Dirt work begins on Ringneck Energy as project details finalized

By Susanne Retka Schill | December 30, 2015

Two critical steps need to be finalized on the proposed 70 MMgy corn/milo ethanol plant at Onida, South Dakota, but Walt Wendland, president and chairman, is confident the last details will be finalized in the first months of the year. In anticipation of that, Fagen Inc. has a project manager on site and dirt work began Nov. 2 to make use of the exceptionally late onset of winter in central South Dakota. “They’ve got the roads in around the plant site and the over excavation is done under the fermenters, process building and distillation units to remove the softer dirt and refill with engineered soil,” he reported.    

All but one permit is in place, and Wendland expects that one—the air permit—to be finalized within 45 days. And, with the last round of investor meetings completed in mid-December, he said, “we’re tying up loose ends with the large investors. We hope to have it all finished up by the end of January.”  Following the new rules for private placement equity drives, Wendland said they were able to publicly advertise and hold meetings, but are required to verify all investors are accredited. The minimum investment was $50,000 and there are minimum income or net worth thresholds to be met.

“Most investors are from South Dakota by far,” he reported, but the project did attract investors from Texas, Kansas, Iowa, Minnesota and Illinois. “Generally, from areas where they understand the ethanol investment,” he added.  When completed, there will be between 150 to 200 investors putting up the $74.5 million in equity. The total cost for the project is estimated at just under $140 million.

Fundraising for an ethanol project has changed, Wendland added, since the early days, when he was raising funds for Golden Grain Energy, the Iowa plant he managed for many years. “It is a lot harder with farm income on the decline than when farm income was increasing,” he said. “But to me, it’s important to continue to build demand for grain. We certainly aren’t slowing down on production. And, we’re expanding the market for ethanol as well.”   

Located in central South Dakota, north of the capital of Pierre and east of the Missouri River, the plant is situated in an area with growing corn acres and no other ethanol plants. As a result, the historical basis is generally 80 cents below Chicago futures. “We’re in the best place to be a lost cost producer,” Wendland said. “We’re creating a local market, which is so much better than putting it in a railcar and letting someone else add value to it.”