KANSAS CITY, Mo. -- Kansas City-based Alternative Energy Sources Inc. plans to build a 110-million-gallon ethanol plant in Greenville, Ill., 45 miles east of St. Louis.

The company also announced it will not proceed with its previously announced plan to acquire Flex Fuels USA.

The new plant news follows announcements in August that the company plans to build ethanol plants in Central Iowa and Northern Illinois.

The Greenville plant will be adjacent to the CSX and BNSF main railroad lines and served by the Illinois Western Railroad. Access to two mainline railroads offers competitive advantages, including maximum flexibility in shipping products and leveraging of freight arbitrage opportunities. The plant location is within five minutes of Interstate 70 and 30 minutes from Interstate 55 and 64, providing truck transport to Midwestern markets.

"With both rail and truck shipping capabilities readily available, we will be able to serve national markets as well as neighboring communities in central and southern Illinois and eastern Missouri," stated Mark Beemer, AENS president and CEO.

AENS has optioned 100 acres at the John W. Kelsey Business & Technology Park.

"The amount of land optioned allows for the large footprint needed for flexibility in plant design and to apply our business model," said Lee Blank, AENS executive vice president and chief operating officer.

Construction is planned to begin within the next year, with the plant scheduled to be in operation by late 2008. To obtain funding for infrastructure needs and move forward with the project, meetings will be held with local, state and federal officials. Using more than 40 million bushels of corn annually, the plant will be a major consumer of corn grown in Bond, Fayette and Effingham counties. Annual output is projected to be more than 110 million gallons of ethanol.

Once in operation, the plant will provide jobs for 45 to 55 people with payroll between $2.5 and $3.5 million. The facility will have many components in common with those in the 110-million-gallon plants to be built in Boone County, Iowa, and Kankakee, Ill. All of the plants are projected to produce about 100 carloads of ethanol per week.

AENS calls off merger plans with Flex Fuels USA

In other news, AENS said Friday it will not proceed with its previously announced plan to acquire Flex Fuels USA Inc. and its affiliate ACN Energy Consulting Inc.

The letter of intent has expired without any further obligation among the parties.

Beemer of AENS said, "We remain committed to exploring cellulosic opportunities and believe that cellulosic biomass is a feedstock that presents great potential for diversifying our ethanol production base."

Kansas City-based Alternative Energy Sources Inc. Alternative Energy Sources Inc. is developing "greenfield" sites, including constructing, owning and operating fuel-grade ethanol plants. The management team has extensive experience in agricultural processing, grain trading, railroad negotiations, logistical economics, construction, acquisitions and operating as a public company. The founders have extensive management and leadership experience, including serving in executive management positions with Archer Daniels Midland Co., the largest producer of ethanol.

SOURCE: Alternative Energy Sources Inc. via PrimeZone.