Eco Investor Update
A Weekly News Update for Environmental Investors
January 2012 - No 65
APA Group is to expand its Goldfields Gas Pipeline that serves WA's Pilbara mining region, and has issued 10 billion yen or $126 million in medium term notes to repay existing loans.
The new pipeline expansion has a 15 year gas agreement to supply gas fired generation to the Mount Newman Joint Venture, in which BHP Billiton has an 85 per cent stake. The Yarnima power station development will power existing and expanded mining operations in the region.
APA said it is the second expansion of the Goldfields Gas Pipeline announced in a month; the first was backed by a 20-year contract with Rio Tinto.
Managing director Mick McCormack said the two pipeline expansions will deliver 44 TJ per day of additional capacity, a 28 per cent increase, and provide APA with additional contracted revenue.
The capital expenditure for both expansions is $150 million over two years. The additional capacity for the Mount Newman JV will be available early in 2014.
The new 10 billion yen fixed-rate medium term note (MTN) was issued under APA's established European MTN program. It extends the average term of APA's drawn debt portfolio and creates additional headroom for corporate and working capital.
The MTNs have a coupon of 1.226 per cent per annum, paid semi-annually, and mature in June 2018.
APA chief financial officer Peter Fredricson said this is the first utilization of APA's European MTN program that was established in 2010. Since 30 June 2011, APA has secured over $2 billion in new bank facilities and MTN issues, which APA said highlights its ability to access capital markets. APA has no debt refinancing obligations until September 2013. (ASX: APA)
Sims Metal Management
The Global 100 rankings identify companies that consistently demonstrate superior leadership and performance on a range of environmental, social and governance policies compared to their industry peers.
The list was compiled by sustainable business publication Corporate Knights and announced at the 2012 World Economic Forum in Davos, Switzerland.
Group chief executive officer Dan Dienst said "Whether or not you believe climate change is a man-made phenomenon or just a natural ebb and flow of our planet's climate, Sims Metal Management is one company that has a noticeable positive impact on the environment and, by extension, a positive impact on the forces that influence climate change. Sims Metal Management is part of the solution to protect the planet." (ASX: SGM)
Clean TeQ Holdings
Executive chairman Greg Toll
said the quarter saw the continuing resurgence in project activity with
the value of new projects awarded in the first six months of this financial
These include previously announced contracts awarded during the quarter of $2.75 million, and another two Australian air purification contracts worth $0.75 million along with two initial small projects in Vietnam. These projects are all scheduled to be completed in the current financial year, he said.
The business is gearing up to match the increasing activity to ensure the contracted projects are delivered to schedule.
A key target for Clean TeQ in 2012 is the establishment of a joint venture for the commercialization of its proprietary water desalination technologies in Australia. Mr Toll said negotiations with a major international company are at an advanced stage.
The company was operationally cash flow positive for the quarter following negative periods over the previous year, and has no material debt. (ASX: CLQ)
Managing director and chief executive, Philip St Baker, said ERM Power now has two power station projects in Queensland with development approval which are ready to proceed when market conditions are right.
"We have previously announced we expect to make a final investment decision on the 550 MW Braemar 3 power station in the 2012-13 financial year with commercial operation to begin in FY2015 after two years of construction," he said.
"The next stage in the development of Braemar 4 is finalizing fuel supply and electricity off- take agreements, which will allow us to make a final investment decision on this development."
"ERM Power has done well to anticipate future market conditions by having two major power projects approved and ready for the forecast growth in demand for peak electricity in Queensland which is expected from the summer of FY2014." (ASX: EPW)
The plan is not underwritten.
Simon Henry has increased his interest in Hydromet Corporation from 10.6 to 12 per cent. (ASX: HMC)
August increased its holdings in Qube Holdings and Panax Geothermal, and reduced its holdings in Geodynamics and Lynas Corporation.
Australian Ethical Smaller
Ceramic Fuel Cells
Sanevo's largest customer is Stadtwerke Aalen, an electricity and gas utility in southern Germany. Stadtwerke Aalen is the first German utility to actively promote and support sales of BlueGen to its customers, including an incentive payment to early BlueGen customers.
The launch offer by sanevo includes the installation of the BlueGen, integration with hot water systems, as well as a three or ten-year full-service contract including maintenance, warranty and support services.
Ceramic Fuel Cells' managing director Brendan Dow said "This is a great start to our partnership with sanevo. There is huge interest in BlueGen from customers and utilities in Germany, plus supportive policy settings. We look forward to delivering on these first orders and securing larger follow on orders."
Ceramic Fuel Cells appointed sanevo as a BlueGen distributor in July last year, with an initial order for 100 units. sanevo has a target minimum of 500 units for delivery in its second year and a target of 2,000 BlueGens over years three and four.
Ceramic Fuel Cells said a number of German states are contemplating market introduction programs for fuel-cell based micro Combined Heat and Power (CHP) systems.
The state of Saxony has announced a '1,000 Basement Programme' to provide financial incentives for installing fuel cell based micro CHP units. In late 2011 the state of North Rhine Westphalia also announced plans to increase the share of CHP electricity production to 25 per cent, by providing funding of EUR 250 million over several years to support the deployment of local CHP systems.
In December half, Ceramic Fuel Cells saw total orders double to 614 units - 262 integrated mCHP products and 352 BlueGens. During the December quarter it received orders for 106 units.
The company's current open order book is 477 units - Germany with 266, Netherlands 106, UK 101, and four in other markets.
Sales for 67 units were completed in the half-year to 31 December, which is equivalent to the total number of units sold last fiscal year.
Receipts from customers for the December quarter were $1.5 million, slightly higher than the first quarter. However; in the first weeks of January the company received another $2 million. (ASX: CFU)
Micro Cap Companies
Intermoco has issued 11,764,706 shares at 0.17 cents per share to La Jolla Cove Investors on the partial conversion of a convertible note. (ASX: INT)
Mission has also secured a US$10 million trade loan facility to fund the production of biodiesel under the contract. Under the trade loan, Mission has placed the ownership of its 100,000 tonnes per annum refinery as collateral.
"We are delighted to be supplying one of world's largest oil companies and most respected fuel companies. We look forward to potentially expanding the relationship," said Nathan Mahalingam Group chief executive of Mission NewEnergy.
Mission had December quarter revenue of $1.37 million and December half revenue of $12.12 million. (ASX: MBT)
Phoslock Water Solutions
Po Valley Energy
Total 2011 revenue was 9.1 million ($12.2 million).
Po Valley said it improved earnings (EBITDA) and generated positive operating cash flow for the year, which was mainly used to finance geological and geophysical studies and development capex.
Gas production for the December quarter, all from Sillaro's two wells, was 6.7 million cubic metres (236 mmcf) while the total 2011 gas production reached was 1.02 bcf.
New contractual arrangements between the company and its two gas customers, Italtrading and Elettrogas, will see Italtrading commence taking 100 per cent of Po Valley's gas production from both its Sillaro and Castello fields from 1 February 2012 and for the rest of the contract to September 2012.
In the second quarter 2012, Po valley will begin a competitive tender for the sale of its gas production for 2013 and future years. (ASX: PVE)
It also had record production of zinc bromine battery modules (ZBMs) for the December quarter.
It has now delivered all 60 R510 residential energy storage units to Ausgrid as part of the Smart Grid, Smart City project, with completion of the first forty installations in Newcastle.
The company has cash of $12.5 million and no corporate debt.
RedFlow said its strategy in 2012 is to expand production, reduce ZBM unit costs, demonstrate cycling performance and broaden its markets for advanced energy storage. (ASX: RFX)
Funds managed by Mount Kellett Capital Management, a US investment firm, have subscribed for US$50 million of the convertible bonds on an unconditional basis, with the balance of US$175 million to be subscribed when specific conditions are met, including completion of technical due diligence in February.
The 18-month working capital facility announced on 22 September 2011 has not been utilized and will be retired.
The new convertible bonds have a term of 4.5 years and a coupon of 2.75 per cent. The conversion price is $1.25 per share.
Mount Kellett co-founder Jason Maynard said "We are delighted Lynas accepted our offer to become a significant investor and look forward to participating in the development of the world's first reliable, sustainable supply chain for rare earth elements outside of China."
Meanwhile, additional engineering requirements and the recent monsoon season mean there will be a delay in the LAMP Phase 1, with Lynas now anticipating the first feed to kiln and first production during the second quarter of 2012, subject to regulatory compliance and the issuance of the pre-operating licence for the LAMP.
The additional capital cost requirements, as well as ongoing operational funding requirements at Mt Weld and Malaysia are estimated to total between $90 million and $100 million. The increase in the total estimated capital cost of Phase 1 from the figures in the September quarter report is $40 million. (ASX: LYC)
A lithium hydroxide circuit would include construction of a lithium hydroxide production plant on land next to the lithium carbonate facility. The feasibility study will take up to six months.
Managing director Iggy Tan said demand for battery grade lithium hydroxide has been growing strongly and there is limited production capacity around the world.
"Like lithium carbonate, lithium hydroxide is also used in cathode and electrolyte production. While there is ample technical grade hydroxide available, higher purity battery-grade hydroxide is in limited supply, which also means it commands a price premium to lithium carbonate.
Battery-grade lithium hydroxide attracts a higher premium of around US$1,000 to US$2,000 per tonne more than battery-grade lithium carbonate.
"A battery-grade lithium hydroxide plant would expand Galaxy's product mix significantly, at a relatively minimal cost by making use of existing infrastructure at Jiangsu, and allow the company to tap into growth in both markets, extending the company's battery sector customer base," Mr Tan said.
The additional circuit could be operating within 18-24 months of deciding to proceed. Additional spodumene ore would be sourced on-market or from the company's James Bay project in Quebec once it is in operation.
M&G Investment Funds have increased their interest in Galaxy from 13 to 14 per cent. (ASX: GXY)
Micro Cap Companies
Executive chairman, Roger Stroud, said "This again demonstrates that sophisticated investors are aligned with the need for alternative transport fuel technologies such as the Algae.Tec enclosed algae to biofuels solution. The market is also responding to the recent milestones and commercial deal announcements the company has signed."
Algae.Tec is commercializing a high-yield enclosed algae growth and harvesting technology, the McConchie-Stroud system.
The placement was organized by through Patersons Securities.
Algae.Tec director Peter Hatfull has indirectly acquired 45,000 shares at 55 cents each. (ASX: AEB)
Carnegie Wave Energy
The capital is for corporate services associated with the company's OTCQX listing and business and marketing services. (ASX: ERJ)
The company had targeted $8 million for the share purchase plan. The issue price was 13.5 cents.
The capital will progress the company's Cooper Basin Geothermal Project, commencing with drilling Habanero 4 which is planned for spudding in February.
The share purchase plan and institutional placement were conducted by joint lead managers RBS Morgans and Austock. (ASX: GDY)
So far La Jolla Cove has made payments of $1,194,903 on the first $2 million convertible note. It has converted $450,000 into 17,637,211 shares, leaving $744,903 to be converted.
Shareholder will vote on 24 February to approve the convertible note and capital raising. (ASX: MDV)
Preliminary results from the model suggest that there are no unforeseen difficulties in extracting the planned initial production, with the possibility to subsequently increase production rates.
The higher grade than anticipated, coupled with excellent flow rates, suggest the possibility of future project expansions, said managing director, Richard Seville.
The company has also completed a diamond drilling program on the Salar de Cauchari properties immediately south of the Salar de Olaroz project .
Mr Seville said the drilling tested the company's properties immediately south-east of the highest grade part of the brine body identified by Lithium Americas Corp on its Cauchari project.
"Our drilling confirms that the brine body extends into the Orocobre properties, with high lithium grades present in the extensive halite units encountered in drilling. Results are encouraging," he said.
"The completion of the drilling program represents another milestone for the company. The assay results confirm the company's previous expectations that Lithium Americas' brine body extends into our Cauchari properties and that a resource can be developed at the project to support additional production at the planned Olaroz facilities twenty kilometres north. We look forward to completing the resource estimate, developing a plan to produce brines from our Cauchari asset and thereby increasing shareholder value." (ASX: ORE)
The company said the Gifford Creek Carbonatite Complex consists of dykes and sills with elevated to high concentrations of rare earths, that occur over an area of about 25 x 25 kilometres. Strategic Materials' permit area is 15 x 7.5 kilometres in size and is 270 kilometres inland and east-northeast of Carnarvon.
The company has relinquished its Mabel Bush silica permit. (ASX: SOR)
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