Eco Investor Update
A Weekly News Update for Environmental Investors
July 2011 - No 40
Drilling at the 482.4 square kilometre permit will target mean reserves of 2 million barrels of recoverable oil.
In recent years AGL has divested several oil assets including in PNG, which has improved its environmental credibility. (ASX: AGK)
Energy World Corporation
Energy World International Limited (EWI), a company controlled by EWC's chairman, Stewart Elliott, and which is a controlling shareholder of EWC, will also sell 85 million EWC shares at 50 cents each to CLSA Limited.
The 173 million new shares and the 85 million shares to be sold will be purchased by Orchid Fund Pte Limited, a Richard Chandler Corporation Company, which will become a 14.9 per cent shareholder on a fully diluted basis.
EWI will now hold 634,572,393 shares in EWC or 36.59 per cent fully diluted.
The proceeds mean EWC can continue to fund its investments in its projects, gas developments and its Modular LNG projects in Sengkang in Indonesia. When appropriate EWC also expects to raise project debt finance for these projects.
Richard Chandler Corporation provides capital to companies and governments in Asia, Africa, Latin America and Eastern Europe and invests in the telecoms, power, steel, banking, energy and other industries.
Mr Elliott said "I am pleased to welcome the Richard Chandler Capital Corporation as a significant investor they fully share our business objectives and vision to bring clean and green energy to the Asia markets. EWI has joined in the placing in order to secure a substantial investor to the Company and remains fully committed to EWC and its largest shareholder." (ASX: EWC)
"The Australian Energy Regulator, in its recent review of Envestra's South Australian and Queensland gas Access Arrangements, indicated that the Carbon Tax, as proposed, would most likely qualify as a "tax change event". This would enable Envestra to recover the additional cost through its network charges," it said.
Any inflation effect on supplies its purchases is not expected to be material.
Meanwhile, Envestra has lodged appeals to the Australian Competition Tribunal against the Final Determinations by the Australian Energy Regulator (AER) over its South Australian and Queensland Access Arrangements from 2011 to 2016.
The appeals are over the exclusion from future tariffs of some management fees paid to the company's contractor, APA Asset Management; the exclusion from future tariffs of part of the cost of system gas used in the operation of the networks; and the basis of the AER's calculation of the weighted average cost of capital.
Envestra said the matters have a potential financial value to it of up to $100 million over the five years. (ASX: ENV)
Ms Stein currently serves on the boards of ASX companies DUET Group, Programmed Maintenance Services, Clough Limited and Alumina Limited. She is also a member of the Board of Trustees for the University of Western Sydney.
Formerly the UK managing director of French utility Gaz de France's energy retailing operations, she moved to Australia in 2003 and took on board roles in energy utility and oil and gas exploration.
"Emma's experience with industrial markets; together with her commercial background in international energy and utilities, and capital investments; will prove a valuable addition to the Transpacific Board," said chairman, Gene Tilbrook. (ASX: TPI)
A new schedule from the project's engineering contractor, Hatch Engineering, indicates the back half of the Jiangsu plant including purification, drying, micronizing and bagging will be completed and commissioning will commence during the third quarter of 2011.
Commissioning of the front half of the plant including calcination, sulphation, leaching and precipitation is expected to commence during the fourth quarter of 2011.
As well as labour constraints, other pressures have come from some late changes to the plant's design from the local approval process, an increase in plant power capacity and alterations to equipment delivery time frames.
The capital budget has increased by 36 per cent in A$ terms to A$99.8 million but Galaxy does not need to raise further funds.
Most of the increase is for materials such as concrete, steel and process equipment which emerged as design details were finalized. The balance is for the higher cost of materials and labour, inflation and scope changes to the project. (ASX: GXY)
Tox Free Solutions
CMA said the New Entitlement Offer is superior as it provides a higher price for the new shares; raises substantially more equity; gives existing shareholders the chance to avoid dilution if they take up their entitlements; and gives shareholders the chance to buy further shares under a shortfall facility.
CMA's existing shareholders Scholz, Souls Private Equity and Stemcor and their associates will together take up to a maximum of $57.5 million of the offer through a combination of firm positions and sub-underwriting.
The raising has an Institutional Entitlement Offer of $30 million and a Retail Entitlement Offer.
CMA said it will use the proceeds of the new offer to make a $5 million mandatory partial repayment of principal to its lenders. The balance will mostly be retained to repay debt on the refinancing of its existing debt facility, and otherwise for working capital including increasing inventory levels and reducing trade creditors.
As a result of the termination, CMA expects KAM will be entitled to a break fee of $302,000.
CMA expects the voluntary suspension of its shares will be lifted on or about 2 September. (ASX: CMV)
"For the past eight years, CO2 has built a profitable and strong business in an environment of continued uncertainty around the federal government's policy on carbon. The policy announcement on the carbon price validates CO2's business model and provides us with a substantial growth platform," said chief executive officer, Andrew Grant.
"Certainty around government policy strengthens our existing contracts where we manage over 17,900 hectares of carbon plantings on behalf of our blue chip customer base. We expect that we will now be able to also expand some of these contracts, most of which are 30 to 50 years in length.
"More importantly, we have been working on a pipeline of new customer opportunities that have been dependent upon certainty around government policy, so we expect to see an increase in new plantings."
With the carbon price likely to impact around 500 large carbon emitters and with CO2 working with just 10 companies at present, "our growth prospects are indeed compelling", he said.
The carbon policy allows liable companies to reduce the carbon tax by up to 5 per cent through purchasing Australian generated Kyoto credits, which will largely be sourced from carbon forests.
"As well, CO2 has actively broadened its range of environmental services in anticipation of this legislation. Mine site rehabilitation, broader environmental plantings, carbon accounting, and carbon credit and renewable energy certificate trading initiatives will now be more actively marketed.
"We welcome this certainty around climate change legislation and are focused on capitalizing on this opportunity for our shareholders," said Mr Grant. (ASX: COZ)
The unit holder vote on the resolutions will be held on 18 August, and the transactions should be completed by the end of August.
Qube said its operating logistics businesses have continued to achieve strong growth in revenue and earnings for the year to 30 June compared to the prior year, despite the adverse weather events in the second half of the financial year in Queensland and Western Australia that impacted volumes in both divisions.
The businesses in the Automotive, Bulk and General Stevedoring division are still being impacted by the consequence of the earthquakes in Japan, which "severely disrupted vehicle and related parts manufacturing in Japan resulting in a significant decrease in volumes of imported motor vehicles into Australia".
Volumes are expected to start to return to normal levels in the third quarter of 2011.
"The strong year on year growth in revenue and earnings despite these issues reflects organic growth and the contribution to revenue and earnings in the 2011 financial year from major development projects and acquisitions," it said. (ASX: QUB)
Micro Cap Companies
A CSA is any system of fish production with a controlled interface between the fish and the natural environment. A CSA would fully utilize the benefits of the company's Licensed Technology, which is primarily created for a closed growing system, said its consultant.
"Proponents of CSA consider the system more sustainable than traditional finfish aquaculture systems as it removes some of the harmful side effects such as habitat destruction, water pollution, parasitic infections of wild stock and unintentional introductions of non-native species," said AAQ.
Although there are a large range of CSA technologies around the world, they share two characteristics: the separation of the fish from the environment and the potential control of inputs and outputs.
Inputs include food and better feed conversion ratios due to greater control of growing conditions, lifecycles and water movement. Outputs include effluents, which can be reused as fertilizer or input for other fish systems.
Some disadvantages of CSA systems are higher capital requirements due to much higher start-up costs than for ocean cage operations and higher operational costs such as for oxygen and chemical balance for water maintenance. Others are the complexity of the technology and risks such as the potential for rapid chemistry alterations and dependency on monitoring.
AAQ said SEAS and the consultant are pioneers and leaders in the farming of Atlantic Salmon and Rainbow Trout on mainland Australia using Cage Aquaculture.
"The Managers of SEAS have considerable practical experience and intellectual property in the growing of such salmonids on the mainland and in particular the limestone Coast region of South Australia which is also one of the few areas on the Australian mainland where production of such salmonids using Cage Aquaculture is possible due to water temperature and tidal conditions." (ASX: AAQ)
The funds will support the expansion of the company's R&D and global commercialization activities and increase working capital. The expanded R&D should qualify Aeris for a greater level of R&D cash back refund in 2011-12.
Meanwhile, the company is in discussions with potential trade partners and customers for its Aeris Guard clean and protect' platform.
Managing director David Fisher said the capital raising will enhance Aeris' commercialization of its cleantech portfolio, with the company having focused its activities on several key aspects of the global cleantech market.
"These core markets are healthier air, cleaner water, food safety, smart surfaces, biocidal polymers (plastics) and new advanced biodegradable materials," he said.
"Favourable testing has demonstrated the effectiveness and the proprietary nature of the Aeris Guard technologies and the Company has received substantial market feedback as to the demand for its advanced technologies in several key international markets."
Aeris recently received commitments from Asia for the application of its Aeris coat' OEM bioactive coatings for production commencing January 2012. (ASX: AEI)
Executive chairman Roger Stroud said the carbon tax "will significantly add to the commercial appeal of the Algae.Tec technology as a solution for carbon dioxide emitting companies."
Algae.Tec's modular technology captures carbon dioxide from power stations and manufacturing facilities and feeds it into an algae growth system.
"Algae.Tec is one of few advanced biofuels companies globally with a closed modular engineered technology designed to grow algae on an industrial scale and produce biofuels that replace predominantly imported fossil fuels for transportation use," he said. (ASX: AEB)
Achievement of the milestone should immediately double the partners' processing capacity.
Chief executive Giles Bourne said the fifth generation RPCVD tool at Silverwater in Sydney is demonstrating promising results. "We believe that we are now very well placed to deliver our next technical milestones between these two teams and facilities," he said.
The next milestone towards RPCVD as a LED manufacturing technology is the delivery of a single crystal commercial quality material. This would be followed by productization and a customer test site. (ASX: BLG)
Chief executive Peter Balsarini said "We have $45 million worth of existing contracts with clients including Origin Energy and BP Singapore. With the Government's announcement it is more likely that a decision by our clients to exercise up to $190 million of commercial options will be made.
"The Government's decision has provided certainty and highlights the necessity for business to prepare for the Carbon Economy. We have received substantial levels of interest from businesses, both in Australia and overseas. Our carbon credits are internationally compliant and will become tradeable with the introduction of the Carbon Price by 1 July 2012 and followed by an Emissions Trading Scheme (ETS) in 2015.
"Carbon Conscious is well positioned to take advantage of the tremendous growth in carbon offset investments and carbon credit trading, and is anticipating further strong growth for the foreseeable future."
The market seems to agree with the company's share price nearly tripling to a post tax announcement high of 38 cents. (ASX: CCF)
Carnegie Wave Energy
Chief executive officer and managing director, Dr Michael Ottaviano, said "The policy will provide the platform for Australia to capitalize on its clean energy resources including its world class wave, solar and hot rocks assets. In particular, it could provide the focus needed on earlier stage renewable technologies like wave where there is still the opportunity for Australia to lead the world."
Although a record $240 billion was spent globally last year in clean energy, more than 95 per cent was invested in deploying existing proven technologies. "Arguably, it is the newer, emerging renewables like wave that have the potential to be game changers, providing high availability, predictable clean energy," he said.
Soon after the Government's announcements, Carnegie hosted the deputy prime minister and federal treasurer Wayne Swan, plus Senator Chris Evans and local MP Melissa Parke at its Fremantle wave energy research facility. (ASX: CWE)
Bodies such as the CEFC and ARENA will make a significant contribution, said managing director, Geoff Ward. Geodynamics looks forward to working with $10 billion CEFC when it is established, as it will assist large emerging technology projects transition into full scale commercial development, de-risk the financing of projects, and help foster wider investor appeal.
The measures announced provide a balanced set of initiatives to address the growing problems of carbon emissions and future energy needs. The Company believes the package has been well considered, limiting the short-term impacts on industry and economic growth, and maintaining electricity affordability," said Mr Ward.
"The clean energy plan is a comprehensive, multi-faceted program capable of delivering real change, building energy security and creating a diversity of energy options for the nation. This will be achieved through taking advantage of areas where Australia possesses world class renewable resources, such as in geothermal and solar thermal energies. It also recognizes the ongoing role of traditional fuels through areas such as co-generation projects."
"These major initiatives will provide a significant boost for Australia's growing renewable energy sector and will prove critical in assisting new clean energy technologies to make the transition from development promise to providing reliable cost effective base-load energy to the Australian economy." (ASX: GDY)
Not surprisingly the company said the tax and the substantial support for the renewable energy and energy efficiency industries meant the company is well placed for future growth.
"The Clean Energy Finance Corporation with $10 billion in funding to supplement the current $3.2 billion in funding now under management by the newly formed Australian Renewable Energy Agency (ARENA) places substantial future funding into the renewable energy and energy efficiency sectors." it said.
The company said it has a suite of strategically positioned clean energy technology entities that have the potential to deliver renewable energy, energy efficiency and CO2 to fuel conversion outcomes in coming years.
These include base load, zero emissions geothermal projects, emerging waste heat recovery and energy efficiency, combined heat and power solar technology, and a CO2 to fuel conversion technology.
Greenearth Energy is unique amongst renewable energy developers with a stable of world class technologies at its disposal to deploy strategically across Australia and the region as opportunities arise, said managing director, Mark Miller. (ASX: GER)
Chairman David Hoff said that first as Cool or Cosy Ltd the company had been manufacturing and installing home insulation products for over 25 years when the Federal Government announced a three year program for the supply and installation of subsidised roof insulation for homes.
With a major increase in demand for its products, ISL, at a substantial cost, expanded capacity to meet the increased demand. "This was done with the expectation that the Federal Government program would run its full three year term. However, after less than one year, the Government suspended the program and three months later in July 2011 cancelled the program completely."
Mr Hoff said ISL suffered substantial losses and write-downs due to the policy change, and options such as a possible merger, a Share Purchase Plan and short term funding were not successful. (ASX: ISL)
KUTh said the important initiative come at a time when the industry requires clear signals on government commitment to renewable technologies. "We look forward to the establishment of ARENA and the opportunity to engage with government as the detail emerges on possible geothermal industry support programs,: it said. (ASX: KEN).
Liquefied Natural Gas
LNG's managing director, Maurice Brand said HQCEC is now LNG's largest shareholder with 19.9 per cent and will greatly assist the company to achieve its immediate objective of securing gas supply and progressing its 3 million tonnes per annum Gladstone Fisherman's Landing LNG Project in Queensland.
The company has received acceptance of and or been granted patents in several national and regional jurisdictions to protect two primary inventions which relate to its OSMRR process for producing liquid natural gas.
These relate to Australia, China, South Africa and the African Regional Intellectual Property Organisation. Patent applications have been filed in another 17 countries or jurisdictions including Canada, Europe, India, Japan, and US.
The OSMRR process can "significantly enhance the plant performance" of LNG output and overall process efficiency, enabling construction of a plant at around half the cost of other technologies and with a 30 per cent reduction in emissions. (ASX: LNG)
PEL 13 reserves have been certified as 31.2 petajoules 2P, 302.4 petajoules 3P and 1334.1 petajoules 2C.
Metgasco now has total 1P reserves of 2.7 PJ, 2P of 427.9 PJ, and 3P of 2541.7 PJ. Its 2C Contingent Resource is 2511.5 PJ.
The PEL 13 reserves and resources are the result of drilling only two wells on the eastern boundary and are included in only 190 square kilometres or 21 per cent of the PEL 13 area. More exploration activity is expected to increase the 2P and 3P reserves in this area and to book reserves and resources in the remaining 79 per cent area.
This is the first time that reserves from PEL 13 have been certified and they add to Metgasco's certified reserves in its adjacent PEL 16 lease. The new reserve figures represent coal seam gas only, as Metgasco also has conventional gas potential. (ASX: MEL)
The company is due to release any day the analytical results from brine samples taken during the core drilling program at the Salinas Grandes Lithium-Potash project in Salta Province in Argentina. (ASX: ORE)
The Chalice underground gold mine is at the Higginsville Gold Project near Kambalda, Western Australia.
Avoca Mining is a subsidiary of Alacer Gold Corp. Pacific Energy managing director Adam Boyd said "Alacer and KPS are also discussing the opportunity to retrofit our exclusive waste heat recovery fuel saving technology to the existing Higginsville Power Station in order to reduce its fuel consumption and carbon emissions footprint.
"The proposed Carbon Tax impost and related diesel fuel excise rebate reduction will further enhance the value of the fuel savings achieved by our waste heat recovery system."
Pacific Energy said it continues to progress a number of new opportunities and is actively negotiating new electricity supply contracts with significant resource companies. These negotiations are at an advanced stage and are expected to be signed shortly. (ASX: PEA)
"Our PAEHolmes business is Australia's most specialized and largest environmental air practice," said chairman Dr Merv Jones. "We assist many industries, particularly in the resources sector, quantify and report their emissions. Carbon is one of many emission types that we deal with."
With a cost on carbon, he expects to see a step change in market size and opportunity for many the company's services.
Pacific Environment NGER (National Greenhouse and Energy Reporting) technology is used with clients as part of their audit and reporting process to qualify and quantify their carbon emissions.
The EnviroSuite product will become more important to organizations that want to track emissions in real time and where economies are large enough to set activities to minimize tax or engage in trading.
The company also expects to see interest in longer-term agreements as part of a total managed service. "Our capabilities are in line with executive responsibilities where we can manage their environmental risk as part of a managed service. This will greatly assist transforming PEL's business model into a more valuable annuity-based business model."
The monitoring business, NewEQ, will now look to invest further in emissions monitoring, which enables large carbon emitters to track their emissions and associated liabilities. (ASX: PEH)
The carbon pricing and clean energy funding initiatives represent the single most significant government assistance package for renewable energy and for the geothermal sector. "These initiatives are needed to drive the necessary further investment in geothermal technology," said managing director Kerry Parker.
"With the introduction of a price on carbon there is great potential for large-scale commercial renewable energy development. Geothermal energy has the capability to provide a significant portion of these base-load renewable energy requirements," he said.
"We look forward to seeing how the funds are distributed, as the right investment into geothermal energy will mean a big step forward in cutting Australia's emissions and working towards a sustainable future."
Panax has two projects underway in Australia at the Otway Basin in South Australia and the Great Artesian Basin in Central Australia.
"We are well placed to take advantage of the funding to invest further into our Australian projects," said Mr Parker. (ASX: PAX)
Managing director Terry Kallis said the introduction of a price on carbon creates the investment framework and certainty needed to enable significant renewable energy development.
"The carbon pricing and clean energy funding initiatives represent the single most significant government assistance package for renewable energy in general and potentially for the geothermal energy sector.
"Petratherm, as a leading explorer and developer of geothermal energy, is well positioned to benefit from those new initiatives."
The Australian Ethical Smaller Companies Fund has reduced its holding in Petratherm from 8.4 to 6.1 per cent. The shares were sold at between 11 and 13.2 cents. (ASX: PTR)
Po Valley Energy
"In regards to Castello, the Ministry of Economic Development has forwarded the final authorization to drill theVitalba-1dirA well and all contracts and service agreements have been executed. We are therefore well positioned to advance the development of this field in the upcoming months." (ASX: PVE)
The company had record shipments and sales in the 2010-11, completing 45 units, primarily for major electricity distribution utilities in Australia and New Zealand. The total unaudited invoiced value was $2.8 million with recognized product revenue at $1.7 million and the balance deferred revenue that will be recognized in coming months. (ASX: RFX)
The Clean Energy Future package will stimulate investment in the clean energy sector, with support for renewable energy development expected to come through a succession of new Government funding initiatives, brought together under the new $10 billion Clean Energy Finance Corporation (CEFC), said managing director John Canaris.
The new Australian Renewable Energy Agency (ARENA) with $3.2 billion of existing grant funding, and the new $200 million Clean Technology Innovation Program are also expected to provide much needed early stage development assistance.
"Whilst market conditions have meant that proof-of-concept drilling has had to be deferred, at Torrens we see this move to a carbon policy as the first step toward the geothermal sector's recovery," he said.
"Geothermal energy remains a first choice as the only potential zero-emission base-load energy source identified in Australia, and Torrens Energy having established world class on-grid geothermal resources in SA, remains positioned to benefit in the future." (ASX: TEY)
Ocean Power Technologies
Revenue rose to US$6.7 million from US$5.1 million, reflecting orders from the US Navy under the LEAP program, US Department of Energy (DOE) and the UK's Technology Strategy Board..
Contract backlog increased to a record US$8.9 million reflecting US$10.3 million of new orders brought in during fiscal year 2011, including recent DOE awards for the PB150 program in Reedsport, Oregon and for development of the next generation PB500 PowerBuoy.
At April 30 the company had cash, cash equivalents, restricted cash and marketable securities of US$48.3 million. Net cash used in operating activities was $4.8 million and $18.8 million for the three and twelve months ended April 30, 2011 respectively.
OPT said it expects the rate of cash outflows to decrease in fiscal 2012, reflecting completion of significant milestones associated with the construction and deployment of its two PB150 systems for Oregon and Scotland.
Chief executive officer said Charles F. Dunleavy said the company expects the remainder of calendar 2011 to be active with progress on the PB150 in Oregon and with the planned ocean-test of a LEAP system.
"We also continue to pursue opportunities in Europe, Australia, the US and Japan, and believe fiscal 2012 will be a year marked by strengthening demand, top line growth and additional operating improvements. Ocean Power Technologies remains at the forefront of making reliable, cost-competitive, clean wave power a commercial reality," he said. (Nasdaq: OPTT)
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