No 10. April 2013

Largest Biodiesel Plant to Open

The largest biodiesel plant in Australia is closer to restarting operations thanks to a $1.2 million investment by a Canadian biofuels company. The 150 million litre per year plant at Darwin, owned by Territory Biofuels Limited (TBF), was shut down in 2009 due to feedstock constraints.

Now, Canadian company Lignol Energy Corporation (LEC) has subscribed for $1.18 million in convertible notes and signed a Technology Collaboration Agreement with TBF that includes technical and further assistance to aid in the restart of the biodiesel plant and glycerine refinery.

The convertible notes can be converted into equity in TBF of between 20 to 40 per cent, depending on the development of the Darwin facility.

The Technology Collaboration Agreement is for technical assistance from Lignol and its partners to restart of the facility and for the potential integration of new pre-treatment technologies and catalysts for processing a broad range of low cost feedstocks.

The Darwin biodiesel plant is also the only glycerine refinery in Australia. The facility was commissioned in 2008 at a cost of $80 million. It was originally built to run on food-grade vegetable oil, but was shut down in 2009 due to feedstock constraints.

TBF intends to restart the facility using feedstocks such as tallow and used cooking oil, and then integrate new feedstock pre-treatment technologies and catalysts to treat feedstocks such as lower quality tallow and palm sludge oil (PSO), a waste product from palm oil mill extraction.

TBF said it has trading relationships with shipping, off-take and feedstock partners that will allow it to start up and operate the facility profitably.

Ross MacLachlan, chairman and CEO of LEC, said "The Darwin plant is an impressive industrial facility and the TBF team has developed a compelling business model with strong commercial partnerships with which to become a major regional player in the biodiesel market in the Pacific Rim. This transaction reinforces the commitment to our strategy of selective investments in energy related projects which have synergies with our Company and have the potential to generate near term cash flow."

Chris Hart, chairman of TBF, said, "Lignol's financial investment and support from its partners is an important step in the restart of our world class facility."

Lignol Energy Corporation also has an interest in ASX listed Australian Renewable Fuels, and will invest in other energy related companies with which it has synergies and have the potential to generate near term cash flow.

It develops biorefining production technologies for advanced biofuels including fuel-grade ethanol and renewable chemicals from non-food cellulosic biomass feedstocks.