Eco Investor Update
A Weekly News Update for Environmental Investors
November 2010 - No 7
The sale will make DUET an Australian and much more gas focused business.
DUET subsidiary United Energy has had the final close of its US$435 million private placement bond issue extended to 15 December. The funds will be used to refinance $363 million of bonds maturing next April, and the extension of time will lower the carrying costs until then, said DUET. (ASX: DUE)
The analysis of these samples did not identify unsafe levels of any of these chemicals, said Origin.
"Due to the physical separation between the water bores and the fracture stimulated well, Australia Pacific LNG is confident the fracture stimulation operations undertaken on its exploration wells have not had any impact on landholder water bores," said Australia Pacific LNG, which has received independent verification of this view.
The Qld Government regulator, the Department of Environment and Resource Management, has reviewed the analysis and has not raised any issues with the conclusion.
Origin said its Exploration and Production business delivered record production and sales revenue in the September quarter.
Executive director, Finance and Strategy, Karen Moses, said "The Exploration and Production business achieved quarterly production of 37 PJe, a 45 per cent increase on the same period last year. Sales revenues of $230 million represented an increase of 52 per cent compared with the corresponding period in 2009.
"Australia Pacific LNG's production of coal seam gas increased 25 per cent compared with the previous quarter (June 2010) and achieved peak daily production rates in excess of 300 terajoules per day (TJ/d). Driving increased demand was the commencement of supply to Rio Tinto Alumina and commercial operations of Origin's Darling Downs Power Station.
"The strong result is a reflection of the deployment of substantial capital and resources during the past couple of years, specifically in the Kupe field in New Zealand, our increased equity interest in the Otway Gas Project, and the continuing growth in production from the coal seam gas fields.
"All projects, except the Perth Basin, produced at or above levels recorded in the previous quarter. High seasonal demand resulted in the Kupe and Otway Gas Projects increasing their production 31 per cent and 26 per cent respectively, compared with the previous quarter," said Ms Moses. (ASX: ORG)
Sims Metal Management
CMRS collects 75,000 tonnes of ferrous scrap and seven thousand tonnes of non-ferrous scrap each year.
Darron McGree, managing director of SimsMM Australia, said "CMRS is a good strategic fit for our Queensland metal recycling business due to its diverse geographic footprint and strong local capability."
The acquisition is subject to clearance from the Australian Competition & Consumer Commission. The financial terms of the transaction are not material to Sims. (ASX: SGM)
Eastern Star Gas
Alan Fanton has over 40 years experience in all aspects of large scale project management from concept stage through to completion and handover, said ESG. Most recently he was project manager and upstream FEED study manager for the Gladstone LNG Project.
In addition to his experience in Australia and New Zealand, he has overseen projects in Asia, South America, North America, Africa and the Middle East.
Eastern Star's managing director, David Casey, said Mr Fanton's skills, knowledge and insight will be invaluable as ESG progress to full-scale commercialisation of the Narrabri CSG Project and work towards implementing the LNG Newcastle option. (ASX: ESG)
Gas Networks has 1,160 kilometres
of gas distribution pipelines and 65 kilometers of transmission pipelines
in southern NSW between Wagga Wagga and Cooma. It delivers 3 petajoules
of gas to 26,000 customers each year.
APA will operate the business on behalf of Envestra. It should deliver revenue of $14 million and earnings (EBITDA) of $10-11 million in 2011-12. (ASX: ENV)
The first quarter results were strong except for the expected reduction in environmental hot water products following the wind back in government rebates. This has been offset by higher sales from construction activity around the Government's social housing and Building the Education Revolution programs.
The company has forecast earnings for 2010-11 of around $105-108 million.
GWA has appointed two new non-executive directors. John Mulcahy is a non executive director of Mirvac and Coffey International and a former managing director of Suncorp Metway. Peter Birtles is a chartered accountant and the managing director and chief executive of Super Cheap Auto Group. (ASX: GWA)
Hastings Diversified Utilities
The GTA provides Santos with
firm gas transport on the South West Queensland Pipeline (SWQP) from Moomba
east to Wallumbilla, and an option for Santos to increase its capacity
on the SWQP through non-firm transportation.
The capital cost to convert the SWQP into a bi-directional pipeline will be funded from HDF's cash reserves and recovered from Santos via a separate capital surcharge.
HDF chief operating officer Colin Atkin said "This development is illustrative of the high value opportunities that Hastings expects will continue to be made available to HDF through its investment in the gas transmission network in Australia."
Announced in December 2009, HDF has committed to the Stage 3 expansion of the SWQP. Construction is underway and due for completion by January 2012.
The SWQP's daily capacity is being increased from 168 TJs to 380 TJs. The expansion is fully underpinned for the firm transport of gas in a westerly direction from Wallumbilla to Moomba. (ASX: HDF)
Tox Free Solutions
Clean TeQ Holdings
The company said it is managing the situation through attention to costs, diversifying revenue, increasing its sales capability, and getting bigger through acquisitions.
It expects its trading results to slowly improve during this "period of re-alignment". At the end of September it had cash of $2.3 million. (ASX: CLQ)
CO2 Group and Carbon Conscious
"The Domestic Offsets Integrity Committee will assess the specific methods for measuring carbon credits," said the minister for Climate Change and Energy Efficiency, Greg Combet. "The Carbon Farming Initiative (CFI) will set out what farmers, foresters and landholders need to do to generate carbon credits and it will establish an independent regulator to verify carbon credit claims."
The National Carbon Offsets Standard introduced in July established the rules for companies to become carbon neutral or to sell carbon neutral products. These include reforestation, capturing emissions from existing landfill, and better management of livestock manure.
"Once the credits are verified, they can be traded on Australia's voluntary carbon market and on overseas markets, generating revenue while reducing carbon pollution," Mr Combet said.
The six experts form an independent panel called the Domestic Offsets Integrity Committee that will advise the minister on methodologies that can be approved in advance of the CFI legislation that is planned to be brought to Parliament in the first half of 2011. (ASX COZ and CCF)
It has also executed what it says is a growth focused $45 million debt facility with major shareholder Greenspark Power Holdings. The sale and one year facility are part of its "strategy to rebalance its global landfill gas, waste coal mine methane, remote area and LNG/ CNG power generation assets towards a higher growth profile".
The Gastec joint venture generated 30 megawatts and contributed $0.48 million to after tax profit for Energy Developments in 2009-10. There is a non cash accounting loss of $9 million on the sale, due mainly to exchange rate movements, but Energy Developments said it was an attractive opportunity to exit a low growth asset and redeploy the capital. (ASX: ENE)
Forest Enterprises Australia
Interestingly, Gunns is continuing with its new push to be sustainable and has become a party to the Tasmanian Forest Statement of Principles agreement. This will see it restrict its woodchip export business to plantation woodchips as soon as possible, review all of its Tasmanian operations involved in processing timber from native forests and, "as a priority", exit the processing of timber from high conservation value forests.
Even more interesting, Gunns
has said it wishes to be seen as an "environmentally positive"
business by the community.
Gale said its new Xceltex waterproof outdoor product was successfully trialed in a range of umbrellas and quickly sold out. An expanded range of products is being marketed in Australia, New Zealand, US and Europe.
Another new product is Coolaroo synthetic grass.
The company expects to achieve modest sales and profit growth in 2010-11. (ASX: GAP)
Micro Cap Companies
The coating is applied to heat exchange coils at manufacture and protects against bacteria and mould for more than three years. The global HVAC industry is estimated to produce about 100 million systems per year.
Aeris is also targeting automotive, transport and refrigeration applications.
The company said it is also in commercial discussions with the leading global manufacturers of microbial control and polymer technologies. The discussions are about Aeris' suite of smart surface products including the AerisGuard Biocidal Polymer, AerisGuard Biocidal Coating and AerisGuard Anti-Microbial Treatments.
In addition, one of Australia's
largest beer makers has requested a trial of the new AerisGuard Multi
Enzyme Brewery Solution that was launched in March.
The other 15 per cent is held by Santos, which could move to 50 per cent. The farm-in is for coal seam gas only, not natural gas.
The estimate is for an area of 218 square kilometres within the 5,953 square kilometre licence area. (ASX: AZO)
The parties have also ended
their 2007 Development Agreement and will pursue separate business strategies.
The company has also lodged a prospectus for a pro rata non-renounceable rights issue of shares and options in BPO expected to raise $1.9 million and $1.65 million after costs. (Eco Investor Update 25 Oct 2010). (ASX: BPO)
The City of Perth's interest
in planting trees is to offset greenhouse emissions associated with parking
activities, said Carbon Conscious chief executive, Peter Balsarini.
The plantation can be cost effectively managed over 40 years in conjunction with other nearby plantations established for other CCF clients, he said.
The rights to the carbon sequestered by the mallees will be vested in the City of Perth and lodged on the title of the land where the plantation is to be established. (ASX: CCF)
Carnegie Wave Energy
The buoyant actuator will begin its onshore and offshore test program in coming weeks, said managing director, Dr Michael Ottaviano.
The buoyant actuator is the technology's energy collection system. The first step in the three test program is individual component testing to ensure each component has met its design specification. This is followed by component assembly and system integration tests onshore, and then offshore deployment and operational testing off Garden Island.
Successful testing will allow
Carnegie to proceed with its first grid-connected commercial wave power
project and deliver its first revenues from power sales.
The spherical buoyant actuator is 7 metres in diameter and 5 metres high, is made primarily from steel and rubber, weighs 25 tonnes, and typically sits two metres below the surface. It contains a proprietary system to reduce energy when wave energy is very high.
Carnegie received a query from the ASX after its shares rose from 9.8 to 13 cents on high volume, but could offer no explanation. (ASX: CWE)
Clean Seas Tuna
The company itself says it "recognises that it is still in the research and development phase for SBT [southern bluefin tuna] and whilst rapid advancement towards commercialisation is being made, it is premature to predict exactly when full commercialisation will occur.
"To this end, a significant amount of funding (with Seafood CRC and FRDC support) is being invested in the SBT program and a full research team, with their own recirculation research systems, will be based on site in Arno Bay for the coming SBT season. This will enable a greater level of research as well as an easier integration of research findings into commercial production" said chairman, John Ellice Flint.
"FY2010 has been a disappointing year for Clean Seas, however, the transformational program that began in 2009 has continued and I believe that it will have a positive long term impact. We achieved a great deal in some areas but underachieved in others. The lessons learnt should stand us in good stead for the year ahead."
The company is focusing on its kingfish operations to become cashflow positive. At 30 September it had cash of $5.1 million. (ASX: CSS)
Executive chairman, Richard Caldwell, said "It has become abundantly clear that we require Dr Tulloch's board presence, especially in relation to direction on the Tata project which is now bearing the fruit of the intense R&D that has been jointly undertaken over the past three years. He will also provide valuable guidance in newer projects, such as DyeTec Solar Inc. which is poised to advance significantly during 2011."
Gavin Tulloch holds a PhD in solid state materials science, is a Companion of the Institute of Engineers and a Fellow of the Australian Institute of Company Directors. He jointly founded Dyesol and its predecessors STA and STI, and has led the industrialisation of DSC for the past 16 years. (ASX: DYE)
Chairman Sylvia Tulloch said the deal could be a company maker as it reinforces the international scope of the product. It should also speed up the company's progress to being cashflow positive. The December half revenue figures should be interesting to indicate initial sales.
Together with other recent distribution deals, the nappies are now on sale in over 200 stores around Australia. (ASX: ECQ)
Eden Energy and Origin Energy
Origin Energy purchased a 70 per cent interest in GEL 185 in September 2009 for $1 million plus an obligation to fund the first $500,000 of expenditure.
Eden said that divestment of GEL 185 and recently securing a 12 month suspension on its financial commitments to its remaining geothermal licences gives Eden time to find a suitable partner or cornerstone investor to progress these licences. (ASX: EDE)
SCPPA executive director, Bill Carnahan, said "SCPPA is excited to support a large scale solar technology that when successfully deployed could change the renewable energy landscape. The pricing and load profile of the Solar Tower coupled with its zero water power production cycle makes it a compelling alternative".
Roger Davey, EnviroMission chief executive, said "Finalization of this PPA with the SCPPA is an important milestone that will allow finance to be secured and Front End Engineering and Design (FEED) that is required to break ground at the site earmarked in Arizona to commence". (ASX: EVM)
Green Rock Energy
The Indicated Geothermal Resource based on temperature data recorded in existing wells within the target reservoir is 26,000 PJt, easily sufficient to support a target of 100 MW of power generation capacity, it said. "Data from five wells provided direct and reliable indications of temperatures greater than 125oC in the selected reservoir units."
"The Indicated Geothermal Resource of 26,000 PJt is equivalent to over 820,000 MWt.yrs. To put this into context, if only 5 per cent of the Indicated Geothermal Resource in these seven Green Rock Permits was produced, for an assumed project life of 25 years, a power conversion efficiency of 10 per cent and a parasitic load of 25 per cent, this would approximate 123 MWe of power generation capacity," said Green Rock Energy.
Green Rock is planning to define drilling targets in the first half of 2011.
The assessment was by Hot Dry Rocks Pty Ltd, a leading Australian geothermal consulting company. The seven North Perth Basin Permits are GEP23, 24, 25, 26, 27, 28 and GEP41, which cover 2,100 square kilometres.
The Permits are near the Dongara, Hovea, and Mt Horner oil and gas fields, 275 to 330 kilometres north of Perth and close to power infrastructure. (ASX: GRK)
UIL LLC is a specialist in tight gas exploration and production technology and can earn an initial 50 per cent of the conventional and tight gas by carrying out a 3D seismic survey or drilling an exploratory in the next 12 months. It can earn another 25 per cent by drilling a second exploratory well.
Greenpower will receive a 10 per cent well head royalty for any gas produced.
The deal does not include coal seam gas. (ASX: GPP)
Hydrotech has also submitted a tender for Wuhan with a decision expected at the end of November.
Hydrotech said that following "very positive endorsement" from the Hong Kong Housing Authority and the "subsequent inundation of requests for presentations", it has adjusted its sales tactics to meet the interest shown.
Its main focus has been on meeting with property developers. A second segment is property management companies and architects.
The company said it is confident several discussions in Hong Kong will covert to instillations in the next three to six months.
"The outlook for HTI has
improved quite dramatically in recent quarters although admittedly this
has not been reflected in our share price," said chairman, Philip
Under the agreement, the RVA will offer its membership base Intermoco Connect for the provision and management of electricity, voice and data services. The initial contract negotiations now being finalized could be worth around $4.2 million over five years. The services will also allow the RVA's members to benefit from annuity streams through a standard revenue sharing agreement.
Intermoco chief executive Ian Kiddle said "We see the retirement industry as a huge growth opportunity for Intermoco that is mutually beneficial for the retirees, the village operators and Intermoco. (ASX: INT)
September quarter sales were $28,000 and net cash outflow $164,000. The company has cash of $184,000.
"Given that sales and cash receipts are inconsistent, the board is investigating various options to assist future operations," it said. (ASX: ISK)
EPG 7 (Jackin Creek) is 40 kilometres south of Weipa on the Cape York Peninsula, an area that has had limited oil and gas exploration. It comprises flat-lying basement sediments over older metamorphic basement rocks, with the thickness of sedimentary cover as determined by deep boreholes and seismic survey data typically around 1 kilometre.
Recent work by KUTh reported in July indicated that significant heat flows may exist in this area. A detailed review of available legacy geophysical data is underway.
EPG 9 Georgetown is beneath the existing electricity grid, around 50 kilometres east of Georgetown in North Queensland. "The occurrence of a geothermal anomaly in this area is indicated by the presence of the Talaroo Hot Springs immediately to the north of the tenement. This unique mound-spring feature produces geothermal waters to surface at temperatures that have now been measured as around 60°C," said KUTh.
The results of geochemical spring sampling completed in July 2010 are currently being appraised before release.
KUTh said its approach to the Queensland tenements "is to carry out initial exploration to assess the prospectivity of the target and to make a decision on future activities based on early stage results.
"The company has always been keen to pursue "over the counter" applications for Queensland leases which will allow us to peg the ground that we believe has highest potential. When this process is introduced we will consider further areas that may be of interest.
"In the meantime if early stage exploration of existing tenements produces promising results we will look to early stage partnering options for the further development of these sites." (ASX: KEN)
Thornbill E01 at PEL 426 is about 50 kilometres south of Casino in northern NSW. It is a vertical well drilled to 846 metres to explore and evaluate the potential gas productivity of the Walloon Coal Measures in the area.
"This well provides further evidence of the presence of a "dry" coal seam gas play in the Clarence Moreton basin which flows little or no water at the time of drilling," said Metgasco.
"Thornbill E01 follows up similar results achieved from the Orara E01 well drilled by Metgasco, which was drilled 35 kilometers to the southwest of Thornbill E01 in January 2009 and the Wyan E01 well which was drilled by Metgasco in May 2009, 45 kilometres to the northwest of Thornbill E01. The Wyan E01 well produced gas on test at 175 mcf/d."
Metgasco said such "dry" coal seam gas plays are rare and that the best known example is the Horseshoe Canyon Coals (HSC) in Alberta, Canada, which is Canada's largest coal seam gas development.
In contrast the majority of coal seam gas developments in North America and Australia have been from coals containing water and gas and the wells must be dewatered before gas production.
"Horseshoe Canyon wells have proven to be highly profitable because production is immediate and there are no associated water handling costs," said Metgasco.
Metgasco's managing director David Johnson said "We first saw gas production without water production at the Orara E01 and Wyan E01 wells. This was a surprise as "dry" coal seam gas plays are rare. Since then, Metgasco's exploration team has compared the technical characteristics of the Clarence Moreton and the Horseshoe Canyon coals and found that they have some similarities. The Thornbill E01 well was designed to test this thesis and it is very exciting that the well has delivered immediate sustained gas production."
Thornbill E01 will be followed up by the drilling of Thornbill E02. (ASX: MEL)
The shareholders subscribed for the Exchangeable Bonds as part of the original funding for the acquisition of the Kalgoorlie Power Systems (KPS) business by Pacific Energy in May 2009.
The company said the early exchange of the bonds into shares will also reduce its debt levels and gearing ratios, which will enhance its ability to get long term credit and equity funding for future growth.
It will also increase the company's capitalisation to about $100 million.
Pacific Energy's managing director, Adam Boyd, said "The reduced balance sheet debt position and expanded equity capital base will significantly enhance the company's ability to finance its strategy to increase generation capacity to 250 MW by 2012 and attract an enlarged equity capital market shareholder base."
Pacific Energy will pay the
shareholders a one-off early subscription fee of $2.4 million, which is
equivalent to the 4 per cent per annum redemption premium coupon.
Phoslock Water Solutions
Phoslock chairman, Dr David Garman said Mr Freedman will considerably strengthen the company. "He is an experienced public company director with an extremely broad and in-depth knowledge of global corporate and commercial operations. Laurence brings comprehensive expertise to the board as Phoslock plans to expand its marketing operations and moves into the next phase of its development," he said.
The appointment comes as Phoslock transitions from a lengthy period of product trialing and small/ medium sized applications towards larger sales and profitability.
Mr Freedman said that he plans to hold his position until this phase of Phoslock's development has been completed and the company achieves sustainable and growing profitability.
"I am hopeful that the
programs planned to achieve these objectives will be implemented in 12
to 18 months," he said.
"Phoslock is a unique solution to solving many water supply and treatment problems. It can provide both clean water supply and safe ecosystems by protecting water bodies such as lakes, dams and reservoirs from the problems of excessive nutrient enrichment. These are increasing problems around the world and Phoslock provides the solution," he said.
"A further attraction for me in joining the board is the very high quality of the directorsDr Garman is a world-renown water expert, the Hon. Pam Allan is a previous NSW Minister for the Environment and Robert Schuitema is a corporate and financial expert who has brought the company a long way since becoming managing director.
"In addition, Phoslock is debt-free with net assets of approximately $6 million," he said
Mr Freedman began his career with the Gold Fields Group as an analyst and rose to be director of Group companies. He later joined BT Australia as Manager, Investments.
In 1980 he founded Equitilink Limited, an investment management group which he grew to a global company with operations around the world and over $3 billion under management. He has held chairman and/or director positions in a number of public and private companies in Australia, US, UK, Canada, New Zealand and Taiwan.
He was a member of the syndicate which bought the Ten Network, taking it out of receivership and helping to make it the most profitable media network in Australia for some years.
In 2000 he sold the Equitilink Group and in 2004 sold out of the Ten Group.
He currently manages his private investment portfolio of international shares, property and fixed income securities, and is a mentor to a number of resource, biotech and technology companies.
He is chairman of The Freedman Foundation, a philanthropic foundation that assists and supports young Australians in many areas of endeavor and also finances a broad range of medical and scientific programs and organizations.
In 2001 he was awarded The Order of Australia for service to the community, to medical research, the arts, and to business and investment in Australia.
On the sales front, Phoslock's joint venture partner and licensee for Germany, Austria and Switzerland has won a contract worth around $450,000 for a lake in northern Germany.
The lake is a popular recreational lake which in recent years has been plagued with poor water quality caused by elevated phosphorus levels. Alum treatment, aeration and other measures have been attempted to improve the water quality but none has been successful and the lake has been closed to swimmers for the past four years due to high levels of blue green algae.
The application of Phoslock will take place over about five days towards the end of November and is expected to generate considerable publicity in northern Germany.
In addition to this treatment, two smaller treatments involving 13 tonnes of Phoslock are also confirmed for smaller lakes in eastern and northern Germany during November and December. The three applications will bring the value of contracts for Phoslock applications in Germany to nearly $2 million over the last three years.
Phoslock said its profile in Germany continues to grow with several additional applications in excess of $750,000 under consideration for 2011 and 2012. (ASX: PHK)
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