Bombed-out ethanol hopeful GTL Resources, with trebled annual losses of £7.7 million, is seeking £24 million at 1.25p to buy control of Illinois River Energy (IRE).

AIM-quoted GTL, whose previously suspended shares have dropped 33 per cent to 1.9p on today's requotation, has conditionally agreed to buy 90 per cent of IRE, which intends to build, own and operate an ethanol plant at Rochelle, Illinois, with an estimated annual capacity of 50 million gallons. Subject to obtaining necessary official permits and additional funding for the project, London-based GTL, whose annual loss rose from £2.75 million to £7.7 million in the year to March, hopes the plant will start production next year.

The enlarged group, which will be headed by GTL's chairman Peter Middleton and chief executive officer Michael Fox, envisages doubling capacity on the Rochelle site to 100 million gallons a year, if possible. The US authorities encourage the blending of ethanol, a by-product of corn turned into alcohol, with petrol to reduce environmental damage from cars and lorries and provide extra income for farmers, and retailers who do the blending themselves receive a 51 cent (30p)-a-gallon sales tax rebate.

Qualifying as a reverse takeover under AIM rules, the IRE deal, handled by Arden Partners, could spell the end of a frustrating search by GTL for a viable project -- which has seen the shares fall from 1998's float price of 30p to below 2p now.

As a high-risk recovery speculation, GTL could find some friends among the brave if the Illinois plans look like being achievable. Not for the cautious.