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Bill Gates Wildcatting on KiOR

Stocks in this article: KIOR

NEW YORK (TheStreet) -- Since its public launch in 2011, with its promise to "bring the pain" to fossil fuels, renewable fuels outlet KiOR (KIOR) has been bringing the pain to investors. At one point in September 2011, the company was trading at $20.74 per share. Its current price is $2.50.

Yet Bill Gates, no fool he, recently put $15 million into a $100 million equity funding round aimed at building a second KiOR cellulosic fuel plant in Mississippi.

What's going on?

KiOR is using a proprietary biocatalyst which it says can turn any form of biomass, starting with wood chips, into the functional equivalent of petroleum at a price competitive with pulling oil from the ground.

KiOr calls this process "Biomass Fluid Catalytic Cracking" and says it accelerates the natural process that turned dinosaur remnants into oil from millions of years to mere seconds.

It's easy to explain. It's just not easy to scale.

In its third quarter report, the company said it lost $43.1 million on sales of just $720,000. Sounds dire, but sales were just $239,000 in the previous quarter. The plant opened in September, 2012.

KiOR's plant is in Columbus, Miss., a half-hour east of Mississippi State University in Starkville. The University of Alabama is an hour west along the same road. The plant is in Columbus thanks to a $75 million loan from the state of Mississippi, which it got in 2010.

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