Nov. 15 (Bloomberg) -- Solazyme Inc., which makes oil products from sugar-consuming algae, surged the most in seven months after agreeing to expand production capacity through partnerships with Bunge Ltd. and Archer-Daniels-Midland Co.
Solazyme climbed 10 percent to $7.80 at the close in New York, the biggest gain since April 3.
The company plans to open a plant in 2014 at an ADM facility in Iowa and will triple planned output from an existing venture with Bunge, according to a statement yesterday from South San Francisco, California-based Solazyme.
“It’s a clear signal that Solazyme has some real value to offer its partners,” said Weston Twigg, an analyst at Pacific Crest Securities LLC in Portland, Oregon, who recommends buying the shares. “They’re basically quadrupling planned production.”
The ADM plant will produce 20,000 metric tons of oil in 2014 and may eventually expand to 100,000 tons a year. Bunge and Solazyme are building a plant in Brazil that will be able to make 100,000 tons annually when completed in the fourth quarter of 2013, and Bunge may introduce the technology at other facilities and produce as much as 300,000 tons a year by 2016.
“The market has been hungry for this type of announcement here as we’ve seen the stock fall a couple bucks over the past couple weeks,” Robert W. Baird & Co. analyst Ben Kallo said by telephone. “This is really the third partner that they’re going to build out capacity with.”
Solazyme has a venture with Roquette Freres SA that produces 300 tons of oil a year in France, and is on schedule to expand that to 5,000 tons by the second quarter, Solazyme Chief Executive Officer Jonathan Wolfson said yesterday in a conference call.
To contact the editor responsible for this story: Reed Landberg at email@example.com