Graal Bios First Commercial Scale Cellulosic Ethanol Plant will be the first of its kind in the Southern Hemisphere and is among the first plants announced in the world.

The first Brazilian cellulosic ethanol plant will be constructed in Alagoas and will initially run using sugarcane bagasse and straw as feedstock, which will be eventually replaced by energy cane. The plant will work in cooperation with first generation mills located in the state, which the company understands is an associative business model as it complements the first-generation ethanol industry, presenting significant synergies to both sides.

Sugarcane bagasse and straw offer the potential of expanding domestic ethanol production by 35% compared to current installed capacities, presenting a potential solution to the annual ethanol deficit of 1 billion liters. This will be achieved without additional investments in land, and there will be no competition with food production. GraalBio offers a clean and economically viable solution to maximize the productivity and competitiveness of the Brazilian ethanol.

The installation of an Experimental Site will expand the potential for the development of biochemicals in Brazil by developing a new type of biomass, known as Energy Cane. This cane will be developed by crossing ancestral varieties of sugarcane with selected types of grasses, resulting in a hybrid that is highly productive and has low contents of sugar and high amounts of fibers per hectare. The combination of these factors, according to the companys technical team, should result in the most competitive biomass in the world. By the end of the year, the experimental site in Alagoas will produce 100,000 (hundred thousand) seedlings by crossing different germplasm lines and will carry out continuous improvements until the achievement of the expected productivity target of 100 tons of dry mass per hectare.

Brazil offers the best conditions for the development and production of biomass, positioning the country as potentially a leading player in the next biotechnology revolution that is expected to occur in the coming years, based on the direct conversion of cellulose into industrial sugar, biochemicals and advanced biofuels, starting with second-generation ethanol.

GraalBio believes it has the best environmental conditions to lead this race. The fact of being a frontrunner in the generation of cellulosic ethanol in the whole continent and the anticipation of the expectations of the industry itself reflect its vision that the second industrial revolution will necessarily involve progress in biotechnology and genetics, which we are incorporating into our business in an innovative and unprecedented technology platform.

State-of-the-art

technology GraalBio believes that, with the advent of second-generation technologies, the current productive capacity of the sector will be greatly expanded through the use of sugarcane bagasse and the leftovers of eucalyptus paper industry, thus giving a new dynamics to these sectors. In this regard, the technological platform of GraalBio is based on alliances with companies that own state-of-the-art technologies (for transfer or co-development) which have already been launched in the most advanced research centers of the world.

To anticipate the construction of the first cellulosic ethanol plant in Brazil, GraalBio started a collaboration with the companies BetaRenewables and Chemtex, subsidiaries of the Italian group Mossi&Ghisolfi. Chemtex has developed a unique technology - called PROESA - used in the pre-treatment and conversion of biomass.

With this technology, it is possible to convert several types of raw materials into a variety of biochemicals and biofuels. BetaRenewables has already announced the construction of a similar-sized biorefinery with a productive capacity of 70 million-liter of ethanol per year, using the same PROESA technology. This biorefinery will be located in Crescentino, Italy and is planned to start operating in the second half of 2012. The agreement entered into with BetaRenewables, a joint venture between Chemtex and TPGBiotech, considers the co- development of the technology in Brazil. The industrial investment in Alagoas is the first to materialize our intention of developing the potential of the Brazilian market in the sector of second-generation ethanol.

The critical equipment to be installed in the Northeast Brazil (Alagoas) plant, which will employ the PROESA technology, has already been ordered. The construction of the plant will begin in July of 2012 and the production in the last quarter of 2013. This technology is unique in the world, and uses the physical pre-treatment method (steam explosion) to break down the plant structures and allow the action of enzymes on the cellulose fibers. The competitive advantage of PROESA is based on the following factors:

Overall, the PROESA technology enables and simplifies the complex pre treatment stage of converting biomass into industrial sugar, allowing the next steps of enzymatic hydrolysis (to break down the cellulose into simple sugar molecules) and fermentation (to turn sugar into cellulosic ethanol). At the Alagoas plant, the suppliers of the enzymes and industrial yeasts are Novozymes and DSM, respectively.

Novozymes, a world leader in enzymes, will provide the GraalBio plant in Alagoas with its most advanced generation of enzymes. DSM will supply genetically modified yeasts that will ferment the second-generation ethanol. GraalBio considers Novozymes and DSM as the top developers of enzymes and genetically modified yeasts in the world, respectively and is proud