Eco Investor Update

A Weekly News Update for Environmental Investors

1 October 2012 - No 100

____ Core Securities ____

ASX 100

APA Group
APA Group has waived all remaining conditions in its offer for Hastings Diversified Utilities Fund except for the minimum ownership condition, which it will waive when its interest is more than 50 per cent.

At 26 September its interest plus its institutional acceptance facility totaled 45 per cent. (ASX: APA)

DUET Group
Macquarie Group and AMP have reduced their interest in DUET Group from 12.46 to 11.37 per cent.

DUET Group said its subsidiary Multinet Gas (MG) ‘will re hedge the base interest rates on most of its debt portfolio to match the Australian Energy Regulator’s cost of debt allowance. As a result, Multinet Gas’ interest expenses are expected to be significantly lower in 2013 17 than the current regulatory period which ends on 31 December 2012.”

MG provides gas distribution services to 675,000 customers in Victoria. (ASX: DUE)

ASX 200

Hastings Diversified Utilities Fund
See APA Group story. (ASX: HDF)

Qube Logistics
The Department of Defence (DoD) has exercised its option to remain as a tenant on the Moorebank property owned by the Moorebank Industrial Property Trust (MIPT) for a further five years from March 2013. Qube Logistics owns 66.7 per cent of MIPT and QR Limited the remainder.

Qube said it remains committed to the development of the Moorebank precinct into a major intermodal terminal with logistics activities and will continue negotiations with the DoD and other stakeholders to facilitate the development.

In the interim, the property is generating reliable rental income which is expected to increase following a market review in March 2013. (ASX: QUB)

Emerging Companies

ERM Power
Energy company ERM Power has increased its $150 million finance facility with Macquarie Bank by $45 million.

The increase includes more than a 65 per cent increase in the working capital component of the facility. It provides ERM Power’s electricity sales business with additional funds to support its growth in the commercial and industrial market and its recently announced expansion into the small to medium enterprise market.

ERM Power has become a substantial shareholder in oil and gas explorer Red Sky Energy Ltd with a 9.49 per cent interest. (ASX: EPW)

____ Satellite Securities____

Emerging Companies

CBD Energy
Shares in CBD Energy touched a three year low of 3.1 cents on 27 September. (ASX: CBD)

CO2 Group
CO2 Group director Ian Trahar acquired 200,000 shares at 11.06 cents each. (ASX: COZ)

Energy Developments
Over two weeks Energy Developments’ shares have jumped from $2.40 to a year high of $2.86. The company has been buying back its shares and has recently paid up to $2.80 per share. (ASX: ENE)

____ Pre Profit Securities ____

ASX 300

Ceramic Fuel Cells
Seven directors of Ceramic Fuel Cells increased their holdings in the recent rights issue at 6 cents per Share. These are B Dow, J Harding, J Dempsey, R Rose, P Binks, R Dudenhausen, and J Hoey.

Mr R Kennett said he instructed his broker to subscribe for shares but due to an administrative error the transaction was not completed, and that he will purchase shares on market.

In total, directors’ holdings come to 1.1 per cent of the company. (ASX: CFU)

Micro Cap Companies

Phoslock Water Solutions
Phoslock Water Solutions chairman Laurence Freedman has indirectly acquired another 100,000 shares at 4.2 cents each. (ASX: PHK)

Po Valley Energy
Po Valley Energy is set to get its third production well with the awarding of a preliminary production concession for the Bezzecca Gas Field in northern Italy. The final award is expected around the end of the calendar year once the Environmental Impact Assessment submitted in February has been reviewed.

Bezzecca is in Po Valley's Cascina Castello concession area, east of Milan, which contains the Castello production field. Po Valley has commenced preparation for a two phase development program. The first phase is connecting the completed Bezzecca 1 well to the Castello surface gas plant via a seven kilometre gathering line. The second phase, following the start up of gas production, includes a second development well, Bezzecca 2, to be drilled in 2014.

The Castello surface gas plant has enough capacity to process production from the single Castello well and both Bezzecca wells.

Managing director Giovanni Catalano said Bezzecca will become Po Valley’s third producing field. This will increase Po Valley's proven reserves by 10 per cent to 8 billion cubic feet (bcf) and proven and probable reserves by 46 per cent to 13 bcf. (SAX: PVE)

Shares in Vmoto spiked to a year high of 3.1 cents on 25 September. (ASX: VMT)

WestSide Corporation
WestSide Corporation said it significantly increased production, sales and reserves during the 2012 financial year, again demonstrating the value of the Meridian SeamGas in which it has a 51 per cent interest.

However, the company posted a net loss of $7.8 million for the year. This was a $1.6 million improvement over the $9.4 million loss in 2010-11.

Chief executive, Dr Julie Beeby, said WestSide will continue to focus on increasing production and reserves to underpin the execution of new gas sales agreements, and on improving efficiency and reducing costs.

“Meridian’s gas production can be expected to generate increasingly significant cash flow for WestSide as production rises toward our initial 25 TJ/d target and revenues benefit from anticipated price increases beyond 2014,” she says.

WestSide generated $5.94 million in revenue from its share of Meridian’s gas sales – up 8 per cent on 2010-11. (ASX: WCL)

____ Pre Revenue Securities ____

ASX 100

Lynas Corporation
The Kuantan High Court will on 4 October hear an application by parties associated with the Save Malaysia Stop Lynas group for an injunction in respect of Lynas’ Temporary Operating Licence (TOL).

The injunction application is part of an application seeking a judicial review of the June 2012 decision of the Minister of Innovation, Science and Technology to affirm the approval of the TOL.

The Kuantan High Court’s interim order suspends any new action under the TOL until the hearing on 4 October. Lynas said it is not expected to impact its planned schedule because the first feed to kiln is scheduled for 4 October. (ASX: LYC)

ASX 300

Shares in Orocobre reached a new one year high of $2.42 on 24 September.

Orocobre’s project partner, Toyota Tsusho Corporation (TTC), is to acquire a 25 per cent stake in the Olaroz lithium potash project in Argentina.

Project finance will be provided by Mizuho Corporate Bank and the debt guarantees by Japan Oil, Gas and Metals National Corporation (JOGMEC) with a debt to equity ratio of 70 per cent, an increase from the 60 per cent previously indicated.

The expected annual production is 17,500 tonnes of lithium carbonate, an increase from 16,400 tonnes in the feasibility study.

The final project ownership will be Orocobre 66.5 per cent, TTC 25 per cent, and JEMSE 8.5 per cent. (ASX: ORE)

Micro Cap Companies

Algae.Tec chairman Roger Stroud said the company’s Shoalhaven One feasibility project is going very well, and in line with expectations.

The time line for Shoalhaven One is in the hands of certification services company SGS, but he is hoping to have a report by the end of the year.

He said it is hard to say how long it may take to get board approval, select a site and complete the feasibility study for the Lufthansa project.

“We have some venues in mind but door opening, depending upon jurisdiction, may take time, albeit facilitated by Lufthansa. The feasibility study, as we have now completed almost three, is the shortest of all to complete. We will know more by end of October,” he said.

La Jolla Cove Investors has converted another 967,118 shares at 25.85 cents each. (ASX: AEB)

AnaeCo and Bioverse Energy are to look for a potential site for a DiCOM waste to energy facility in WA. The company’s will also look at the technical and commercial feasibility of Bioverse using the DiCOM system under licence at a site to be selected by Bioverse.

The waste facility would be owned and operated by Bioverse. Bioverse proposed the AnaeCo system as the core part of its offering for an expression of interest it submitted to the City of Rockingham on 26 September.

The solution would leverage the design principles of the DiCOM system at Shenton Park with differences in scale facilitated by the system’s modularity.

“We are committed to developing clean, commercially sustainable, renewable, assets that will provide positive long term global climate benefits. AnaeCo’s innovative DiCOM solution aligns perfectly with Bioverse’s core strategy. Their world leading technology provides a sustainable solution for the ever increasing amount of municipal solid waste,” said Bioverse chief executive, Steve Burns. (ASX: ANQ)

Blue Energy
Blue Energy’s shares fell to a five year on 28 September of 4.2 cents. (ASX: BUL)

Enerji said its sales, engineering and corporate teams have inspected potential new customer sites interstate and overseas.

The sites, a mine site, a city power station and an industrial plant, represent different types of applications for Enerji’s Waste Heat to Power Solutions (WHPS). Negotiations with these prospective customers are at advanced stages, it said.

The customers are paying fees to Enerji for professional time conducting the inspections and report/ proposal preparation and covering travel and other expenses.

Enerji is nearing completion of construction of its waste heat to power Opcon Powerbox system at Horizon Power’s Carnarvon Power Station. (ASX: ERJ)

EnviroMission has raised $205,000 through the issue of 6.8 million shares at 3 cents each. (ASX: EVM)

Origin Energy will not participate in Geodynamics’ 2012-13 capital work program at their geothermal joint venture at Habanero. Geodynamics will undertake the capital work program on a sole risk basis.

Origin Energy has the right to maintain its full 30 per cent participation in the joint venture prior to the end of the financial year through a buy back provision, or dilute its ongoing interest beyond 2012-13.

Geodynamics said it has sufficient funds to carry out the FY2013 capital work program at Habanero and will meet continuing commitments through its own financial resources and by drawing down funds under the $90 million Renewable Energy Demonstration Program (REDP) grant as milestones are achieved. (ASX: GDY)

Hot Rock
Hot Rock has placed 36,080,332 shortfall shares from its recent rights issue to raise another $541,000. This brings the total raised under the rights offer of $1.463 million. (SAX: HRL)

Kimberley Rare Earths
As part of its strategic review, Kimberley Rare Earths has suspended further expenditure on its Cummins Range light rare earths project in WA, and its exploration focus will now the Malilongue heavy rare earths project in Mozambique.

The company said it is responding to significant change in the rare earths sector; positioning itself for growth through project development and production; and aiming to preserve and then grow shareholder value.

“Since KRE listed in May last year at a time of an unprecedented spike in rare earth prices, the rare earths sector has changed significantly and prices have fallen markedly. The company is reseting its business strategy in response to these movements,” said chairman, Jon Parker.

“The change reflects both the diminished prospectivity of the light rare earths sector and increasingly accessible market opportunities beyond rare earths.”

In May 2011, KRE listed with a 25 per cent interest in the Cummins Range Project a modest sized resource with significant exploration potential.

However, the number of non Chinese rare earths deposits has since risen from 12 to 44 and defined resources increased to around 400 years of current annual rare earth global demand. High prices led to demand destruction via substitution and efficiency gains, particularly for light rare earths, he said.

Since the July 2011 price peak, light rare earths forecasts have moved from under to oversupply, prices have fallen by 70 per cent and continue to decline.

The Cummins Range project is technical viability, but is modest in scale, and its near term commercial development is not practicable, while long term development depends on factors beyond the company’s control.

The company has identified several M&A opportunities. The target sectors include precious metals, base metals and strategic minor metals.

KRE’s Malilongue project in Mozambique is highly prospective for heavy rare earths, lithium, tin and tantalum, and it will continue its exploration, said managing director, Tim Dobson.

The company has cash of $11.3 million. (ASX: KRE)

KUTh Energy
KUTh Energy has received a notice from the Commonwealth Utilities Corporation (CUC) in Saipan that the Geothermal Gradient Well project for which it successfully bid has been cancelled.

The reason given is “specifications which have been revised”. KUTh said cancellation notices have been sent to other renewable energy projects that have passed through the request for proposal stage.

KUTh said the latest cancellation notices confirm its concerns that renewable energy tenders with “Intent to Award Contract” notices issued by the CUC have been affected by recent political events.

“Despite multiple efforts by the company over the last three months to seek clarification from the CUC and the Government of Saipan, we have received no responses to our enquiries until the receipt of the cancellation notice dated 21 September 2012, which in itself contained very little information.

“The company is currently being advised on its rights in this matter,” it said. (ASX: KEN).

MediVac is to acquire Republica Capital Ltd, which it said will vend in income producing assets, provide for a pay down of the La Jolla funding facility, and lead to an injection of cash and ensure future funding for the merged business.

Consideration for the merger will be 660 million shares issued at 0.6 cents each.

The proposed transaction is subject to shareholder approval at the annual general meeting.

RCL seeks high yield investment return by investing in growth companies using high return convertible note facilities. RCL currently has five convertible note and loan assets of $2.258 million – excluding the funds invested in and loaned to MediVac – and forecasts it will earn significant interest and capital gains on these.

RCL has already injected $154,572 at 0.6 cents per share in MediVac, and has provided a $350,000 loan facility with a commitment to provide a further $400,000 in October.

RCL has also pledged support to raise up to $5 million for the merged businesses. Up to $2 million will be raised shortly after the proposed merger is approved, said MediVac executive chairman, Paul McPherson.

As a result of the merger, MediVac intends to focus on its core MetaMizer business and the soon to be acquired RCL investments. RCL will expand its portfolio of high return convertible note facilities where opportunities are presented, said Mr McPherson. (ASX: MDV)

Metgasco has raised $10 million at 20 cents per share through a placement to shareholders and new institutional and sophisticated investors in Australia and overseas.

Metgasco is also offering shareholders a share purchase plan for up to $15,000 of shares each at the same price.

The funds will be used for Metgasco’s planned work program, which includes lateral CSG wells and license well commitments. (ASX: MEL)

Panax Geothermal
Panax Geothermal chairman, Gregory Martyr, is retiring from the board and will not seek re-election at the annual general meeting.

In 2012, Gryphon Partners, a corporate advisory group where Mr Martyr is a partner, was acquired by Standard Chartered Bank. In accordance with the bank’s policies, Mr Martyr is unable to continue on non related party boards. (ASX: PAX)

Papyrus Australia
Shares in Papyrus fell to an all time low of 1.9 cents on 25 September. (ASX: PPY)

Shares in Petratherm fell to an all time low of 2.9 cents on 24 September. (ASX: PTR)

Strategic Elements
Strategic Elements’ director Matthew Howard has indirectly acquired 75,000 shares at 3.64 cents each. (ASX: SOR)

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