Eco Investor Update
A Weekly News Update for Environmental Investors
March 2013 - No 122
Sims Metal Management
Sims Metal Management has filed amendments to its 2012 annual report to restate its consolidated financial statements and notes for the past three years, as previously announced, after a special committee investigated inventory valuation issues in the UK business.
The amended sections are Item 3Key Information, which gives five year revenue numbers; Item 5Operating and Financial Review and Prospects which discusses the principal factors that affect the results of operations; and Item 18Financial Statements.
Sims has also announced changes to its senior management in Europe and Global Sims Recycling Solutions (SRS), and SRS Continental Europe and SRS UK. (ASX: SGM)
Managing director Peter Crowley and director Richard Thornton have sold 572,500 and 100,000 employee shares respectively as part of the wind down of the companys employee share plan. The prices were at an average of $2.40 and $2.42. (ASX: GWA)
Evergreen Capital Partners has sold down its stake in Energy Action from 9.3 to 7.9 per cent. The average selling price was $3.10. (ASX: EAX)
Shares in ERM Power jumped to an all time high of $2.64 on 19 March. Soon after, 1,346,823 unlisted options were exercised at 80.6 cents each.
Despite on market purchases, deputy chairman Trevor St Baker has had his interest reduced from 49.8 per cent to 48.6 per cent due to dilution from the dividend reinvestment plan, the incentive program, and the exercise of options. (ASX: EPW)
Interest Rate Securities
Transpacific SPS Trust
Transpacific SPS Trusts securities reached a new five year high of $94.98 on 18 March. Volume was strong. There was no news but the record date for the $3.23 half year distribution is 28 March. (ASX: TPA)
Infigen Energys has rebutted assertions by Origin Energy about wind power and the renewable energy target, saying that wind farms are typically supported by the vast majority of the local communities where they are located. It has also welcomed the Climate Change Authoritys recommendations about the Large scale Renewable Energy Target.
Infigen managing director and chief executive, Miles George, said It is a fact that Origin is a massive multi billion dollar gas play, and it is Mr Kings job to do everything he can to advance the interests of, and prospects for its gas investments. There is no question that Mr King is world class in that regard. However that should not bestow upon Mr King the right to have his opinion projected as fact, especially in light of the contradicting domestic and global evidence.
Independent studies conducted by the Climate Change Authority, among others, have found that increased levels of renewable energy will in fact displace coal fired generation, after gas exporters, including Origin, price themselves out of the domestic electricity generation market.
South Australia has achieved over 25 per cent of its electricity from wind energy without adding a single megawatt of open cycle gas generation to provide reliability, and at the same time wind energy has reduced the price volatility and wholesale cost of electricity, said Mr George.
He also points out the renewable energy target was established by a Liberal Government not only to reduce emissions but to promote the development of the renewable energy industry.
Wind farms are an excellent provider of carbon emission free electrical energy to the grid and comparing a wind farm to a diesel peaker or coal fired power station is akin to comparing an Americas cup yacht to a Jet Ski or an oil tanker. Each serves a different purpose and is effective when deployed for that purpose, he said.
A wind farm delivers cheap clean energy when the wind blows, a diesel peaker delivers expensive fossil energy when consumers demand it. As we decarbonize our generation fleet these technologies will combine with others to deliver the least cost solution to the end customer.
Origin has chosen not to go down a path of commitment that would underwrite a smooth new build schedule for renewable energy, instead choosing to use its dominant market position, and the political clout that goes with that status, to browbeat the Australian parliament into a watering down of its obligations under the RET legislation.
The independent Climate Change Authority recommended no change to the RET scheme, and the Governments acceptance of all of its recommendations for the Large scale Renewable Energy Target (LRET) will deliver regulatory certainty essential for new investment in renewable energy.
Origin had an opportunity to make its case to the Authority and it is a disservice to the Authority to suggest that it skipped an opportunity to review the true cost of the scheme, said Mr George.
It is reassuring to see the Government is following the recommendations of the CCA that are based on independent economic modeling. That modeling showed that lowering the LRET, as promoted by companies with deep gas interests, would result in a lose lose lose outcome for investment, emissions reductions and cost to consumers, said Mr George.
Australia stands to gain $18 billion of investment and 10,000 jobs over the next decade from wind energy projects generated as a result of the LRET, in addition to $4.25 billion of investment and 1,700 jobs already created in the industry.
The CCA said reducing the legislated LRET target of 41,000 Gigawatt hours would increase carbon pollution by 119 million tonnes over the life of the scheme.
Mr George emphasized that as a market based mechanism the LRET will build renewable energy at least cost, but only if there is confidence the target will not change. (ASX: IFN)
Shares in Carbon Conscious fell to an all time low of 4 cents on 19 March. Volume was very high.
A day earlier the company said it had raised another $200,000 by issuing 4 million shares under its shortfall placement for its recent share purchase plan. The day after it increased the total of shortfall shares issued to 7,794,000. (ASX: CCF)
Ecosave Holdings continues it successful IPO with its shares rising to a new high of $1.56 on 21 March. (ASX: ECV)
Greencaps shares jumped over 1 cent or 25 per cent on news of a strategic review to increase shareholder value.
It says value could be achieved by reviewing different ownership alternatives such as a transformational acquisition, considering approaches by third parties, a merger with a complementary business, or privatization.
Miles Advisory Partners has been appointed as advisers for the review. Miles previously assisted Greencap with the disposal of its discontinued operations and can advise on acquisitions, mergers and approaches, divestments, and capital structures that maximize the outcome for shareholders.
Despite recent initiatives such as a restructuring of senior management, reduction of service delivery costs, alignment of business locations with growth markets and others, the board believes the market has not recognized the companys underlying value.
Managing director, Earl Eddings, said Greencap remains optimistic about the fundamentals of its business and its growth prospects in Australian markets and abroad. We operate in the right markets with the right clients.
Greencap has appointed Dr George Robinson as National Director Trimevac. The emergency services and training business is one of the largest in the emergency services and training market in Australia and is a core element of Greencaps integrated service offering to national enterprises. (ASX: GCG)
Pacific Energys share price spiked to a new five year high of 54 cents on 20 March.
Two days earlier in a new presentation the company said it expected its record earnings growth to continue, and that it generates significant surplus cash to fund growth. (ASX: PEA)
Shares in Galaxy Resources fell to a three year low of 34.5 cents on 21 March, two days after the company announced a three year spodumene feedstock contract with Talison Lithium to by spodumene for its Jiangsu Lithium Carbonate Plant in China.
Galaxy will purchase the feedstock in US dollars, which has cost benefits.
Galaxys own Mt Cattlin was developed as a feedstock provider for
Jiangsu, but it was placed in temporary suspension in July 2012 due to
high inventory levels of spodumene at Jiangsu; and an over 40 per cent
deterioration in the exchange rate has pressured the cost of local production.
Galaxy said Talisons recently expanded capacity and threefold head grade at its Greenbushes operations has resulted in the first significant external supply of spodumene becoming available on the international market.
The contract is expected to begin in July after existing stockpiles at Jiangsu have depleted.
Mt Cattlin will remain suspended but ready to restart if Galaxy needs to resume internal production, and for security of supply.
Managing director Iggy Tan said Given the current exchange rate and the adverse impact on local operating costs, it is financially a better option to purchase external spodumene today instead of resuming operations at Mt Cattlin. The Talison Greenbushes mine has the benefit of a threefold head grade and greater capacity compared to Mt Cattlin, and can better weather the impact of the high Australian dollar.
The Mt Cattlin team will be reduced to a small maintenance workforce and 37 local staff will become redundant. (ASX: GXY)
Micro Cap Companies
Australian Renewable Fuels
Australian Renewable Fuels directors Michael Costello, Julien Playoust and Andrew White participated in the companys recent entitlement offer.
TIGA Tradings stake has risen from 19.9 to 25.1 per cent, and Wentworth Holdings has increased from 6.5 to 9.2 per cent. (ASX: ARW)
Himer Holdings Pty Ltd and Himer Superannuation Fund have together become a substantial shareholder in Carbon Polymers with a 13.1 per cent interest. A director is Phillip Merhi, who is also a director of Carbon Polymers and is the subject of general meeting to have him removed from the board. (ASX: CBP)
Clean Seas Tuna
Clean Seas Tuna Ltd has launched a renounceable entitlement issue to raise up to $3.6 million. The three for five offer is at 1.2 cents per share.
The funds will be used to increase Yellowtail Kingfish production.
The issue is partially underwritten to $1.8 million by Patersons Securities Limited, which is also lead manager for the issue.
Clean Seas chief executive Craig Foster said Since joining Clean Seas last year I have recognized the potential to turn Clean Seas into a profitable commercial producer of quality Kingfish. The company has done a great job of positioning its Yellowtail Kingfish at the top end of the sushi and table fish markets, and there is strong demand for the companys products. I am excited about our plans to build our Kingfish production and transform the company into a profitable operation generating value for shareholders. (ASX: CSS)
Nanosonics said its trophon EPR sterilizer has been endorsed as ground breaking in the US based Scripps Health network sites where it has been installed.
Scripps is a $2.6 billion private, non profit health system in San Diego, California and treats 500,000 patients annually at five acute care hospital campuses and 24 outpatient centers and clinics. It is said to be ranked among the top tier in US medical facilities.
Scripps installed 21 trophon EPR devices as part of its initial roll out and plans to introduce significantly more as moves from a manual to fully automated disinfection of ultrasound probes.
Eric Rosenberg, manager of the Scripps Gooding Imaging Center in San Diego, said the trophon EPR has improved the efficiency of cleaning processes, created more standardization and eliminated non value added variation, and also reduced the chances for human error. Importantly, it has reduced exposure to harsh chemicals previously used during the manual cleaning process.
Candace Goldstein, Clinical Educator for Scripps Clinic, said The trophon EPR is ground breaking, and gives an ultrasound department its first technology driven disinfection process. (ASX: NAN)
Po Valley Energy
Shares n Po Valley Energy fell to a low of 10 cents on 20 March, two days after it announced its financial results for the year to 31 December 2012. This included a maiden profit of Euro 2.37 million or $2.94 million against a 2011 loss of Euro 5.07 million.
However, the profit was after recognizing a deferred tax asset of Euro 2.23 million for the first time
Revenue was Euro 8.20 million or $10.18 million, down from Euro 9.11 million. Net cash flow from operating activities was Euro 4.34 million, up 33 per cent on 2011's Euro 3.26 million.
Cash at 31 December was Euro 1.22 million or $1.55 million.
Chief executive Giovanni Catalano said In 2012 the company was pleased to make a maiden net profit before tax of Euro 201,570. In addition we have managed to offset the impact of the decrease in production resulting from the temporary suspension of Sillaro's main producing level through strong gas prices and improved operating efficiencies. The construction of the new condensate separator is almost complete and the field is expected to return to the previous daily production rates of 80,000 standard cubic metres in early April 2013.
Full year gas production was 24.7 million cubic metres, a 15 per cent decrease on 2011. (ASX: PVE)
RedFlow said the development of its core battery technology continues and testing results show improved efficiency and power throughput, but further improvements are needed to have a fully commercial product.
The company is now sourcing 75 per cent of its components by value from external suppliers and is targeting 90 per cent by the end of 2013.
The company has a shortlist of five potential contract manufacturers, and it expects to see an initial 25 per cent reduction in the cost of manufacturing its finished product. A final decision on transfering manufacturing to a contract manufacturer will take at least 3 to 6 months.
The company is now looking for strategic or cornerstone investors with the skills, experience and financial capability to assist it to bring its battery to a commercially ready state in its largest markets.
RedFlow said a competing product for its ZBM module is the EnerStore system from US based and NASDAQ listed ZBB Energy. RedFlow believes EnerStore is a similar product at a similar stage of development although no public information is available about the batterys performance.
Their recent sales and shipments, when combined with our recent orders and shipments, confirm that market interest in this new emerging technology is developing and is gaining the attention of system integrators and end customers alike as a potentially efficient, longer term solution to a growing global problem, said RedFlow.
The company will have $5 million in cash at the end of March, and expects to receive a Commonwealth R&D tax rebate of around $2 million in September. Its current cash burn rate is $550,000 per month. (ASX: RFX)
The Federal Court of Malaysia has confirmed the earlier decisions of lower courts to dismiss a challenge to Lynas Temporary Operating Licence (TOL) by people from the Save Malaysia Stop Lynas group (SMSL).
In April 2012, the Kuala Lumpur High Court dismissed an application by SMSL for leave to seek a judicial review of the decision of the Atomic Energy Licensing Board to approve the TOL. On appeal, the decision of the High Court was upheld by the Court of Appeal in September 2012.
The Federal Court has now dismissed an application by SMSL for leave to appeal the earlier decisions of the lower courts.
SMSL has now exhausted all avenues of appeal in the Malaysian Courts for this challenge. (ASX: LYC)
Orocobre has announced a new Borax product that can be used in nuclear plants. Earlier this month subsidiary Borax Argentina SA made the first shipment of Boric Acid HPN (High Purity Nuclear) Grade to a customer in Brazil.
Boric Acid HPN is a new refined chemical product developed by Borax Argentina over the last six months with high purity greater than 99.9 per cent and low levels of key impurities such as iron, sodium, chlorine, sulphur. Heavy metal levels are less than one part per million.
The high boric acid content and low impurity levels makes it suitable for nuclear power plants, where boric acid is used to slow down the rate of fission.
Boric Acid HPN will form an integral part of the product portfolio as Borax Argentina becomes more geographically diverse by growing its presence in key international markets, said Orocobre.
This follows the recent development of a high grade hydroboracite product for the agriculture market.
Managing director Richard Seville said This is another great example of innovation by the Borax Argentina business and fits with our strategy to expand sales into new markets and new geographical regions.
Borax can be used for environmentally positive uses as well as in less desirable situations.
Orocobre opened the construction of its Olaroz lithium project with a 500 person function including Amado Bodou, the Vice President of Argentina, other dignitaries and government officials, company staff, representatives of ten local communities and members of the business community. (ASX: ORE)
Micro Cap Companies
Algae.Tec has signed a Memorandum of Understanding with engineering firm WorleyParsons to help it develop its algae to fuel projects.
A number of Algae.Tec projects in the EU, USA, Australia and Brazil are in the final stages of technical feasibility studies, and this agreement will establishes the framework for WorleyParsons to support Algae.Tec with the future development of these projects.
Executive chairman Roger Stroud said Algae.Tec is extremely pleased to have the support of WorleyParsons during this global development, construction and management phase. WorleyParsons, a world leader in the delivery of engineering, procurement, and construction management (EPCM) services, brings an extensive network and years of experience in supporting project development and plant operations.
Algae.Tec was ranked by Lux Research as the leading algae business in 2013.
Director Peter Hatfull has indirectly acquired 8,700 shares at an average 25 cents each. (ASX: AEB)
AnaeCo has been engaged by a private company to undertake a Project Definition Study into the viability of deploying its DiCOM Advanced Waste Technology for a 200,000 tonnes per annum plant at an existing facility in Southern Australia. Useage would be under licence.
Managing director and chief executive Patrick Kedemos said We are pleased to have the opportunity to work with such a progressive company which understands the business of waste management and is able to move quickly.
The PDS is the first step on the road to the deployment of AnaeCos DiCOM solution; discussions have commenced in parallel on the commercial aspects of the project. (ASX: ANQ)
Carnegie Wave Energy
Carnegie Wave Energy has raised $9.5 million including $8.5 million from its share purchase plan (SPP) and $1 million from a private placement.
Carnegie had initially aimed to raise $6 million from the share purchase plan.
The private placement was to a group of sophisticated investors, the majority of whom are existing Carnegie shareholders, and was on the same terms as the recently completed and oversubscribed share purchase plan.
The funds will be used to deliver the Perth Wave Energy Project and for working capital. Procurement and construction are due to start within weeks. (ASX: CWE)
Shares in Enerji dipped to a new three year low of 4 cents on 19 March. There was no accompanying news. (ASX: ERJ)
Shares in Geodynamics fell to a new all time low of 9.3 cents on 20 March. (ASX: GDY)
Hot Rock has been granted a further geothermal exploration authorization in the Huisco area of Southern Peru. This brings its granted authorizations in Peru to six.
The Huisco prospect is located at the northern end of the active volcanic belt in Southern Peru. Evidence is that the prospect is a medium to high temperature, fracture controlled, and hot water geothermal system.
Hot Rock will commence community information programs and discussions with local land owners to obtain land access. An application has been submitted for environmental clearance to allow detailed geoscientific surveys.
When these have been satisfied, Hot Rock will commence geoscientific surveys in the field season which runs from early May to the end of November.
Hot Rock is seeking partners to help explore and develop its granted projects. (ASX: HRL)
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