Abengoa And Dyadic Sign Ethanol R&D Agreement

Dyadic International, Inc. (AMEX:DIL), has signed a three-year research and development (R&D) agreement and a stock purchase agreement with Abengoa Bioenergy R&D, Inc. (ABGOF.PK). Under the terms of the agreement, Abengoa Bioenergy will invest $10 million in Dyadic, for which it will receive 2,136,752 shares of Dyadic Common Stock.

Dyadic will use the proceeds from this private sale to fund R&D obligations called for in the agreement, whose objective is the development of a cost-effective enzyme production system for commercial application in Abengoa Bioenergy’s bioethanol (cellulosic ethanol) production process. The R&D agreement calls upon Dyadic to use its proprietary technologies to develop one or more enzyme mixture manufacturing systems customized to ABRD’s proprietary biomass substrates.

Dyadic International, Inc. is engaged in the development, manufacture and sale of biological products using a number of proprietary fungal strains to produce enzymes and other biomaterials, principally focused on a system for protein production based on the patented Chrysosporium lucknowense fungus, known as C1.

Dyadic is applying its technologies to produce enzymes for use in converting various agricultural products (e.g. corn) and waste products (e.g. switch grass, wheat straw, sugar cane bagasse, etc.) into fermentable sugars, which can then be used in the production of traditional and cellulosic ethanol as well as other products currently derived from petroleum. It has identified and tested highly effective enzyme mixtures for the efficient conversion of renewable cellulosic biomass to ethanol. The C1 genome has been sequenced, which will reduce the time required to bring a specific gene to market from years to months.

Abengoa Bioenergy, headquartered in St. Louis, Missouri, is a company dedicated to the development of biofuels for transport, including bioethanol and biodiesel, to support sustainable development. It is considered to be the second largest ethanol producer in the world and a leader in the fields of both corn-derived and cellulose-derived ethanol production.

Abengoa is currently building a 5 million liter per year cellulosic ethanol plant in the Salamanca region of Las Vilas in Spain, which it claims will be the worlds first commercial cellulosic ethanol plant. Startup of the plant is scheduled for this year. Production of bioethanol from agricultural residues, specifically, corn stover and wheat straw, requires extensive processing to release the polymeric sugars in cellulose and hemicellulose that account for 30% to 50% and 20% to 35% of plant material, respectively. ABRD is developing a novel biomass-to-ethanol process, with emphasis on thermochemical fractionation and enzymatic hydrolysis to release these sugars for ethanol fermentation.

In November 2005 Abengoa finalized financing for an 88 milion gallon per year corn ethanol manufacturing plant in Ravenna, Nebraska and it's scheduled for completion in early 2007.

Upon completion of the Ravenna facility, Abengoa Bioenergy will be able to produce 203 million gallons of ethanol in the U.S. each year, in addition to its current annual capacity of 85 million gallons in Spain, and with an additional 53 million gallon facility expected to be completed in Spain within the next few months. In May 2006 it started construction of the first bioethanol facility in Europe to utilize corn as the raw material. The Lacq facility will be capable of producing 200,000 tons of bioethanol utilizing corn and wine alcohol as raw material.

The U.S. Department of Energy and Abengoa Bioenergy R&D signed a 4-year, $35.5 million (U.S.) contract in 2003 to develop the technology for Advanced Biorefining of Distillers Grain and Corn Stover Blends.

Under this contract Abengoa Bioenergy R&D, in collaboration with Novozymes North America, Inc., the National Renewable Energy Laboratory [NREL], and Stake Technology, is developing novel biomass-derived process technology that utilizes advanced bio-refined Distiller's Grain and Corn Stover blends to achieve significantly higher bioethanol yields while maintaining the protein feed value.

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