Eco Investor April 2016

Pre-Revenue Securities

Protean Wave Energy Joins ASX

There is a reason why the Australian wave energy industry is a world leader - it keeps bobbing along, with the latest development being the backdoor listing of Protean Wave Energy Ltd.

The listing was through WA minerals explorer Stonehenge Metals Ltd, which until last year had been a minority shareholder in Protean. Last November its shareholders voted to acquire all the shares in Protean and change the company name to Protean Wave Energy. The consideration was 60 million shares and 120 million Class A Performance Shares to the vendors.

In February Protean closed a fully subscribed prospectus that raised $2,536,250 at 2.5 cents per share. The money is for working capital and to fund the next steps in the commercialization of its Protean wave energy converter (WEC) technology.

The inventor of the WEC technology, Sean Moore, is Protean's Chief Technology Officer - Wave Energy.

The WEC works via a buoy device that floats on the water surface and extracts energy from waves by the extension and retraction of a tether to its anchor on the sea bed. The rotation of the pulleys moves a piston which compresses air in the buoy, and an air motor drives an electricity generator. The compressed air can also drive a water pump to desalinate seawater into drinking water through reverse osmosis. The company has patents and pending patents for the technology.

The device captures energy through what Protean says are all six degrees of wave movement. The technology is low cost and scalable. It uses off the shelf components and is designed for cost effective manufacture, deployment and maintenance.

Top: the Protean Wave Energy Converter (WEC) buoy. Bottom: WECs joined to form an array. Multiple arrays are joined to create a wave farm.

So far, one ocean test has been conducted with one Protean WEC and this was a key factor in Stonehenge's decision to exercise its option to acquire Protean.

The next step in commercialization is to create a demonstration wave farm at the Port of Bunbury in southern WA. Protean has a $500,000 fixed price contract with Moore Commerce Pty Ltd for the construction of 30 WEC buoys. Deployment of the demonstration wave farm will be progressive and commence this month.

The project will test aspects of the WEC design and provide data for an initial economic analysis and project feasibility. It will produce compressed air and transfer and store it. This and the generation of electricity have been demonstrated at proof of concept stage and the scale up at the demonstration farm is part of the development work for this year.

Protean is also involved in a project in California. It has teamed with Californian Polytechnic University at San Luis Obispo (Cal Poly) for a staged ocean wave energy and energy storage micro-grid project. The project is expected to commence with the deployment of the first Protean WEC at the Cal Poly Pier in San Luis Bay.

Protean is not a pure play wave energy developer. It retains some of the assets of Stonehenge Metals. In 2015 it sold 50 per cent of Stonehenge Korea to joint venture partner Korea Resources Investment & Development Inc (KORID), which later sold 20 per cent to BHI Co Ltd. Stonehenge Korea holds the rights to three uranium and vanadium exploration projects in South Korea.

Stonehenge Korea is active and Protean will continue to support its three projects - Daejon, Miwon and Gwesan. Daejon is the main one and contains uranium and vanadium deposits. The prospectus says the development of the uranium resources at Daejon has a high strategic importance in securing a large part of South Korea‘s future uranium demand.

South Korea has 23 nuclear reactors with more under construction and is the fifth largest consumer of uranium in the world. Nuclear power provides almost 40 per cent of its electricity and is growing. South Korea imports all of its uranium.

Vanadium is mostly used in the steel industry but it has a growing role in alternative fuels, as an essential catalyst for the production of industrial chemicals, and is a critical component in vanadium redox batteries (VRB) and military aerospace technology.

So Protean is not a simple company for ethical investors. Despite this, Eco Investor will follow it while its wave and uranium projects are early stage and until its core business activities and priorities may change one way or the other.

Meanwhile, Protean is a pre-revenue business and is likely to need to raise further capital in due course. In the December half it made a loss of $2.8 million. Net assets before the capital raising were $4.1 million.

Protean has 2,152 investors and 1,070,477,653 shares on issue. Its shares are currently below the prospectus price at 1.9 cents. (ASX: POW)





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