
773 kg total

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This part of the Project was evaluated with Eng. Miguel Ullivarri, our internal expert, included in our
staff for this study. Mr. Ullivarri was the project leader of Grupo Ledesma’s Biomass Project
completed in 2012 (200.000 tons of biomass processed/year - from field to boilers).7 With his
expertise and experience on systems for grinding, screening, dust collection and conveying, we
worked on a model for receiving 332 tons/day of Bagasse (we did not analyze any other
feedstock), and with the help of different suppliers that participated in Ledesma’s project, we
established a basic cost for this case study.
Fragmaq Industria e Comercio de Máquinas-Diadema /SP Brazil8, actual suppliers of Ledesma,
have been contacted to corroborate cost calculations for different equipment. Finally these cost
estimates were submitted to SER Alcoholes which confirmed they were in line with what they would
expect for such project. With all data cross-checked from these three sources, we determined the
numbers to be considered for CAPEX calculation.
AWEx Pre-treatment
This Wet Explosion process is a turnkey system designed and developed by CleanVantage. It
requires a supply of makeup water from the ethanol plant, steam at about 21 bar, and pure
oxygen to operate.
This is the Key process of the system and the basic CAPEX were obtained from CleanVantage for
two different models,
• 50,000 TPY AWEx System - One - 6 tph system (dry solids basis); Installed equipment cost:
$3.6 million
• 300,000 TPY AWEx System - Three - 12 tph systems (dry solids basis); Installed equipment
cost: $16.1 million
As this Wet Explosion process is part of CleanVantage’s know-how, this Study will limit itself to
consider this process’ inputs and outputs. It requires size-reduced biomass from the pre-processing
system and will discharge the pre-treated biomass slurry to the C5 sugar separation step/process.
Other costs for this AWEx pre-treatment module which are not Basic Cost, are included in a line of
the attached spreadsheet as “Civil Works; Electromechanical Equipment (power transformers,
electrical wiring, metering equipment, piping, valves; etc.); Assembly & Installation, etc. “
C5 Sugar Separation
After the AWEx block, feedstock goes to C5 Sugar Separation, where Solubilized C5 sugars are
separated from cellulosic solids in screw press. This screw presses are standard equipment, used to
separate solids from water. Solids pass to enzymatic hydrolysis and water with all soluble solids in it
(some solids are still in this stream) goes to C5 sugars recuperation via evaporation.
Cost for screw press or belt press filter (it has to be defined in the final design which is the most
appropriate for each case) was calculated from standard equipment and to obtain a better
quotation several other suppliers were contacted: Grupo Nahuelco Argentina - representative of
Johnson Screens9; Industry & Separators Suppliers10; Andritz Chile Ltda. (Separation Technologies)11;
Línea E Ingeniería12.
7 Grupo Ledesma - www.ledesma.com.ar/3/quienes-somos
Ledesma is one of the largest sugar and alcohol producers in Argentina.
8 www.fragmaq.com.br/
9
www.johnsonscreens.com/es/node/458
10
www.iss-separators.com.ar
11
www.andritz.com/ep
12
www.lineae.com.ar

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Evaporation
Raw C5 sugar solution is evaporated to the desired concentration, and then Evaporated water is
condensed and recycled to C5 sugar separation and enzymatic hydrolysis. All C5 sugars
recovered nominally at 35 wt% solids can be sold as animal feed, with excellent value. To
evaporate this stream to the desired concentration, a two or three step evaporation unit is
needed; steam (provided by the Distillery), a condensed unit and all piping for recycled water in
the C5 sugar separation and Hydrolysis.
CAPEX for this stage has been calculated with the experience in evaporation projects made in SER
Alcoholes, and with the help of expert Eng. Ramón Traverso from Ledesma’s Ethanol Distillery in
Argentina.
Enzymatic Hydrolysis
The solid stream from C5 sugar separation coming from the presses, goes to Hydrolysis where at a
Solids loading of 15% water and commercial enzyme solution at a temperature of 50°C, stays for
2,5 to 3 days HRT - Hydraulic Retention Time – until there is a 85% conversion of cellulose to glucose.
In this enzymatic hydrolysis reaction, cellulase enzymes are used to break the chains of sugars that
make up the cellulose, releasing glucose.
This Hydrolysis process requires tanks, temperature (low temperature because it works at 50 °C)
which can be provided by an external heat exchanger, and of course a control oanel to maintain
appropriate operating conditions.
CAPEX calculations were realized with Mr, Alexis Diez from Tank Connection13 who assisted in
determining a cost based on those Hydraulic Retention Time and operating Temperature.
Solid/Liquid Separation
This solid/liquid separation can be done by a commercial decanter/centrifuge to provide clarified
C6 sugar solution to feed the ethanol plant. From this stream there are residual solids which may be
composted for soil amendment. Burning solids was not considered as it requires drying them and
there is not enough capacity in the distillery facilities. (Steam for drying + boiler for burning).
CAPEX cost was calculated same as C5 Sugar Separation block, with the same suppliers, although
not using screw or belt presses, but a commercial decanter.
Any Optional anaerobic digestion of solids for methane production will be considered if SER
Alcoholes goes on with the vinasse anaerobic digestion project which is under study.
Note. Utilities for the whole process including those on the AWEx system, were considered as a
whole package in CAPEX budget.
13
www.tankconnection.com

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Evaluation of the Available Feedstock & All Related Cost
The Project needs certainties on biomass availability to remain feasible from an operational
standpoint, as it is the principal raw material for 2nd generation ethanol production, and of course
all logistic cost from field to distillery will be financially decisive. Therefore, in order to reduce logistic
cost and simplify as much as possible the feedstock planning, it is recommendable that all the
required biomass comes from agricultural activities nearby SER Alcoholes Distillery.
SER Alcoholes is located in the middle of an agricultural area where many different crops are
produced. These activities generate large amounts of biomass residues which are usually left in the
field. This happens not only to reduce erosion and recycle nutrients and organic matter back into
the soil, but in many cases because there is no market to sell those biomass residues. Consequently,
farmers prefer to leave them on the soil rather than facing the risks and uncertainties of investing in
proper collection machinery.
For our study, as we will use only biomass left from harvested crops, our Biomass inventory is
estimated as the total amount of plant residue remaining after harvest, minus what has to be left
on the field as organic matter or cover to prevent soil erosion. There are no standard for maximum
removal rates, but 60 to 70 percent of all residues is achievable. Nonetheless, in practice, there is a
much lower recovery rate, especially when the proper equipment is lacking or is not being used
properly.
The current practice in Panama allows for a lot of improvement as regards biomass collection rates
and therefore constitutes a great opportunity in terms of biomass availability. Actual availability
can be improved with more efficient collection equipment, better crop management practices,
The biomass general information used for this Study is based on three main sources:
I. Instituto de Investigación Agropecuaria de Panamá IDIAP study, provided by Mr. Rodolfo
Morales.
II. SER Alcoholes data.
III. Other sources.
After gathering all data from the above mentioned sources, a Biomass Availability and Cost table
were elaborated14, considering all operations involved in the process from field to Distillery,
collection, gathering, baling/packaging, and transportation. Temporary storage in SER Alcoholes is
considered at free cost, as there is available room for it.
I. IDIAP study.
The study includes information on availability, location and some references on costs. Mr. Rodolfo
Morales is currently conducting a major study which will be presented in December 2014, with
more information available, but as all results are still under review and will only be released after
the final presentation.
For a better understanding of the actual situation of biomass in Panama, the following information
was given by Mr. Rodolfo Morales and was used to determine availability and cost.
a. Biomass Location: maps of rice and corn producers which will be our major sources of
biomass, at a radius of 100 km from SER Alcoholes Distillery. (see below)
b. Available biomass: For the inventory of raw materials and to determine the available
volume, the study was based on data from MIDA (Ministerio de Desarrollo Agropecuario)
14
Please see the attached Spreadsheet to this Report, tabs 5 and 11.

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on rice and corn harvested per hectare, recorded in the progress of planting and
harvesting in November 2013.
c. Not all farmers were considered in the study, only those located in the surrounding
Provinces and Districts of the selected area that are using mechanical harvesting
equipment.
d. A survey on the use of crop residues of maize and rice was prepared, with the support of
an extension of the MIDA, the interview was conducted on a sample of 8.6% of corn
farmers and 10.6% of the population of rice farmers in the study perimeter. These
percentages are recommended in the literature (10) range.
e. To find out which were the farmers willing to sell or selling their waste, IDIAP made a survey
through a questionnaire to 10% of the farmers and extrapolated all results. For example: if
60% of rice farmers respond affirmatively to sell rice straw, 60% of rice straw that can be
achieved in the area under study was considered. This was also undertaken with corn
farmers.
f. Biomass cost is only clear for rice bales which are USD $1,50 per 35 lb, including 100km
transport to destination.
g. Quality of the biomass was only studied in terms of humidity, which is 12% to 15% for rice
bales, and 30% for corn.
Figure 8: Corn Crop Parcels Repartition

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Figure 9: Rice Crop Parcels Repartition
IDIAP study shows that most farmers will be willing to sell biomass as it will bring an additional
income to them. The other important data from the study is the biomass availability within a 100 km
radius around SER Alcoholes distillery.
Distribution of Crops Rice Corn
Province N° Producers
Surface harvested
(Ha)
N° Producers
Surface
harvested (Ha)
Coclé 263 9 584 10 302.30
Herrera 45 655 126 1570.00
Los Santos 161 10 073 583 13 963.88
Veraguas 116 10 245 6 87.70
TOTAL 585 30 557 725 15 923.88
Figure 10 and 11: Repartition of Crops and Harvested Surfaces / Available Biomass Quantities
Biomass Availability as per IDIAP study:
IDIAP Biomass Availability Data Tons /Year
Corn Stover 24 936
Rice straw 57 203
Bagasse (only Campos de Pesé) 10 153
Total Biomass Available 92 139

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II. SER Alcoholes Data.
SER Alcoholes has a long experience using biomass as a fuel source. The following table shows
tons/year and cost/ton for all the different biomass they are using as fuel in their biomass boilers.
Bagasse comes only from their own fields, but all others are from nearby farmers crops and own
production.
SER Alcoholes Biomass Fuel
Types
Quantity
Tons/year
Tons of
Steam
Total Cost
/Year
Biomass
Cost/Ton
Bagasse (Ton) 750 1.514 $ 3.750 $ 5
Wood Chips local (Ton) 4.000 8.077 $ 172.000 $ 43
Own Wood from Fields (Ton) 1.200 2.423 $ 51.600 $ 43
Wood Sawmills (Ton) 1.200 4.431 $ 51.600 $ 43
Risk Husk Bales (Ton) 1.172 4.456 $ 64.721 $ 55
Bagasse Bales (Ton) 661 1.906 $ 36.496 $ 55
Total Mix (Ton) 8.982 22.807 $ 380.167 $ 42
Figure 12: SER Alcoholes Biomass Fuel Mix
The next tables are a study SER Alcoholes did for a nearby area of 350 hectares, to find out cost
and availability of biomass from corn fields.
Biomass On-Field Collection Analysis
Biomass on the field 5,0 Ton/ha/yr
Area in study 350,0 Has
Quantity available biomass 1.750,0 Ton/yr
Weight 270,0 kg/bale
Yield 18,5 bales /ha
Quantity 6.481,5 Bales
Collecting performance 25,0 Bales/hr
Days of harvest 25,0 days
Area harvested per day 14,0 has/day
Bales per day 259,3 Bales/day
Machinery needed x day 0,9 Machines
Rental equipment
Chop and Bale 60,0 $/hr
working hours 12,0 hr
harvest days 25,0 days
Daily cost 720,0 $/day
Total cost for Chop and Bale 18.000,0 $/total
Tractor for Transport bales 45,0 $/hr

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working hours 6,0 Hr
Daily cost 270,0 $/day
Total cost for tractor 6.750,0 $/total
Equipment + Tractor 24.750,0 $
Cost per bale 3,8 $/bale
Cost per biomass ton 14,1 $/ton
Benefit 15,0 $/ton
Selling price 29,1 $/ton
Transport to SER Distillery (2X 100 km) 20,4 $/ton
Total Cost 49,6 $/ton
Figure 13: Biomass On-Field Collection Analysis
Transport was estimated at $20,4/ton for a radius of 100 km from distillery and $2,5/km.
III. Other sources
After the 16th September meeting in Panama with IDIAP, SER Alcoholes, CleanVantage (Dr. Birgitte
Ahring), and Mary Ensch from USDA, two biomass sources have been added:
a. Additional Bagasse of 18.000 tons/year.
b. Rice Hulls with an availability of 20.000 tons/year. In the meeting, Dr. B. Ahring confirmed
this feedstock was excellent for ethanol production and IDIAP (R. Morales) and SER
Alcoholes (Rafael González) agreed on the availability and cost of this feedstock.
IV. Conclusion
All the gathered information gathered from different sources gives a reasonable knowledge of the
biomass availability from different feedstock in a radius of 100 km from SER Alcoholes distillery.
Final estimated biomass quantities available, all sources:
Biomass (wet)
Availability and Cost
Tons/year Cost $/ton Humidity % Total
Corn Stover 24936 $ 49,60 0,3 19,16%
Rice Straw 57203 $ 49,60 0,15 43,96%
Bagasse 28000 $ 24,30 0,45 21,52%
Rice Hulls 20000 $ 55,20 0,15 15,37%
Total Available 130 139
Figure 14: Biomass Total Quantities Available

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Biomass Prices per Ton per Type
Figure 15: Biomass Prices Per Type
Biomass Mix – Availability
Figure 16: Biomass Mix - Availability
19,16%
43,96%
21,52%
15,37%
Biomass Availability (wet)
Corn Stover Rice Straw Bagasse Rice Hulls
$ 0,0
$ 10,0
$ 20,0
$ 30,0
$ 40,0
$ 50,0
$ 60,0
Corn Stover Rice Straw Bagasse Rice Hulls
Biomass Cost in $/Ton

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Brief Legal Analysis
The Ethanol market in Panama was established by Law 42 of April 20th, 2011 which promotes the
national production of biofuels and sets the general guidelines of the national policy for promoting,
encouraging and developing the production and use of biofuels […].15
As of May 2013, following the execution of the Executive Decree 345 of May 14th 2013 signed by
former President Ricardo Martinelli16, the transportation gasoline sold in 175+ petrol stations
participating in the national ethanol program has a mandatory blending of Ethanol that was raised
from 2% in April 2013 to the current level of 5% (since April 2014), will hit 7% in April 2015 and should
reach 10% by April 2016.17
Law 42 defines biofuels as "fuels or oxygenators produced from raw materials of animal or
vegetable sources, agro-product processing, organic waste or any other form of biomass, which
includes products such as bioethanol and biodiesel, among others".
Those activities are entirely regulated by the National Energy Secretariat18 which is the responsible
entity for developing, promoting and executing the strategic programs and projects established by
Law 42. The Ministry of Agriculture (MIDA) will be the official organ responsible for developing
mechanisms to promote the production of any vegetable crop or animal production that can be
used as feedstock for the production of biofuels or biomass needed for the generation or
cogeneration of electricity. Included in these mechanisms is the production of biomass and energy
crops within the agricultural products or crops favored by the regime of preferential loans in the
country, such as the purchase of farms within a term of up to 25 years, improvements to farms, land
titling systems, the purchase of machinery and equipment, irrigation and infrastructure systems and
lines of credit with preferential interest rates for the establishment of these crops.
In addition to the aforementioned incentives, the said Law 42 states that companies or foreign
capital that promote the production, marketing and use of biofuels based on products obtained in
Panama, will be entitled to a benefit or incentive equivalent to 20% of the value of locally
purchased raw material, which will be managed in accordance with the provisions of Law 76 of
2009 on Industrial Development Certificates19. These Certificates can be used for the payment of
all national taxes, fees and contributions related to their beneficiaries, with the exception of the
supplementary minimum taxes and dividend taxes, the excise tax on fuel and petroleum products
or the taxes subject to the retention system. They cannot be used either for the payment of taxes
or contributions of tax periods prior to their issuance.
General Incentives introduced by Law 42:
Article 27 of Law 42 of 2011 specifically states the exemptions offered to natural or legal persons
involved in the production processes of raw material for the generation of bioethanol, biodiesel,
biogas and its by-products, as well as the generation and/or cogeneration of electricity from
biomass, which include the following exemptions20:
1. Duties relating to imports, tariffs, fees, contributions and levies pertaining to all machinery,
manufacturing equipment and plants, production equipment, supplies, power lines,
substations and electric distribution and/or transmission systems and other equipment, for a
period of 10 years, as of the start of commercial operations.
15
16
www.gacetaoficial.gob.pa/pdfTemp/27287_A/41582.pdf
17
18
www.energia.gob.pa/Biocombustibles.html
19
20
Source: Mossack Fonseca - a major international Law firm established in Panama.
www.mossackfonseca.com

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2. The transfer tax on tangible goods and services, known by its acronym ITBMS, currently at
7%, for all machinery and plant manufacturing equipment, production equipment,
supplies, power lines, substations and electric distribution and/or transmission systems and
other equipment, for a period of 10 years, as of the start of commercial operations.
3. The income tax for a period of 10 years, from the start of commercial operations.
4. The income tax applicable to income generated by the sale of Certified Emission
Reductions or CERs (Carbon Credits).
5. Payment of the industrial license fee and/or notice of operation, the Control, Monitoring
and Supervision fee paid to the National Authority of Public Services, as well as municipal
taxes and/or rates, for a period of 10 years from the start of commercial operations.
6. The taxes to provide the services necessary for the construction, operation and
maintenance of production plants.
7. The distribution and transmission charges when engaging in direct sales or in the open
market, always keeping in mind that in no case may the transmission or distribution costs
be transferred to the users, for a period of 10 years, from the start of commercial
operations.
As an additional incentive for those buying bioethanol and biodiesel from Panamanian feedstock
used for blending with fuels such as biofuels, the said Law 42 of 2011 states that a tax credit of $0.60
per gallon will be generated, which is not transferable and may only be used to offset the
payment of the excise tax on fuels and other petroleum products.
The Law 42 and the specific legal regime offered by the Republic of Panama to ethanol producers
is highly attractive indeed; additionally, the local market requires the current national production
levels to be multiplied by 3 in the next 2 years to satisfy the growing demand as the mandatory
percentage of ethanol in gasoline is risen over the years. There is as a matter of fact an urgent
need for a second or even a third local ethanol producer, otherwise Panama would have to either
review its ethanol mandate percentage or import foreign ethanol to satisfy the local demand.
The mandatory aspect of the program has several times been challenged but the newly elected
President and his Government recently stated their position as regards the non-viability of an
optional ethanol offering in the Panamanian petrol stations.21
The critical issue remains the ethanol price fixing which can be unilaterally modified by the
Government through the National Energy Secretariat as seen recently. Such situation offers no
guarantee or visibility to local producers or possible future investors. Discussions with Government
bodies and the National Energy Secretariat are taking place at present; once the price issue has
been resolved in an investor-friendly manner, Panama will represent an excellent opportunity for
ethanol producer candidates, for both foreign and national investors.
21
www.prensa.com/impreso/economia/gobierno-avala-etanol/379086

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Financial & Sensitivity Analysis of the project
I. Key Assumptions:
The key specifics and assumptions used in this Study are listed as follows:
1. There is no competition as SER Alcoholes is the sole ethanol producer in the country at
present. This monopolistic situation may change in the future.
2. Ethanol in Panama is a highly regulated market. Local producers are required to obtain an
operating license delivered by the Government.
3. Panama is a stable economy, with a low inflation rate and a fixed currency parity with the
United States Dollar: 1 Balboa = 1 US Dollar.
4. The project depends on governmental regulations and even though Panama has a stable
economy, policies may change with Government alternation.
5. CAPEX were calculated based on information given by CleanVantage.
6. Variable costs are divided in three basic items:
• Biomass cost and logistics from the field to SER Alcoholes Distillery,
• Biomass to Sugars, CleanVantage Process from biomass to C6 sugars,
• SER Alcoholes Distillery costs from C6 sugars to ethanol.
7. Biomass availability was based on IDIAP studies and further discussions conducted with
both SER Alcoholes and IDIAP.
8. Biomass cost was based on SER Alcoholes actual cost for biomass as fuel and
transportation cost has been considered for a 100 km average radius from Distillery.
9. The financial analysis was made for a period of 8 years; the project’s lifetime could be over
20 years before major changes occur, as 2nd generation ethanol is a new technology and
is not likely to become obsolete during the lifetime of the project.
10. Financial considerations for the study:
• Cost of Debt (Interest Rate): 7.5 % annually.
• Income Tax: 0% for a period of 10 years according to Law 42.
11. Even though SER Alcoholes is able to finance the project, a 65% external financing ratio
was considered.
12. All special tax exemptions, grants or incentives available under Law 42 have been
considered in the study.
13. Ethanol Selling Prices for the project were taken out from Panama Government and are
applicable from August 2014 to August 2015 = $2,98 per Gallon.

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II. Summary of the Project Figures:
Model 1 Model 2
Production Days
114 180 51 114 180 51
Zafra22 No Zafra Additional Zafra No Zafra Additional
Total Production Days With
Biomass Sugars
345 345
Ethanol Production per Day
(liters)
210.000 161.591 53.258 206.234 134.962 26.629
Current Ethanol Production
(liters)
39.975.000 39.975.000
Additional Ethanol
Production Bolt-on Project
(liters)
15.767.571 9.186.985
Total Distillery Production
(liters)
55.742.571 49.161.985
Project CAPEX Model 1 Model 2
AWEx CleanVantage (all costs included) $ 5.366.667 $ 3.600.000
Preprocessing: Grinding Process & Dust Removal $ 1.250.000 $ 903.846
C5 Sugar Separation: Press Block $ 625.000 $ 350.000
Enzymatic Hydrolysis: 3 days HRT Block $ 975.000 $ 636.538
Raw C5 Sugars Evaporation Block $ 900.000 $ 700.000
Solid/Liquid Separation (after Enzymatic Hydrolysis) $ 625.000 $ 350.000
Cost for Equipment installed in SER Alcoholes
including: freight, insurance, (Law 42 Duties 0%); civil
works; electromechanical equipment; power
transformers, electrical wiring, metering equipment,
piping, valves; assembly & installation, etc.
$ 5.718.205 $ 4.828.846
Engineering, Final Project Design, Procurement;
Commissioning
$ 1.894.302 $ 1.470.556
Total Project Investment $ 17.354.174 $ 12.839.786
OPEX ($/liter of alcohol/ethanol produced = $/lap) Model 1 Model 2
Total Cost CleanVantage BOSS process $ 0,281
SER Alcoholes Distillery cost $ 0,23
Total Operational Cost per lap (BOSS + Distillery) $ 0,511
Biomass Costs $ 0,323 $ 0,328
Total Operational Cost per LAP $ 0,833 $ 0,838
Figure 17: Summary of the Project’s Financial and Operational Results (expected)
22
“Zafra” is the harvesting period that starts on the last week of December or on the first week of
January and ends on the last week of April.
“No Zafra” is the period that starts post-Zafra and goes until the next one, in January of the
following year.

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III. Financial and Sensitivity Analysis:
After gathering all the data for the Project and using an Ethanol Price of $2,98 per Gallon (Panama
Government price from August 2014 to August 2015), the resulting financial figures and ratios can
be summarized as follows:
Model 1 Model 2
Current Ethanol Production (liters) 39.975.000,00 39.975.000,00
Additional Ethanol Production Bolt-on Project (liters) 15.767.570,65 9.186.984,58
Total Production with the Bolt-on Project (liters) 55.742.570,65 49.161.984,58
Total CAPEX $ 17.354.173,76 $ 12.839.786,35
Ethanol Price Actual
$/Gallon $ 2,98
Revenues from Ethanol (biomass) $ 12.412.746,76 $ 7.232.294,41
Revenues from C5 $ 2.239.398,89 $ 1.309.745,96
Total Revenues $ 14.652.145,65 $ 8.542.040,37
Total OPEX $ 14.616.013,34 $ 8.642.798,84
EBITDA $ 36.132,31 $ -100.758,47
IRR Negative Negative
NPV Negative Negative
Figure 18: Summary of the Project Ratios with the Current Ethanol Price
With an ethanol price of $2,98/gallon, all ratios appear to be negative and the Project does not
reach a sufficient profitability to be feasible.
The sensitivity analysis usually measures the responsiveness of financial results to small changes in
key factors; it accounts for example how price volatility and sudden variations can affect the
viability of a project. In this Case Study, these factors are Ethanol Price and Biomass Cost. There is
also another operational variable which may be relevant for the sensitivity analysis as it can be
deemed as important as Biomass: Enzymes cost. It has nonetheless not been included in this
sensibility analysis as CleanVantage (the technology provider) is confident that a reasonable price
of $1,35/kg can be obtained (Vs. $2,2/kg (Novozymes market price).
In order to perform the Sensitivity Analysis and understand how Ethanol Price, CAPEX and OPEX
variations affect this Project, a $3,5/gallon base price of ethanol was considered. This price makes
and shows how CAPEX and OPEX variations can affect the Project’sthe Project feasible
profitability.
1. Ethanol Price
The 2013 ethanol price of $4,62/gallon was suddenly changed by the recently established
Panamanian Government –through the National Energy Secretariat- down to $2,98 /gallon on
August 2014, a -35% reduction. This price is valid until August 2015 and will be revised on a yearly
basis afterwards.
The former $4,62/gallon ethanol price was enough to cover all uncertainties on CAPEX or OPEX of
the Project, and even made it an attractive investment opportunity with an IRR of 43,30% for the
Model 1 and 34,64% for the Model 2; whereas the new value for ethanol appears to make the

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Project unfeasible and jeopardizes the future of the entire Panamanian ethanol industry. Unless
biomass cost is lowered in unrealistic proportions, the project would not even reach breakeven.
If finally SER Alcoholes succeeds in its negotiations with the Government and obtains a new price
of ethanol nearby $4,00/gallon, the 2nd Generation ethanol bolt-on Project subject of this Study will
become feasible with the herein considered actual costs.
In this sense, the performed Sensitivity Analysis helps revealing what minimum ethanol price level
would make the Project feasible. As such, and without changing any other cost or value, Model 1
needs $3,43/gallon (11,03% IRR) and Model 2 needs $3,58/gallon (10,21% IRR) in order to show
positive financial returns.
Both Project Models become very attractive from an investor’s perspective as soon as the price
reaches $4.00/gallon (28,90% IRR for Model 1 and 21,77% IRR for Model 2).
Figure 19: Biomass Cost Variation Vs. IRR
The following table shows the financial results of the Project Models when the price of ethanol
reaches $3,50/gallon, with all other values and cost unchanged.
Model 1 Model 2
Total CAPEX $ 17.354.173,76 $ 12.839.786,35
Ethanol price $/gallon $ 3,50
Revenues from C5 $ 2.239.398,89 $ 1.309.745,96
Total Revenues $ 16.818.128,30 $ 9.804.051,47
Total OPEX $ 14.702.652,64 $ 8.693.279,28
EBITDA $ 2.115.475,66 $ 1.110.772,19
IRR 13,75% 7,42%
NPV $ 3.719.666,64 Negative
Weighted Average Cost of Capital 9,8%
Figure 20: Summary of the Project’s Financial Results with a $3.50/gal. Ethanol Price
-20%
-10%
0%
10%
20%
30%
40%
50%
$ 2,98 $ 3,28 $ 3,43 $ 3,58 $ 3,73 $ 3,87 $ 4,62
0% 10% 15% 20% 25% 30% 55,0%
Model 1
Model 2
Ethanol Price Variations
IRR

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2. CAPEX
As stated above in this Report, CAPEX have been calculated based on information disclosed by
CleanVantage. A Block Diagram with streams and flows, which is called BOSS - Biomass to Sugars
made for 1000 dry tons of bagasse was provided.
No data from other projects to compare was available as this is a new technology and there is
only one Pilot Plant from CleanVantage operating with this technology, thus the cost of scaling it
up is not clear. The herein stated values and calculations were nonetheless validated with SER
Alcoholes and CleanVantage through different meetings and communications and it can be
considered that all data reflects in a reasonable way what to expect if this Project is developed.
CleanVantage estimates the Project CAPEX to be in the $20 M. range, based on their knowledge
of the full process and their experience.
The following table shows how the different CAPEX estimates determined by this Study and
CleanVantage impact the Project financial profitability.
Model 1
Project Study CleanVantage
Total CAPEX $ 17.354.173,76 $ 20.825.008,51
Ethanol Price $ 3,50
IRR 13,75% 9,54%
NPV $ 3.719.667 $ -249.208
Figure 21: CAPEX Estimates – Study Vs. CleanVantage
As a result, if CAPEX is 20% higher than what was calculated in this Study, IRR will be nearly 4 points
lower and the NPV will be negative.
It is worth noting that if instead of $3,50/gallon, the ethanol price is merely 3,5% higher at
$3,62/gallon, a 20% higher CAPEX would give the same IRR as with a $3,50/gallon ethanol price,
and of course a higher NPV as it is calculated for a higher base value.
Model 1
Project Study CleanVantage
Total CAPEX $ 17.354.173,76 $ 20.825.008,51
Ethanol Price $ 3,62
IRR 18,02% 13,59%
NPV $ 8.271.474 $ 4.269.249
Figure 22: IRR Results depending on CAPEX – Ethanol @ $3,62/gal.
An accurate CAPEX evaluation is critically important prior to any investment; nonetheless in this
Project, small changes in Ethanol Prices cover all reasonable variations in CAPEX values, and
hence even if final CAPEX end up higher than initially calculated, it would not kill the Project
profitability as soon as the price of ethanol is high enough, i.e. in the $3.50/gal. to $4.00/gal. range.

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3. OPEX
Regarding OPEX variations, the Sensitivity Analysis was performed, changing biomass cost (-20%
variation), -as all other OPEX values are assumed to be in line with what is actually expected for the
Project-, as mentioned above, the only OPEX item which can make a difference on total OPEX
other than Biomass, are Enzyme cost, but after discussing this issue with CleanVantage, the price
was changed from $2,2 /kg = $ 0,214/lap (liter of ethanol produced) down to $1,35/kg = $
0,131/lap.
Hereunder are the base case calculations considering an ethanol price of $3.50/gallon.
Model 1 Model 2
Biomass Cost Reduction 0,00% 0,00%
Ethanol Price $/Gallon $ 3,50
Total CAPEX $ 17.354.173,76 $ 12.839.786,35
Revenues from C5 $ 2.239.398,89 $ 1.309.745,96
Total Revenues $ 16.818.128,30 $ 9.804.051,47
Total OPEX $ -14.702.652,64 $ -8.693.279,28
EBITDA $ 2.115.475,66 $ 1.110.772,19
IRR 13,75% 7,42%
NPV $ 3.719.666,64 negative
Figure 23: Base Case Study – Ethanol @ $3,50/gal.
The following graphic shows the impact on IRR of the Biomass Cost variation with a -40% to +40%
decrease and increase.
Figure 24: Biomass Cost Variation Vs. IRR
-20,00%
-15,00%
-10,00%
-5,00%
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
-40% -30% -20% -10% 0% 10% 20% 30% 40%
Model 1
Model 2
Ethanol Price = $ 3,50/gallon
IRR
Biomass Cost Variation - 0% is the Basic Cost

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The following are two different scenarios with a 20% reduction on Biomass overall cost; one with a
base Ethanol Price of $3,50/gal. (Scenario A), and the other with an increase of this base price of
3,5% to obtain $3,62/gallon (Scenario B), as was performed for CAPEX sensitivity here above.
Scenario A Scenario B
Model 1 Model 2 Model 1 Model 2
Biomass Cost Reduction -20,00% -20,00% -20,00% -20,00%
Ethanol Price $/Gallon $ 3,50 $ 3,62
Total CAPEX $ 17.354.173 $ 12.839.786 $ 17.354.173 $ 12.839.786
Revenues from Ethanol (biomass) $ 14.578.729 $ 8.494.305 $ 15.088.984 $ 8.791.606
Revenues from C5 $ 2.239.398 $ 1.309.745 $ 2.239.398 $ 1.309.745
Total Revenues $ 16.818.128 $ 9.804.051 $ 17.328.383 $ 10.101.352
Total OPEX $ -13 685 918 $ -8 089 166 $ -13 705 912 $ -8.100.816
EBITDA $ 3 132 210 $ 1.714.885 $ 3 612 059 $ 1.994.469
IRR 22,15% 15,64% 25,58% 18,83%
NPV $ 13 176 868 $ 4.167.959 $ 17.635.782 $ 6.765.949
Figure 25: Case Study – Biomass Cost Variation -20% Ethanol @ $3,50/gal. and $3,62/gal.
Reducing biomass costs by 20% in those base scenarios of $3,50/gallon makes a big difference in
Model 2, not that much in Model 1, however if the base ethanol price is increased by 3,5%, the
impact on both scenario, is significant, with an IRR increased by 4 points in Model 1 and 3 points in
Model 2.
The above results show, that biomass costs have to be considered after the price of ethanol as the
most significant cost to work on, if the Project is developed. No matter how low could the biomass
cost be, if a higher Ethanol Price is not set by the Government, the Project cannot be considered
as financially feasible.

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List of Figures and Tables
Figure 1: Map of Panama p. 7
Figure 2: SER Alcoholes Industrial Complex in Las Cabras p. 8
Figure 3: SER Alcoholes Industrial Site in Las Cabras p. 8
Figure 4: CleanVantage's Pilot Plant In Washington (DC) p. 11
Figure 5: Feedstock Storage Requirement p. 12
Figure 6: Block Diagram of BOSS Bagasse to Sugars (CleanVantage) p. 12
Figure 7: BOSS flow diagram - Detailed streams p. 13
Figure 8: Corn Crop Parcels Repartition p. 17
Figure 9: Rice Crop Parcels Repartition p. 18
Figure 10: Repartition of Crops and Harvested Surfaces p. 18
Figure 11: Available Biomass Quantities p. 18
Figure 12: SER Alcoholes Biomass Fuel Mix p. 19
Figure 13: Biomass On-Field Collection Analysis p. 20
Figure 14: Biomass Total Quantities Available p. 20
Figure 15: Biomass Prices Per Type p. 21
Figure 16: Biomass Mix - Availability p. 21
Figure 17: Summary of the Project's Financial and Operational Results (expected) p. 25
Figure 18: Summary of the Project Ratios with the Current Ethanol Price p. 26
Figure 19: Biomass Cost Variation Vs. IRR p. 27
Figure 20: Summary of the Project's Financial Results with a $3.50/gal. Ethanol Price p. 27
Figure 21: CAPEX Estimates - Study Vs. CleanVantage p. 28
Figure 22: IRR Results depending on CAPEX - Ethanol @ $3,62/gal. p. 28
Figure 23: Base Case Study - Ethanol @ $3,50/gal. p. 29
Figure 24: Biomass Cost Variation Vs. IRR p. 29
Figure 25: Case Study - Biomass Cost Variation -20% Ethanol @ $3,50/gal. and $3,62/gal. p. 30

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References & Sources
General Information:
"Second Generation Biofuels- Economics and Policies" - The World Bank Development
Research Group Environment and Energy Team - August 2010 - Policy Research Working Paper
5406
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-5406
“From 1st to 2nd Generation Biofuel Technologies - An Overview of Current Industry and RD&D
research activities” – Ralph Sims, Michael Taylor, International Energy Agency, Nov. 2008.
http://www.iea.org/publications/freepublications/publication/2nd_biofuel_gen.pdf
"Integration of the first and second generation bioethanol processes and the importance of
by-products" - Patrik R. Lennartssona, Per Erlandssonb, Mohammad J. Taherzadeha, 2014
http://www.sciencedirect.com/science/article/pii/S0960852414001527
"Status of 2nd Generation Biofuels Demonstration Facilities in June 2010 A REPORT TO IEA
BIOENERGY TASK 39" - Bacovsky, Dina Dallos, Michal Wörgetter, Manfred, June 2010
http://www.bioenergy2020.eu/files/publications/pdf/2010-bericht-demoplants.pdf
OPEX Sources:
• Andritz Chile Ltda. Separation Technologies. Av. I. Goyenechea 3600 Of. 702 Las Condes ,
Santiago Chile; www.andritz.com/ep
• Belt Filter press: Línea E Ingeniería www.lineae.com.ar
• Fragmaq Industria e Comercio de Máquinas- Rua José Bonifácio 1925 Serraria – Diadema
/SP Brazil http://www.fragmaq.com.br/
• Grupo Nahuelco Argentina - Perdriel 3810, 1646 San Fernando, Buenos Aires
http://www.johnsonscreens.com/es/
• Industry & Separators Suppliers- Diagonal 135 Nº1747 (1650) San Martín – Bs. As. Rep.
Argentina. www.iss-separators.com.ar
• Instituto de Investigación Agropecuaria de Panamá IDIAP (Mr. Rodolfo Morales).
• Ledesma SA – Sugar Mill, Ethanol Distillery Jujuy Argentina
• Novozymes presentation: http://www.novozymes.com/en/investor/events-
presentations/Documents/Inbicon%20investor%20day.pdf
• Oxygen: PSA (Pressure Swing Adsorption): AC GROUP, Barranquilla-Colombia, calle 76
Of.806 World Trade Center.
• SER Alcoholes, Panamá
• SODA: M. Trading inc. SA, via BOYD Roosevelt, Los Andes, Panamá
• Tank connection: http://www.tankconnection.com/
• "The Challenge of Enzyme Cost in the Production of Lignocellulosic Biofuels"
http://www2.lbl.gov/tt/publications/2678pub2.pdf

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