Ethanol play GTL Resources turned a $2.2 million (£1.1 million) loss into an $8.5 million profit in the first half-year.

The London-based company has been expanding production facilities and increasing its ownership of its prime operation, Illinois River Energy (IRE) at Rochelle, Illinois, and began production in late 2006. GTL produced 29.5 million gallons of ethanol, in the six months to September, which generated $69.4 million (£34.7 million) of revenues, against £25.9 million revenues and a $1.9 million loss for the full year to March.

Executive chairman Peter Middleton, former banker and Lloyd's insurance market chief executive, says production in the first six months exceeded 115 per cent of planned capacity. The company raised $270 million debt and £13 million equity at 140p to refinance and expand IRE and take its ownership to 87.5 per cent and Middleton reports the expansion is 'currently both on time and on budget'.

AIM-quoted GTL, which sold more than 90 per cent of turnover to the premium Chicago ethanol market, still had to contend with pressure on margins as the price of corn feed stocks rose and the price of ethanol fell. The company argues its new 'cost-competitive' IRE plant and its proximity to the Chicago market will shield it from too severe a margin squeeze and suggests increased blending of cheap ethanol with costly 'gasoline' (petrol) in several US states should provide a further boost to demand stimulated by the passing of the US Energy Bill.

Floated in 1998 at 30p, GTL shares have given investors a rollercoaster ride, hitting 550p three years ago, before crumbling to 98p by last month. Now 101p, up 2.5p this morning and valuing the company at £32.3 million, they could offer speculative recovery possibilities for the risk friendly.

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