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More bad news has sprung from beleaguered corn-to-ethanol producer Renova Energy (RVA:AIM) after the company admitted that costs for the construction of its ethanol and power plant in Idaho were likely to come in way above initial expectations at $60.1 million.

Trading in the firm’s shares was suspended in December after the project was put on hold following remarks by the contractor in charge of building the plant that costs would be some £6 million, or 25% more than expected. Trading in the shares resumed after the company entered into standstill agreements with banks but these have now expired and it is in further talks to try to negotiate a solution.

‘In what is a very difficult economic environment generally, and for the bio-fuels sector in particular, in which to raise additional capital from traditional sources we are continuing to investigate a number of alternative funding arrangements to complete the Heyburn project,’ says chairman Chris Thomas.

There was some good news, with production at its Wyoming plant up around 42% to 10 million gallons. ‘However, this will count for nothing if new funding arrangements cannot be finalised,’ says Ambrian analyst Richard Lucas, who has placed a sell rating on the stock. The shares have plummeted to 5.38p, valuing it at just £1.8 million compared with £80 million in 2006

Shares says: Securing funds is crucial but with a credit crunch and touch biofuels market finding someone to take up the baton won’t be easy. AVOID