Eco Investor Update
A Weekly News Update for Environmental Investors
April 2011 - No 27
United Energy Distribution (UED) has completed a bank debt raising of $500 million including a $260 million capital expenditure facility. This replaces UED's existing $450 million facility which matures in June 2011.
The new facility comprise three and seven year tranches of $380 million and $120 million respectively, and will fund key growth capital expenditure over the medium term.
UED's chief executive, Hugh Gleeson, said "The transaction was significantly oversubscribed following strong demand from local and global banks. The syndicate is made up of six financiers including new relationships for UED. This demand reflects financier interest for investing in BBB rated regulated energy utilities, and is a sign of support for our debt management strategy which includes, for example, our decision to repay all of UED's subordinated debt this year."
UED has no further debt maturities until December 2013.
Duquesne Light Holdings and Duquesne Light Company have together refinanced US$900 million of bank debt facilities that mature in May 2012.
The new facilities comprise US$300 million that matures in two years and US$600 million that matures in five years.
DUET is awaiting final regulatory approvals to sell its interest in Duquesne. (ASX: DUE)
Dart will own 30 per cent of the JV and act as operator; Electrosteel will hold the other 70 per cent. Electrosteel is one of India's largest manufacturers of ductile iron pipes and fittings and a provider of water infrastructure. Its Parbatpur mine supplies coal for its manufacturing facilities.
Dart said geological studies on the mine have identified 18 coal seams with a cumulative thickness of over 80 metres at depths between 200 and 1,100 metres. The coal seams have high gas content and gas saturation close to 100 per cent, requiring extraction of the CBM ahead of mining for regulatory and mine safety purposes.
An independent evaluation of the resources by Netherland, Sewell and Associates Inc has estimated gas-in-place resources of 168 billion cubic feet (BCF), gross contingent resources (2C) of 62 BCF, and gross prospective resources of 50 BCF.
An initial appraisal program of two core holes and six pilot wells in 2011 will be followed by a well development program expected to include over 30 wells in the following years.
"Given the high gas contents and coal thicknesses, a vertical well completion technology is intended," said Dart. When all wells have been completed, the estimated annual field production is approximately 3 BCF.
The first gas from the pilot wells should arrive in late 2011. Any gas produced can be sold immediately, so first gas sales could be as early as January 2012.
Dart and Electrosteel said they are in advanced discussions with domestic compressed natural gas players about potential off-take contracts. Electrosteel has the option to ultimately acquire produced gas for its nearby steel plant.
Dart estimates its capital contribution at US$2 million in 2011 and another US$10 million for subsequent development expenditure.
Chief executive officer and managing director, Simon Potter said "The Parbatpur mine project is an attractive niche opportunity for Dart in India it allows us to achieve accelerated production, demonstrate the ability to complete projects in India and deliver near-term gas sales in a supply constrained market. The project also marks the beginning of a relationship with Electrosteel and opens up future coal mine related opportunities for Dart across India." (ASX: DTE)
Eastern Star Gas
The pilot was drilled in the first half of 2010, but persistent wet weather prevented the completion of the water handling facilities needed for its operation. The operation of the pilot is now possible following completion of a water holding pond adjacent to the Wilga Park Power Station. The gas is used for generating electricity.
Managing director David Casey said the operation of the Tintsfield Pilot is an important step forward for the Narrabri Gas Project and the pilot opens a whole new gas reserves horizon. "The Hoskissons coal seam has not to date been taken into account in independent gas reserves certification work and production results from the pilot should make a major contribution to our next gas reserves upgrade."
"Commencement of Tintsfield operations is also timely in that we are in the process of bringing three new gas engine driven generators on line at Wilga Park. The capacity of the power station is being increased from 7 MW to 16 MW to utilize growing gas production from all pilots, including Tintsfield."
ESG anticipates the Tintsfield Pilot will need to be operated for several months to provide the data required for the next gas reserves review. The review will also take account of production performance of other existing pilots and corehole drilling program results. (ASX: ESG)
Hastings Diversified Utilities
Through its subsidiary Epic Energy, HDF has long-term contracted revenues that will significantly increase in the medium term as the SWQP expansion is completed by 2012 and the Easternhaul agreement becomes unconditional and commences around 2015, he said.
"These expansions alone provide security holders with a tremendous outlook for reliable and increasing returns, notwithstanding any additional growth projects that may arise. The investment outlook remains strong and opportunities are expected to crystallize in the near term that will enhance HDF's value proposition for security holders, as well as helping to provide sustainable earnings growth for increased distributions over the medium term," he says in HDFs' 2010 annual report just released.
Investment opportunities already identified include operational investments and capital efficiencies. (ASX: HDF)
As part of the raising, Lynas has concluded financing, distribution and agency, and availability agreements with Sojitz Corporation of Japan. The agreements provide for the allocation of a minimum of 8,500 tonnes per annum of rare earths products to the Japanese market over 10 years, and the joint marketing and distribution of a minimum of 8,500 tonnes in Japan.
A loan facility for US$225 million (A$225 million) will be provided by a special purpose company established by Sojitz and the Japan, Oil, Gas and Metals National Corporation. Conditions for the loan facility must be satisfied by 30 May. The special purpose company will subscribe via placement for US$25 million (A$25 million) of new Lynas shares at A$2.12 each.
The proceeds of the loan facility and the Sojitz placement will be used solely to fund the completion of Phase 2 of the Project, which will enable Lynas to increase planned production of rare earth oxides to 22,000 tonnes per annum (tpa) from the expected Phase 1 production of 11,000 tpa.
Lynas' executive chairman, Nicholas Curtis, said "These landmark agreements allow Lynas to accelerate marketing to Japanese customers and enable Phase 2 construction to be committed in April 2011 and be completed in 2012. "The expansion in production will allow Lynas to take advantage of positive industry dynamics as the global supply of rare earths remains constrained."
A fully underwritten institutional placement to raise $55 million and an underwritten share purchase plan to raise $20 million also form part of the raising. The new shares will be issued at $2.07 each.
The company said the extra funding is to ensure that funds are available for additional expenditures that may arise. These could include preliminary work on the Kangankunde Deposit in Malawi, additional equipment for the processing and handling of additional end products from the Lynas Advanced Materials Plant (LAMP) in Gebeng, first fill chemicals for the Concentration Plant and the LAMP, and working capital.
Lynas said it is on track to begin production in the third quarter of 2011.
"The Mount Weld Concentration Plant is completed and it is ready for the first feed of ore. Lynas is working on satisfying the final requirements of the WA Department of Environment, which are taking longer than expected to satisfy. Lynas expects to satisfy those requirements within 3 to 4 weeks, and Lynas understands that start up of the Mount Weld Concentration Plant will occur upon satisfaction of those requirements," said the company.
The first feed of concentrate to the kiln at the LAMP in Malaysia is on target for the third quarter of 2011.
If the Sojitz funding is not received, the proposed expenditure for Phase 2 would be deferred until alternative funding is received. (ASX: LYC)
Ceramic Fuel Cells
Ceramic Fuel Cells' gas-to-electricity technology is one of three finalists in the Design for a Sustainable Future' category the first time this category has been included in the awards.
Entries will be judged on degree of innovation, current and potential scope of application, commercial significance and benefit, degree of collaboration, and environmental sustainability. (ASX: CFU)
Managing director, Iggy Tan, said the first shipment is an important milestone for the company and heralds preparation for commissioning the company's Jiangsu Lithium Carbonate plant in China.
"We are still on track to begin the commissioning and start-up of the Jiangsu plant end of the second quarter," he said.
"If we have a surplus of spodumene around the commissioning phase, we may consider selling subsequent shipments to external customers; but our priority is the Jiangsu plant."
The first shipment was from the Bunbury Port while arrangements are finalized with the Esperance Port.
The company said the ramp up at Mt Cattlin is progressing well with daily spodumene production averaging 70 per cent capacity. (ASX: GXY)
Novarise Renewable Resources
"Demand and market acceptance of Novarise's recycled products are expected to grow in China and internationally as governments and consumer behaviours encourage the wider use of Green PP products such as green shopping bags," it said.
Stage 1 of the company's new facilities at Nan'an should be completed in the third quarter of 2011 and will have a production capacity of 75,000 tonnes of PP yarn per annum. Following the completion of Stages 2 and 3, the facility is anticipated to have production capacity of 140,000 tonnes per annum.
The timing for completing Stages 2 and 3 will depend on product demand forecasts.
The new facility should also improve gross margins for its products, including new finished products with higher margins, and lower costs through manufacturing and process improvements.
"With the growth and expansion of its business, the Group will need to raise more capital to fund its growth. The Group is currently undertaking a technical feasibility study to raise additional capital via the Taiwan Depository Receipts. The Group is also looking at raising more capital through options such as private placements," it said.
Factors that may adversely affect it in 2011 are inflation pressures and further tightening of China's monetary and macroeconomic policies, the continued rise of the RMB, and the global economic recovery remaining erratic.
The Group continues to search for new types of recyclable PP waste, and more business relationships in different regions and countries. (ASX: NOE)
Taverners No 10 Pty Ltd has reduced its substantial holding from 16.6 to 15.6 per cent. (ASX: QUB)
Transfield Services Infrastructure
This would be through acquiring the 56.2 per cent of TSI Fund that Transfield Services does not own, and plus another 23.8 per cent owned by Transfield Services.
Ratchaburi is Thailand's largest private power producer, and the proposal has the in principle support of Transfield Services, which owns 43.8 per cent of TSI Fund.
The chairman of TSI Fund, Peter Young AM, said the proposal is non-binding, subject to a number of conditions, and the independent directors have not yet formed a view on it.
The acquisition would be under a Scheme of Arrangement and associated trust scheme'.
TSI Fund security holders would receive $0.85 cash per security. The price paid would be reduced by any distributions prior to implementation of the Schemes.
The proposal is for the Fund's portfolio of infrastructure assets and its right of first refusal over Transfield Services' portfolio of wind farm development assets.
Under a separate proposal to Transfield Services, Ratchaburi proposes to acquire another 23.8 per cent interest in TSI Fund, so that its interest would be 80 per cent. The price paid to Transfield Services would be $0.85 per security. (ASX: TSI)
Micro Cap Companies
The funding will be used to establish economic gas flows from the Monslatt Block, and from the Central and Sapphire Blocks of ATP814P, which if successful, should provide a significant volume of gas for the market.
This follows the 1 March doubling of total discovered gas in place in Blue Energy's Monslatt, Sapphire and Central Bowen Basin Blocks of ATP814P to 7,018 petajoules and a 60 per cent increase in 3C Contingent Resource to 2,063 PJ of recoverable gas.
Blue Energy also said it is establishing itself at the forefront of the group of non-export LNG committed companies, with a targeted exploration program across its 21,0489 square kilometres over seven tenements in the Bowen and Surat Basins in Queensland, plus the Galilee, Maryborough and Cooper/Eromanga Basins.
The placement will see Mathews Capital Partners Pty Ltd become a substantial shareholder. (ASX: BUL)
Carbon Conscious said the contract involves significant investment by an international carbon forest sink company in the New Zealand carbon forest industry and will involve plantings over multiple planting seasons commencing this year.
The contract capitalizes on the inclusion of forestry in the New Zealand Emission Trading Scheme which commenced on 1 January 2008 and allows companies to offset their liability with carbon offsets from forestry projects.
"Given the established nature of the carbon market in New Zealand we believe the New Zealand business model has the potential to be as rewarding as the company's Australian operations," said chief executive, Peter Balsarini.
Carbon Conscious has relocated staff from the Australian business to New Zealand. Tom Reynolds, who has over 25 years experience in the New Zealand forestry sector, has been appointed general manager Carbon Conscious New Zealand.
Carbon Conscious has also agreed to vary the terms and conditions of its Australian Carbon Plantation Agreement of 16 July 2009 to increase the time frame over which the remaining contract plantings will be undertaken to three years, ie from 2011 to 2013. It has also varied the terms and conditions on which the options can be exercised. The $28.5 million face value of the contract has not changed. (ASX: CCF)
The company recently undertook the retrofitting of an existing land-based aquaculture operation with its specialist Cell' filtration equipment to establish a low-cost, high-yielding barramundi production facility.
"Once harvests commence from the facility in June, this will represent strong consistent ongoing cash flows for the company," it said.
In addition to the retro-fit, CAQ has been expanding the Thailand site through the establishment of a new specialist Cell' production facility. Design and documentation of the new facility has been conducted over previous months and the company says that construction of the new facility has now commenced with a number of key contracts awarded in recent weeks.
A new range of ready
to eat' barramundi meals developed via its subsidiary, Cell Aqua Foods
Pty Ltd., will be launched in late April. This will be in Western Australia
"The development of such value-added products will significantly increase the projected returns from CAQ's production operations," it says. (ASX: CAQ)
Datamotion Asia Pacific
Drillwise Pty Ltd has been engaged to complete the planned 900 metre drilling program on the M12 rare earths target, with commencement scheduled for 18 April.
The gravity survey being conducted by Atlas Geophysics is due to be completed in early April.
Datamotion Asia Pacific is earning 70 per cent in the project and Oroya Mining Limited is free carry for 30 per cent to a decision to mine. (ASX: DMN)
The number of personnel working on the project will go from 30 to 50 and activity at the Centre will be scaled up.
The £11 million project, whose initial development phase is due to be completed in June, is aiming to develop the world's first continuously manufactured dye sensitised photovoltaic product on steel for building applications. The partners have been supported by a £5 million grant from the Welsh Assembly Government.
Peter Strikwerda, managing director of Tata Steel Colors, said "This project forms a key part of the Tata Steel strategy to develop a new range of functional coated steel products based on renewable energy for use on the roofs and walls of buildings. The project has met the objectives originally set for this phase to determine the photovoltaic cell architecture on steel, the roof component designs, the manufacturing processes and the raw materials requirements.
"This expansion takes the project from its laboratory and pilot line phase into a pre-industrialization phase. We will significantly accelerate technical progress with the objective of establishing a product, process and supply chain that can be successfully commercialized."
Meanwhile, Tata Steel has opened a new centre that will develop and demonstrate low-carbon, low-energy sustainable construction technologies. The Sustainable Building Envelope Centre (SBEC) will be a showcase for sustainable products and used to test and monitor new integrated heating, energy and ventilation systems on the fabric of the building.
At SBEC, a team of researchers and technologists will create building façades the walls and roofs which will transform the buildings from being energy consumers into energy generators. (ASX: DYE)
The vendors will continue as employees of ERM Power and have agreed that 50 per cent of the shares be subject to voluntary escrow until three business days after the release of ERM Power's results to 30 June 2012.
A further small tranche of shares will likely be issued to the vendors based on a post- completion working capital adjustment, said the company. (ASX: EPW)
Green Rock Energy
The permits are about 120 kilometres south of Perth and total 879 square kilometres.
Field activities have primarily been aimed at measuring the geothermal heat source potential. Temperature logging of 27 existing drill holes and water bores within the permits between 13 metres and 291 metres depth with an average depth 70 metres have been completed.
"This survey yielded an average geothermal gradient of 33°C/km which is considered to be encouraging," they said.
A geophysical survey to measure the gravity response along 278 line kilometres was completed to define the depth and thickness of potential geothermal heat sources in the form of thermally anomalous granites. This survey followed up radiogenic anomalies previously mapped by airborne surveys.
A geochemical soil sampling survey of 80 sites covering 460 square kilometres together with analysis of soil gas was completed to determine the concentration of naturally occuring heat producing elements as another means of delineating regions in the permits with higher than normal heat content.
"Results showed concentrations of heat producing elements in the soil at levels of two to four times the magnitude of the average levels reported in earlier studies by other parties for the same elements in the Yilgarn Crust of Western Australia." they reported.
"Follow up of the geothermal soil survey is currently underway via shallow drilling to granite bedrock at an average depth of around 25 metres.
"Together with the results of the gravity survey and further soil gas sampling, this information will allow geothermal heat source targets to be located and evaluated with a view to selecting sites for deep follow-up drilling."
An independent study by Sinclair Knight Merz of the potential markets for geothermal energy in the Collie/Worsley region should be completed in April. This will assist in selecting deep drilling sites close to potential energy offtakers. (ASX: GRK)
At around 0.5 cents the shares are close to their 10 year low of 0.4 cents. (ASX: MDV)
"These gas reservoirs have different technical characteristics to Queensland CSG reservoirs, most of which tend to be under saturated and under pressured therefore requiring a significant dewatering effort before gas desorption commences," it said.
Over the past month, Metgasco has installed the surface equipment and telemetry on Corella P18 and completed the surface pumphook up. Corella P18 is making good water volumes of about 30 barrels per day, "which is encouraging and consistent with the water production from the company's lead pilot well Corella P11".
Gas desorption commenced immediately with gas flows to surface and the well head pressure is above 100 psi.
Metgasco intends to continue dewatering the well until it sees a decline in water production, at which point it will commence production testing.
The company said it achieved a technical success in re-entering the Corella P18 well and drilling a sidetrack to 861 metres as planned. The total length of the inseam lateral is 607 metres.
In early March the company commenced drilling on the Harrier P01 multi-lateral well to complete two horizontal in-seam laterals. The first lateral has been completed at 1229 metres.. This lateral has now been lined in preparation for future production testing. The rig is currently drilling ahead in the second lateral and is currently at 1150 metres. (ASX: MEL)
John Houston, an independent hydrogeologist, has estimated a measured and indicated resource of 1,752 million cubic metres of brine at 690 mg/L Lithium, 5,730 mg/L Potassium and 1,050 mg/L Boron. This is equivalent to 6.4 million tonnes of lithium carbonate and 19.3 million tonnes of potash (potassium chloride) based on 5.32 tonnes of lithium carbonate being equivalent to 1 tonne of lithium and 1.91 tonnes of potash being equivalent to one tonne of potassium.
The estimate extends to an average depth of 197 metres, and the weighted average modeled specific yield is 9.6 per cent.
The drilling program also confirmed an attractive brine chemistry with an average magnesium to lithium ratio of 2.4, reduced from the 2.8 previously reported, and a sulphate to lithium ratio of 25, said the company.
Orocobre expects to release its Definitive Feasibility Study in coming weeks.
Managing director Richard Seville said the measured and indicated resource of 6.4 million tonnes of lithium carbonate is more than a fourfold increase of the previous inferred resource of 1.5 million tonnes.
"Our original 2008 drilling program highlighted the challenges of assessing these immature, soft sediment salars which are typical of Argentina. We have developed "state of the art" techniques to collect the quality of data necessary for a resource estimate at these confidence levels," he said.
"The grade of our resource, even using no grade cut-off, is high and reduces capital costs of ponds as less evaporation time is required. The large, broad surface area of the Olaroz salar, and consistently high grades at depth give us confidence that attractive grades will be maintained over time in a potential production scenario.
"These resource attributes, together with the quality of our data, which I believe gives a great deal of confidence in the results, clearly differentiate us from other projects." (ASX: ORE)
"The new policy will close
a loophole that has seen geothermal energy exploration treated differently
to traditional exploration for minerals and petroleum, and will improve
the economics of geothermal exploration," it said.
If approved, chairman Greg Martyr will receive 1.5 million at 7.5 cents vesting now and 1 million at 10 cents vesting in two years. Stephen Evans will receive 1 million at 7.5 cents vesting now and 1 million at 10 cents vesting in two years. Ian Reid will receive 750,000 at 7.5 cents vesting now and 750,000 at 10 cents in two years.
Mr Martyr will have 2 million options cancelled and Mr Evans 1 million. (ASX: PAX)
Ramy Azer has indirectly acquired another 2.5 million shares at 12 cents each plus 1.25 million options exerciseable at 12 cents. Edward Byrt indirectly acquired another 833,333 shares and 416,667 options on the same terms.
The $400,000 raised from the issue of shares will be used to continue production improvements at the company's Walkamin Factory in North Queensland, the manufacture and commissioning of new veneering units and for working capital. (ASX: PPY)
RedFlow has entered into a supply and installation contract for 60 RedFlow R510 energy storage systems with Ausgrid (formerly EnergyAustralia), Australia's largest electrical distribution utility.
The R510 units will be part of the Smart Grid, Smart City project which Ausgrid is developing in Newcastle, Scone and Sydney on behalf of the Australian Government. The $100 million Smart Grid, Smart City initiative is designed to keep Australia at the forefront of energy technology and promote ground-breaking changes to the energy industry. The Smart Grid, Smart City consortium also includes IBM Australia, GE Energy, AGL, CSIRO and Transgrid.
Chief executive Phil Hutchings said "The contract we have secured represents a continuation of our work with Ausgrid since mid-2010 following our first installation of a single zinc-bromine flow battery module at its Smart Home in the Sydney suburb of Newington. The new R510 installations will put RedFlow's energy storage systems on the world stage when it comes to Smart Grid technologies which will eventually be rolled-out globally."
The units will store electricity to distribute power into the grid at peak usage times. They will help create a micro-grid near Scone to power part of the community independently of the grid during maintenance or power outages. Other trials will involve using the energy storage systems to test drawing power from the grid in off peak times and sending it back during peaks.
The RedFlow R510 units include a standard RedFlow 5 kW / 10 kWh zinc-bromine flow battery module, an inverter, remote control and communication systems packaged into a steel enclosure ready for installation.
The units will be installed before November this year. (ASX: RFX)
Water Resources Group
Chief executive officer, Murray Vitlich said "Our Group's relationship with Oak Ridge National Laboratory, Lawrence Livermore National Laboratory, Sandia National Laboratories and Pacific Northwest National Laboratory has created significant interest in the company in the United States and this listing will facilitate easier access for US investors."
Water Resources Group provides a low-cost, community-based desalination system that eliminates any chemical residue in the brine outfall. Its California based research and technology arm, Campbell Applied Physics (CAP), has been awarded the "Success Story of the Year for 2011" by the United States Industry Coalition (USIC) Award for its elimination of chemicals and chlorine to enable lower cost, safer, sea water desalination.
The company said USIC's membership is made up of leading US companies such as Boeing, Ford, General Electric, Westinghouse and Dupont. It promotes the commercialization and peaceful use of previously developed defence technologies in the former Soviet Union in conjunction with the US Department of Energy.
CAP and its founder Robert Campbell achieved the recognition following a 20 year effort to develop and implement the world's first chemical and chlorine free seawater pre-treatment system. WRG established its controlling position in CAP in 2007 and has funded the commercial development of its Advanced Seawater Reverse Osmosis (ASWRO) system. Mr Campbell is WRG's chief technology officer and a WRG board member.
The USIC report says that CAP, in co-operation with technology partners in the US and Ukraine, is exploring new water treatment technologies including its O3CD (ozone capacitive de-ionization) water treatment system. This is being developed to de-contaminate toxic water produced during extraction of coal seam methane gas.
The USIC report is optimistic about sales of O3CD units and says "In the near term, the O3CD market is estimated to be larger than the worldwide seawater desalination market."
WRG has three new agreements to advance the ASWRO system and develop new markets.
One is a Co-operative Research and Development Agreement jointly funded by the US Department of Energy's Pacific Northwest National Laboratory to develop a larger high-capacity plasma chemical reactor which will enable new markets in aquaculture, shipping and food transportation and storage.
Another is a Partnership with the Science and Technology Centre of the Ukraine to develop an advanced power source for the company's O3CD system which will be applied to decontaminate water produced by the extraction of coal seam methane gas.
The third is a Co-operative Research and Development Agreement jointly funded by the US Department of Energy's Oak Ridge National Laboratory to develop manufacturing processes and cost reduction engineering to improve water treatment system components.
The development of a high capacity plasma chemical reactor will open up three significantly large new markets - aquaculture, with improved efficiencies for treating large volumes of water; waste treatment with an environmentally sustainable treatment of used rubber tyres; and shipping through a cost-effective treatment for a ship's ballast water to reduce marine pollution. (ASX: WRG)
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