Eco Investor Update
A Weekly News Update for Environmental Investors
April 2012 - No 75
In early April Green Rock Energy entered an option to acquire up to 20 per cent of the Backreef Area in WAs Canning Basin from Oil Basins Ltd.
The company said This acquisition has enabled Green Rock to increase its footprint in the Canning Basin and gain exposure to a near term production oil well, the Backreef-1. Other commercial oil discoveries in the area include the producing Blina Oilfield, with oil intersected in the Yellow Drum Formation, and the Ungani Well, also operated by Buru Energy Limited.
A pre-revenue micro cap company, Green Rock Energy began as a geothermal energy explorer and recently moved into gas exploration. With this latest move it has committed to oil production and says its strategy is to diversify by acquiring complementary oil and gas assets.
The move into oil earns a low rating on commitment to being environmentally positive. The company appears to be spending more time and effort on its gas and now oil projects than on its geothermal projects.
The ACCC seeks comment on competition issues and the likely developments impacting on the demand for, and supply of, gas and how these developments may affect the demand for pipeline capacity, flows on pipelines and competitive constraints on the merged firm.
In particular, the ACCC
would welcome views on:
UE chief executive Hugh Gleeson said: This represents UEs first deal in the domestic market on an unwrapped basis for more than 10 years. We are pleased with the level of interest shown in the deal, reflecting continuing investor confidence in UE.
United Energys next term debt maturity due to be refinanced is in April 2014. (ASX: DUE)
Hastings Diversified Utilities
The Fund will repay a $41.8 million Warrant Call Notice from the Government Investment Corporation (GIC) of Singapore. The warrants were issued as part of the debt financing provided by GIC in 2009 that enabled the completion the South West Queensland Pipeline expansion.
The settlement amount is based on a volume weighted average price over the 30 trading days prior to receipt of the notice, a time when the Funds security price has been at a three year high. The payment will be met from cash reserves. (ASX: HDF)
The three directors were David Groves, Gary Helou and Clive Hooke. They were thanked but no further information was given by chairman Allan McCallum.
The new director is Trevor Gerber, a chartered accountant who was nominated by substantial shareholder the Orbis Group.
Mr Gerber becomes an independent non-executive director effective immediately. He is a director of Sydney Airport Holdings Ltd and a member of Advisory Board of St Hilliers Group. Former roles include senior executive positions with Westfield Holdings Ltd.
A report in the Australian Financial Review says the nomination of an external director by Orbis was behind the three resignations. (ASX: TGR)
Interest Rate Securities
Transpacific SPS Trust
Energy World Corporation
The Sydney Morning Herald says there is an error in Energy World Corporations accounts.
Journalist Michael West wrote E&Y had signed off on a set of company accounts as ''true and fair'', as you do, and we simply bet them $100 that these accounts were not correct.
The company in question is Energy World Corporation, an aspiring producer of liquefied natural gas plants, of which we wrote last week.
Alas, neither the firm nor the individual auditor to the company - who was unavailable on the telephone - was prepared to accept the bet.
Out of sheer goodwill though - and knowing how fastidious the firm is about its fearless and independent audit opinion - we even narrowed the terms of the bet in our counterparty's favour.
'I bet that (we cited a particular note to the financial accounts) is not correct and further to that bet - especially as the claim is fundamental to EWC and its financial statements - I also bet that EWC never builds a commercially viable LNG plant at the scale that it claims.
Not a whimper from the venerable giant [E&Y], he wrote.
Perhaps Mr West will tell his readers which line of the accounts he is refering to? (ASX: EWC)
Qube was to acquire Stocklands 55 per cent interest in MIPT, but with by exercising its pre-emptive right to part of this equity QR National will hold 33 per cent of MIPT and Qube the balance of 67 per cent.
Qube describes the Moorebank property as a strategic development site for Sydney land-based logistics and a critical component in the growth of Australias intermodal freight sector. (ASX: QUB)
An initial capital return of 35 cents was paid to shareholders on 29 February.
The total of the capital returns and franked dividends will be 38.6 cents.
This is in line with the companys expectation in December 2011 when it announced the sale of its assets to Tox Free Solutions.
Krikor (Greg) Hagop Soghomonian has resigned as a director of the company. (ASX: DMX)
Chief executive officer Val Duncan said that Energy Actions strong relationship with Moss Capital will not be impacted by the resignation.
Meanwhile, Nathan Francis has been appointed as executive director finance and company secretary.
Mr Francis was with listed property group Charter Hall where he worked for seven years in senior finance roles including as chief financial officer and company secretary. He also worked for seven years with PricewaterhouseCoopers. His experience is across finance, company secretarial, risk management and compliance roles within listed companies. (ASX: EAX)
The company will finalize the economic and technical evaluation of the project including the likely feed streams and the products in the next few months. Subject to the above outcome the construction of the new plant could commence in early 2013. The project is expected to cost about $4.6 million.
The grant is under the first round of the lllawarra Region lnnovation and lnvestment Fund (lRllF).The balance of the project cost will be funded from internal resources and a capital equipment finance arrangement.
Simon Henry has increased his substantial holding in Hydromet from 15.1 to 16.2 per cent. (ASX: HMC)
Ceramic Fuel Cells
From 1 April, subsidies are available for eligible mCHP products which generate up to 20 kilowatts of electricity and meet performance requirements including a total efficiency of at least 85 per cent.
Ceramic Fuel Cells BlueGen and integrated mCHP products will receive a subsidy of 1,800 Euros per unit, which will go to the end customer who installs the product.
The program is in addition to the German CHP Law, which requires that 25 per cent of Germanys electricity generation come from small and large scale combined heat and power by 2020.
Ceramic Fuel Cells managing director Brendan Dow said We welcome this policy to help the deployment of mCHP products. While the subsidy amount is modest, Germany continues to be a leading market for our clean energy products. We are actively discussing additional market introduction programs with State and Federal Governments in Germany. We look forward to these ongoing consultations to help achieve Germanys goal of a significant increase in high efficiency power and heat generation.
Meanwhile, Ceramic Fuel Cells German sales partner sanevo blue energy has received its first order for a BlueGen unit in Austria, and a follow-on order in Switzerland, which are part of sanevo blue energys first order for 100 BlueGens. About 30 of sanevo blue energys sales partners are now offering BlueGen to customers across Germany.
In recent months the company has exhibited its BlueGen units at numerous exhibitions in key countries including Australia and says these sales and marketing initiatives will continue to raise the profile of its products and maintain their sales growth momentum. (ASX: CFU)
Micro Cap Companies
Two directors - Tony McKee and Karl Grebstad, have resigned effective immediately. Mr Grebstad was a founding shareholder.
The rights issue is on a 4 for 1 basis with shares to be offered at 0.1 cents each. One free listed option will be issued for every two new shares and these will be exercisable by 31 March 2015 at 0.1 cent each. The placement of 70 million shares raised $70,000, and the rights issue will raise $2.18 million.
The funds raised will be used to retire debt, assess acquisition opportunities, due diligence and for working capital. (ASX: HTI)
Po Valley Energy
The one for two pro-rata non-renounceable rights issue is at 1.2 cents per share. Each new share will receive one free option with an exercise price of 4 cents and an expiry date of 31 December 2014.
The funds will be used with existing funds towards the expansion of the companys product range, improved quality control measures, marketing and better after sales service, the companys Stage 2 manufacturing facility in Nanjing in China including purchasing electrical fixed assets, and for working capital.
The rights issue is not underwritten.
Vmoto has corrected several statements in its Strategic Marketing and Operational Update of 28 March.
The heading Denmark TAO Newspaper Delivery should have read Denmark DAO Newspaper Delivery.
The Company said 32 units of electric scooter samples have been delivered when a total of 140 units have been delivered via Vmotos distributor, EVScandia.
The company stated that Denmark Post has ordered 5 units of samples to be delivered for trial. The Company is currently working with Denmark Post to prepare the electric scooters in accordance with Denmark Posts requirements. In fact, three sample units were ordered by Vmotos distributor in Denmark, EVScandia ApS, and these are being prepared for general postal and delivery use, not specifically for any postal service.
Vmoto also said Belgium Post has also recently ordered 50 units of samples to be delivered for trial. The Company is currently manufacturing these units to be delivered to Belgium Post.
This is incorrect to the extent that Vmoto, via its distributor in Belgium, has prepared 2 units of the 120LD+ electric scooter to take part in a trial with Belgium Post alongside other electric scooter companies as part of a public tender. Separately, Vmotos distributor in Belgium has ordered 50 sample units which are unrelated to the tender process, said managing director, Charles Chen. (ASX: VMT)
The early access has been granted in exchange for a commitment to compensate Meridian SeamGas for any loss of production revenue from five associated wells for a period of two years if production is adversely affected.
The Meridian SeamGas projects certified gas reserves will be unaffected because the area concerned has never been included for reserves assessment.
The deal optimizes the management of five wells within a co-development area of the mining lease. Meridian SeamGas has the right to extract gas from specific areas of the mining lease prior to the expansion of mining into those areas. Under the new agreement the mine owners will gain access 12 months earlier than otherwise. (ASX: WCL)
Lithium One owns the prospective Sal de Vida lithium and potash brine project in Argentina, for which a preliminary economic assessment in October 2011 estimated a net present value of US$1.07 billion, and the James Bay lithium pegmatite project in Quebec in which Galaxy has a current 20 per cent stake under a farm-in arrangement.
Galaxy managing director, Iggy Tan, said the merger is an excellent opportunity for Galaxy to boost its global lithium resource base and become a major global lithium company.
Galaxy has spent the last 18 months searching the world for a high quality, undeveloped lithium brine deposit and we believe Sal de Vida fits that criterion. The Sal de Vida brine chemistry is highly favourable, with high levels of lithium and potash, and low levels of magnesium and sulphate impurities. Sal de Vida is located adjacent to FMC Lithiums El Fenix lithium operation in the Salar del Hombre Muerto, which has been in operation for the last 15 years.
Galaxy will require more lithium resources over the next few years, and Sal de Vida along with James Bay will significantly add to our existing Australian resource inventory and gives us ample resources to continue to grow the lithium business and drive the long term value of the company.
The merger is not only a good strategic fit for Galaxy, it also represents an opportunity for Lithium One shareholders to become part of a lithium producing company with hard rock and brine assets around the world.
With Galaxys expertise across project development and lithium mining, processing and marketing, we would be able to fast track development of Sal de Vida as we did at our Mt Cattlin lithium mine and Jiangsu lithium carbonate plant. In addition, Galaxy plans to retain Lithium Ones current management team and incorporate it into Galaxys successful business.
Under the agreement, Galaxy will acquire all of the securities of Lithium One via a Plan of Arrangement that will give Lithium One shareholders not less than 1.8 shares for each Lithium One common share.
As a pre-cursor to the transaction, Galaxy will undertake an equity raising of $50 million to strengthen the merged entitys balance sheet and increase its finances. The funds will be used for working capital for the Mt Cattlin and Jiangsu projects, to accelerate development of Sal de Vida; debt servicing, capital raising fees and merger costs.
The equity raising, expected to be completed before the merger, is through an equity placement and share purchase plan.
If all goes to plan, the merged entity will have a market capitalization of just under $0.5 billion.
Galaxys board unanimously supports the merger and recommends that shareholders vote in favour of it at the annual general meeting likely to be held on 17 May. The merger is also unanimously supported by the Lithium One board which also recommends that its shareholders vote in favour. (ASX: GXY)
Micro Cap Companies
Technical director Earl McConchie will arrive from the US to oversee the final phase of the project.
Project planning for the algae to biofuel facility at the Holcim cement plant in Sri Lanka is complete. The bioreactors are being fitted out at Algae.Tecs Algae Development & Manufacturing Centre in Atlanta, Georgia, which has been expanded to accommodate the commercial production programs.
The despatch of the bioreactors to Sri Lanka will commence by late May.
Executive chairman Roger Stroud said both facilities offer carbon capture.
In Nowra the Algae.Tec facility will take a carbon feed from the Manildra Group operations, and in Sri Lanka the facility will take a feed from the subsidiary of industrial giant Holcim, the world's largest cement and building materials company, he said.
Algae.Tec has a biofuels memorandum of understanding with European airline Lufthansa, and a 50/50 equity joint venture with Chinese company the Kerui Group for roll-out in China. (ASX: AEB)
Director Gerald Grove-White indirectly acquired 20,000 shares in the share purchase plan, while Gordon Thompson both directly and indirectly acquired 120,000 shares. (ASX: DYE)
Enerji has installed the second of the three heat recovery units (HRU) at the Carnarvon project in Western Australia.
Recent clear conditions at Carnarvon have allowed the installation of the first two HRUs following a delay caused by inclement weather.
Installation of the third and final HRU is imminent, with commissioning expected at the end of April.
The HRUs incorporate an Airec heat exchanger to capture the heat from the engines hot exhaust. The design of the waste heat to power system (WHPS) means that the exhaust is diverted through the Airec heat exchanger and then channeled back to the original exhaust stack.
Revenue will be generated through selling the electricity created by the waste heat and Opcon Powerbox. The Powerbox has the capacity to increase the power stations energy output by up to 700 kW without burning additional fuel or creating emissions. (ASX: ERJ)
Mears has begun exploring opportunities to list on the ASX and, as K2 holds 8 per cent of Mears and 15 per cent on a fully diluted basis, a merger and backdoor listing via K2 could benefit both companies.
The intention is that the merged entity would retain K2s listing but under the name Mears Technologies.
Mears is commercializing 10 years of research and development that can be used by semiconductor chip producers for the solar PV sector. The MST. CMOS technology can reduce gate leakage and increase drive current to improve power and performance in CMOS semiconductors. Testing of the new design is about to commence at the CNS facility at Harvard and results should be ready by mid-May.
The Mears board recently implemented changes to the company to assist with commercialization. These include a new management team, a new business plan, a new multi-track commercialization program, and a reduction in the burn rate.
The revised commercialization strategy involves a more aggressive, multi-track approach, with broader engagement in the industry to cross-pollinate the various tracks, raise MSTs profile, and promote MST demand in the marketplace.
Mears is in the process of raising US$2 million to fund the company through its next stage. K2 has agreed to commit US$1 million to the raising, subject to certain conditions including the commencement of negotiations on a possible merger of K2 and Mears.
On K2's investment, Sam Gazal, chairman of K2, will join the board of Mears. (ASX: KTE)
Kimberley Rare Earths
KRE entered into the Malilongue Project in September 2011 to take advantage of the joint ventures strong prospectivity for xenotime-hosted heavy rare earth oxides such as yttrium, dysprosium and erbium, coupled with the strong market outlook for heavy rare earth products.
A program of high-impact exploration is underway to rapidly assess priority heavy rare earth targets identified from regional geophysical data sets previously advised to the ASX on 17 February 2012, it said.
The aim is for the priority targets identified to be the basis of a drilling program during the 2012 dry season. (ASX: KRE)
On the same day the company provided an update on its Shaw River Project near Marble Bar in WA, saying it has commissioned HyVista Corporation to conduct an Airborne Hyperspectral survey across the entire Shaw River group of tenements, an area totaling 418 square kilometres.
The aim of the survey is to identify pegmatite rocks as pegmatites in the Shaw River area are known to host heavy rare earth, tin, tantalum and lithium mineralization.
Australias first rare earth mine was located on the project, which was worked in 1913 and 1930 and yielded about 2 tonnes of gadolinite (yttrium iron beryllium silicate), said Lithex. An analysis of this gadolinite yielded 45.78 per cent of yttrium trioxide and 4.81 per cent of other rare earth oxides. (ASX: LTX)
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