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Eco Investor Update

A Weekly News Update for Environmental Investors

20 June 2011 - No 37
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Please note there will be no Eco Investor Update next week. The next issue will be on 4 July.

ASX 100

APA Group
APA Group is acquiring the 1,630 kilometre Amadeus Gas Pipeline in the Northern Territory for $63 million. The pipeline comes with a long term gas transportation agreement.

Commissioned in 1986, the pipeline provides gas from the Bonaparte Gas Pipeline and the Amadeus Basin in Central Australia to Darwin, Katherine and elsewhere for power generation in the NT.

The Amadeus Gas Trust has leased the pipeline from a consortium of financial institutions, and that lease is now coming to an end. NT Gas as trustee for the Amadeus Gas Trust has managed and operated the pipeline, and APA has 96 per cent of NT Gas and Amadeus Gas Trust.

The gas transport agreement is with Power and Water Corporation, the NT government's electricity provider.

APA managing director, Mick McCormack, said the acquisition ensures APA's continued presence and growth in the NT, complements its interest in the Bonaparte and Wickham Point pipelines, and reinforces operational synergies between the three assets. (ASX: APA)

DUET Group
DUET Group has confirmed it will pay a final distribution of 10 cents per security, bringing the full year distribution to 20 cents.

The Group said it will issue a distribution guidance for 2011-12 when there is more certainty about the AET&D sale and its affect on DUET's portfolio, and when it receives the proceeds of the Duquesne sale, which are expected in August. (ASX: DUE)

ASX 200

Dart Energy
Dart Energy's shares hit a new low of 57.5 cents on 16 June, the day the S&P ASX 200 Index hit a new three month low.

The company said it has committed not to use fraccing in Australia unless it is "Deemed acceptable and approved by authorities, and there has been adequate community dialogue."

In China it has a gas sales agreement for its Liulin project and sales should commence in the first half of 2012.

It is also looking at early monetization schemes at its Sangatta West and Tanjung Enim projects in Indonesia, local CNG sales at Electrosteel in India, and in Scotland. (ASX: DTE)

Eastern Star Gas
The Wilderness Society of Newcastle says Eastern Star Gas is "dreaming" if its thinks it can win approval for its Pilliga Coal Seam Gas Project in early 2012.

The Society quotes Eastern Gas managing director David Casey as saying that at best estimate the company's Narrabri Gas Field will be approved by early next year.

Warrick Jordan, campaign manager at The Wilderness Society Newcastle, said it's virtually impossible for that to happen in light of the scale of the project and the current uncertainty over NSW mining and planning policy.

"Eastern Star are dreaming if they believe that an adequate approvals process for such a massive project can be done in six months," he said.

"The assessment requires full community consultation and proper consideration of environmental impacts on 85,000 hectares of forest, 1,600 kilometres of pipeline, a RAMSAR wetland, the marine environment, and the Great Artesian Basin. There need to be two separate environmental impact statements, and separate approvals by state and federal agencies. You don't get these things out of cornflakes packets."

The project involves NSW's largest coal-seem gas field, an export terminal at Newcastle, and pipelines to Wellington and Newcastle.

The project area in the Pilliga is a recharge area for the Great Artesian Basin and includes habitat for threatened species, endangered ecological communities, and an area protected under legislation for its natural values, he said.

"In regards to NSW, it is unclear if the Eastern Star project will be assessed under the previous Part 3A Major Projects legislation, and if it is, whether new legislation that may require modeling on aquifer interference and the protection of high conservation values will apply."

"At the Federal level, the project hasn't yet been issued with the guidelines that dictate the environmental work to be done and there also should be consultation on those guidelines."

"At both State and Commonwealth level, a rigorous environmental assessment likely requires flora and fauna surveying over four seasons, and potentially multiple years. Given the inadequacy of the survey work presented so far, the unprecedented area of forest to be impacted, and the need to undertake highly-precise surveys due to the area's high conservation values, it is unlikely survey work can be completed before at least mid-next year," said Mr Jordan. (ASX: ESG)

Infigen Energy
Infigen Energy has sold its German wind farms to a European renewable energy fund for 154.6 million and will use the net proceeds to reduce its global debt facilities.

The assets have an installed capacity of 128.7 MW. The sale is subject to German cartel authority approval, which make take up to 30 days.

Managing director, Miles George, said "The sale of our German assets will achieve a fair value for security holders and will represent an important step in improving our capital structure." Further financial information will be available on settlement.

In Australia, Infigen has finalized the finance facility for its Woodlawn Wind Farm project. The finance facility is with Westpac. It has a limit of $55 million and first draw down has occurred.

Electricity has been exported to the grid as part of the wind farm's pre-commissioning tests of the first of the 23 Suzlon 2.1 MW wind turbines.

When completed by the end of 2011, the 48.3 MW Woodlawn Wind Farm will provide enough energy to power about 23,000 homes. Mr George said the Woodlawn Wind Farm has a supportive local community.

However, Infigen will not pay a distribution for the six months to 30 June 2011, and has suspended distributions for the years ending 30 June 2012 and 2013. This is to maximize the capital available to fund future opportunities, it said.

Meanwhile, hedge fund The Childrens Investment Fund Management (UK) LLP continues to creep up the Infigen share register and now holds 26.4 per cent. (ASX: IFN)

Transpacific Industries Group
Transpacific Industries' shares continue to slide and have hit a new all time low of 71 cents. (ASX: TPI)

ASX 300

Galaxy Resources
Shares in Galaxy Resources reached a 12 month low of 76.5 cents on 16 June, when the market fell dramatically to hit a three month low.

In some positive news, the company revised upward its 2011 and 2012 budgeted lithium price forecasts.

This followed Rockwood Holdings' Inc's lithium division Chemetall Lithium announcing a price increase of up to 20 per cent for its lithium salts, including lithium carbonate, lithium hydroxide, lithium chloride, and increases on lithium metal battery grade effective July 1.

Galaxy said Chemetall Lithium is one of the largest global manufacturers and suppliers of lithium-based compounds.

Managing director Iggy Tan said "Our own modeling forecast lithium prices to return to pre-GFC levels in the next 12 months due to the significant rise in demand. We now see this occurring sooner than expected, and we welcome the demand growth and corresponding signals of price increases in the global lithium market." (ASX: GXY)

Emerging Companies

Clean TeQ Holdings
Clean TeQ Holdings expects to return to profitability in 2011-12, and is working to improve its share price, having raised $0.5 million that will be used to limit future share conversions of its current convertible notes. La Jolla Cove Investors has converted over 25 million shares over the past eight months (Eco Investor June 2011).

"The funds raised of $500,000 will be used to limit, whenever it is practical to do so, future conversions of the current convertible notes and working capital to support the growing market for the Company's technologies, particularly in the water sector," said Clean TeQ.

The $0.5 million was raised through the issue of 10 million shares at 5 cents each to Aqua Guardian Group, a 50 per cent subsidiary of the listed Wasabi Energy. Aqua Guardian Group now holds 18.9 per cent of Clean TeQ.

The companies said ongoing discussions may result in further expansion of their relationship.

Clean TeQ said the funding is in line with its strategy to become a major water company with diverse products and partnerships to tackle the various issues around water quality and availability.

The Aqua Guardian Group owns the innovative AquaArmour product (Eco Investor August 2008) that can reduce water evaporation by up to 88 per cent, provides control of algal growth and improves water quality.

Ian Woodfield, executive director of Aqua Guardian Group, said "AGG is pleased to be supporting Clean TeQ as it grows it business and increases its activities in the water sector." Clean TeQ's technology provides clean, useable water from otherwise difficult to treat sources. "When used in conjunction with our AquaArmour product, the potential is increased significantly to provide solutions to the ongoing issue of water security and conservation and has widespread application."

Clean TeQ's chief executive Peter Voigt said "We are pleased that Aqua Guardian Group has become a major shareholder in Clean TeQ. We have a common business objective in providing environmentally smart solutions to industry.

"In the water sector in particular, AGG has a unique product in AquaArmour. When coupled with our water purification and treatment technologies it provides water security for industry and the community. We look forward to building our business and delivering smart solutions to our clients in air and water purification and mineral recovery."

Clean TeQ's expected return to profitability is based on the winning of several new contracts and the on-going level of enquiries it is receiving.

Meanwhile, "The Company expects to record a net operating loss after tax for the financial year ending 30 June 2011 in the range of $2.4 million to $3 million before any impairment adjustments." (ASX: CLQ)

CMA Corporation
Shares in CMA Corporation are scheduled to recommence trading on 5 August on a post consolidation and deferred settlement basis and on 19 August on a normal settlement basis. (ASX: CMV)

CO2 Group and Carbon Conscious
The Carbon Credits (Carbon Farming Initiative) Bill 2011 has passed through the House of Representatives, with Minister for Climate Change and Energy Efficiency, Greg Combet, describing it as a win for farmers, for Indigenous Australia for the environment.

The Bill passed the House of Representatives with support from the crossbenches, but was opposed by the Opposition.

Under the Initiative, the Federal Government will help facilitate the sale of carbon credits on domestic and international markets, opening up new income streams for farmers and landholders in regional Australia.

"This is an important step towards delivering a carbon offset scheme in Australia. We will now work to secure this Bill's passage through the Senate so that farmers and landholders can start reaping financial rewards from acting to tackle climate change," said Mr Combet. (ASX: COZ and CCF)

Transfield Services Infrastructure Fund
The proposed takeover of Transfield Services Infrastructure Fund gets more interesting with the Fund having received an offer to acquire its interests in the Macarthur and Yan Yean water filtration plants.

The offer is from its joint venture partners TRILITY Australia Holdings Pty Ltd and TRILITY Yan Yean (Holdings) Pty Ltd. Both filtration plants are owned jointly by TSI Fund and TRILITY under separate 50:50 joint venture agreements.

Both joint venture agreements contain change of control pre-emptive rights that will be triggered if the proposed scheme of arrangement by Ratchaburi Electricity Generating Holding PCL is approved.

TRILITY approached TSI Fund before the pre-emptive rights were triggered to seek agreement on the terms of a sale.

TRILITY is offering cash of $27 million for TSI Fund's half interests in both filtration plants. TRILITY will also assume responsibility for the $38.8 million shareholder loan from Macarthur to TSI Fund.

The purchase price offered is slightly below the Independent Expert's valuation range for the assets.

A sale would occur only if the RATCH proposal proceeds. TSI Fund said it is evaluating the offer, which does not impact the terms of the RATCH Proposal. (ASX: TSI)

Micro Cap Companies

Credit Suisse World Water Trust
The net asset value for the Credit Suisse PL100 World Water Trust at 14 June was 96.22 cents per unit. The units are trading at around 96 cents.

In May the Fund rebalanced its Notional Portfolio by replacing three securities with three securities that are more highly ranked according to market liquidity and other criteria used in the Notional Portfolio.

The three securities removed were Severn Trent Plc, United Utilities Group Plc, and Watts Water Technologies Inc. The three securities included were Toray Industries Inc, Toto Ltd and Woongjin Coway Co Ltd. (ASX: CSW)

Datamotion Asia Pacific
Datamotion Asia Pacific said the drilling program at the M12 Target at the Mt Barrett project has concluded but "visual assessment by the geologist on site saw no evidence of a carbonatite intrusive which was the target host of Rare Earth Elements. Selected core samples have been sent to the lab for further analysis."

The announcement saw Datamotion's shares fall to a low of 0.1 cents.

"The drilling revealed the source of the magnetic anomaly as magnetite rich granites and the gravity low as thick clay sediments which included a thin Permian Coal Bed. These two holes discovered the source of the geophysical anomalies previously observed and the drilling was consequently terminated," said the company. (ASX: DMN).

Dyesol
Dyesol and Tata Steel have produced the world's largest dye sensitised photovoltaic module, over three metres in length and about one square metre in area.

The module "represents an important step in the development of large-scale micro energy generation capability within the infrastructure of buildings," they said.

Creation of the module has shown the potential to use continuous printing and coating processes to scale up the production of steel strips onto which a dye sensitised photovoltaic coating has been printed.

Produced as a single length of coated steel rather than separate cells connected together, the breakthrough brings closer to commercial realization the two companies' ambitions to develop a manufacturing process that can produce long roofing panels with an integrated dye sensitised photovoltaic function.

Paul Bates, operations manager of the Tata Steel Colors PV Accelerator, said "The Tata Steel and Dyesol team has worked hard to translate laboratory concepts to pilotline scale, and has successfully produced hundreds of metres of printed steel and polymer film that go into our demonstration product."

Dr Mikael Khan, lead scientist of Dyesol UK, said the module demonstrates the feasibility of a continuously printed dye sensitised product. "The materials and processes we have created move the process from the production of single cells into the continuous production, from rolls, of lengths of finished modules that would be ideal for roofing applications."

Developing the ability to print the PV coating directly onto steel roof cladding would enable the modules to be produced in large volumes cost effectively and integrated into building envelopes.

Tata Steel and Dyesol recently announced an increase in personnel from 30 to 50 as the project moves into the pre-industrialization phase.

Meanwhile the shares have hit a three year low of 48 cents. (ASX: DYE)

EnviroMission
EnviroMission has raised $184,242 by issuing 7,369,297 shares at 2.5 cents. 3,684,648 unlisted options were also issued with an exercise price of 5 cent) and expiring 15 September 2014. (ASX: EVM)

ERM Power
Empire Oil & Gas NL and the EP 389 Joint Venture, in which ERM Power has a 21.25 per cent interest, have received a non-binding term sheet with Alcoa of Australia and an exclusive 90 day period to finalize a Gas Sales Agreement (GSA).

The agreement is for the supply of gas from the Gingin West and Red Gully gasfields in Exploration Permit EP 389 in the Perth Basin, WA.

A pre-payment may be apply for a portion of the gas sales where the funds will be used to construct and commission the Red Gully Gas and Condensate Plant. This would include condensate storage tanks and road tanker load out for condensate together with construction of the flowline from the Red Gully Plant to existing natural gas pipeline infrastructure. The distance from the Red Gully Gas and Condensate Plant to the Dongara to Pinjarra Parmelia Pipeline and the Dampier to Bunbury Natural Gas Pipeline is 2.8 kilometres.

However this not a pure gas venture. The partners said condensate sales to the BP Kwinana Refinery are the subject of a separate crude oil contract with BP which will provide substantial additional revenue to the EP 389 Joint Venture.

The entry into a GSA with Alcoa together with condensate sales to the BP Kwinana Refinery will also provide funding towards the planned 3D Seismic and Drilling Programmes in the EP 389 Permit. (ASX: EPW)

Island Sky
Island Sky Australia and Featherlite Industries are to build what they says is the world's first, self sustaining emergency water container.

The product, Skywater ESU-20, is a customized Featherlite ISO container built to house a mobile water generation plant that can supply over 900 gallons of drinking water daily from atmospheric humidity.

The unit features three Skywater 300 units, a 1,275 gallon water storage tank, and a built-in 30 kW electric diesel generator. It is mobile and can generate its own electricity or be hooked up to any available power source.

"The product is a go-anywhere, ready for use, self-contained water source. You can literally roll this unit to any natural disaster site or remote location where water is needed and make safe drinking water," said Island Sky president and chief executive, Richard Groden.

With record-breaking weather patterns and natural disasters, the need for emergency water is ever increasing, he said.

Featherlite president and chief executive, Brent Crego, said "The engineers have come up with a volume package that scales multiple units inside our customized ISO 20 foot shipping container. With this principal, and Island Sky technology, we can produce thousands of gallons of water per day and be ready to take on water shortage problems quickly and effectively."

Featherlite Industries is a manufacturer of industrial containers for power generators, boilers, water treatment, and custom projects.

Despite the deal, shares in Island Sky have hit an all time low of 0.7 cents. (ASX: ISK)

Liquefied Natural Gas
The final condition for Liquefied Natural Gas' share placement to China Huanqiu Contracting & Engineering Corporation (HQCEC) has been satisfied and the shares price will be 37.83 cents to raise $20.144 million.

Completion of the placement will follow HQCEC's compliance with China's foreign exchange procedures and approval from the Minister of Commerce.

LNG managing director, Maurice Brand, said "This now completes the Company's corporate requirements and means that the Company and HQCEC can now focus on its immediate objective to secure gas supply and progress the Gladstone LNG project at Fisherman's Landing".

Meanwhile, Jemena has completed a Pre-Front End Engineering Design (Pre-FEED) study which confirms that the existing Jemena Queensland Gas Pipeline (QGP) from Wallumbilla to Gladstone can be expanded to allow for gas supply for the first LNG train. This should be be available in 2014,

The gas delivery plan with Jemena also provides for gas supply in 2015 for a second LNG train, each LNG train having a guaranteed capacity of 1.5 million tonnes per annum. (ASX: LNG)

MediVac
MediVac has secured a distribution contract with NSW Ambulance for its new SunnyWipes Antimicrobial Hand Sanitising and Moisturising Gel.

MediVac's executive chairman, Paul McPherson, said "This contract with a significant player in the healthcare market is major news for MediVac and our new SunnyWipes professional range, and demonstrates the market demand for our unique gel."

Infection Control Manager for NSW Ambulance Service, Kate Hipsley, said that user feedback from paramedics was overwhelmingly positive. (ASX: MDV)

Metgasco
Metgasco has raised $6.25 million at 26 cents per share from a placement to existing shareholders and new institutional and sophisticated investors, including overseas investors.

Metgasco aims to raise another $15 million from a share purchase plan where shareholders can apply for up to $15,000 of shares at the same price.

The capital will be used to fund the supply of gas to local customers and Stage 1 of the 6 MW Richmond Valley Power Station. The completion of these local projects will generate first revenue for the company, it said

Other uses are the for reserve development and licence commitment drilling in PEL 13 and PEL 426; the drilling of the Rosella E01 well on the Mackellar North structure to the north of Metgasco's Kingfisher discovery, which has an estimated 1,312 billion cubic feet of gas; and for working capital.

Metgasco's plans have been assisted with a Memorandum of Understanding (MOU) to supply gas to with Casino based manufacturer Richmond Dairies Pty Ltd.

It is expected that a sales agreement will be finalized by the end of calendar 2011, subject to environmental and production licences approvals. First sales should be made by the third quarter of calendar 2012.

The agreement will give Richmond Dairies a more environmentally friendly and economic source of gas for its manufacturing operations.

Metgasco said the proposed agreement is likely to be its first gas sale, and although not a large volume it is an important first step in commercialising its gas resources.

The company expects other local gas sale opportunities including gas supply for power generation and to domestic customers.

Metgasco's chief executive, Peter Henderson, said " Metgasco continues to work vigorously to pursue further sales opportunities in both domestic and international markets." (ASX: MEL)

Papyrus Australia
Papyrus Australia director Graeme Menzies has resigned due to health issues that require a reduction in his work level at this time.

The company said Mr Menzies has been a director since its listing in 2005 and has made an outstanding contribution. (ASX: PPY)

Refresh Group
Refresh Group shareholders have approved the sale of AridTec Pte Ltd and all other resolutions presented at the shareholders' meeting, including a placement. (ASX: RGP)

SWW Energy
SWW Energy director and company secretary Gino D'Anna has resigned to pursue other business interests. Mr D'Anna was involved with SWW since the execution of the Deed of Company Arrangement (DOCA) and Recapitalisation Deed and was instrumental in the termination of the DOCA and the relisting f the company's securities.

SWW Energy has appointed Matthew Foy as executive director and company secretary. Mr Foy was a senior adviser at the ASX for four years during which reviewed and approved the listing of over 40 companies.

He has been involved in a number of seed capital raisings and initial public offerings and is the company secretary of Red October Resources.

The company said it is finalizing its outstanding financial accounts for the full years ended 31 December 2009 and 2010 and the half year to 30 June 2010.

Upon lodgement, it will apply to have its securities reinstated. (ASX: SWW)

WestSide Corporation
Mitsui E&P Australia has executed farm-in and associated joint operating agreements with WestSide Corporation to acquire a 49 per cent interest in each of the company's Galilee Basin tenements, ATP 974P and ATP 978P.

WestSide has been appointed operator of both tenements, and the joint venture partners said the commencement of exploration drilling is imminent. The tenements cover 14,480 square kilometres and are said to be Queensland's last coal seam gas frontier. They contain an estimated 21 trillion cubic feet of gas in place.

Settlement will occur following Queensland Ministerial approval of the change in tenement interests.

Mitsui notified WestSide on 1 November 2010 of its intention to exercise its option to farm in to the tenements, subject to mutually agreeable farm-in and operating agreements.

WestSide's chief executive Dr Julie Beeby said "The ownership structure of this new joint venture aligns with our existing Meridan SeamGas joint venture with Mitsui at Moura in Queensland's Bowen Basin and extends this alliance into the Galilee.

A settlement payment of $1.6 million, based on reimbursement of 49 per cent of WestSide's costs to date, will following Queensland Ministerial approval of the change.

Meanwhile, WestSide's shares hit a two year low of 21 cents on 15 June. (ASX: WCL).

International Companies

Contact Energy
Origin Energy has increased its interest in Contact Energy to 52.57 per cent through participation in Contact's 1 for 9 pro rata renounceable entitlement offer and the subsequent shortfall bookbuild.

Origin purchased 36,206,220 shares at NZ$5.05 per share representing its full pro rata entitlement and an additional 3,322,068 shares at NZ$5.85 per share in the shortfall bookbuild.

In total Origin acquired an additional 39,528,288 shares at an average price of NZ$5.12 each. (NZX: CEN)


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