Eco Investor Update

A Weekly News Update for Environmental Investors

3 December 2012 - No 109

____ Core Securities ____

ASX 100

APA Group
APA Group’s securities continue to climb and reached another all time high on 30 November of $5.54. (ASX: APA)

ASX 300

Tox Free Solutions
National Australia Bank and its subsidiaries including MLC have increased their interest in Tox Free Solutions from 5.8 to 6.8 per cent. Some of this movement in recent months was related to short selling. (ASX: TOX)

Emerging Companies

Energy Action
Shares in Energy Action climbed to a new all time high of $3.00 on 29 November.

The J&C Allen Superannuation Fund is no longer a substantial shareholder. (ASX: EAX)

Gale Pacific
Shading and screening materials maker, Gale Pacific, has acquired the assets of Highgrove (Victoria) Pty Ltd, a marketer and distributor of branded home improvement products such as glass and stainless steel fencing and balustrade, frameless
shower screens, glass safety mirrors, kitchen splashback panels and the Enduroshield range of glass protective coatings.

The products are sold to the do-it-yourself home improvement market.

“The acquisition of the Highgrove assets is a great fit for the business giving GAP an expanded presence in the broader screening and fencing market in Australia, and an expanded product offer to further grow the combined GAP and Highgrove businesses," said chief executive, Peter McDonald.

"The business has grown rapidly over the past three years and still has great growth potential in some of its key product areas.“

Highgrove will generate annual sales revenues of around $11 million. The acquisition will be funded from existing banking facilities with $0.35 million of the purchase price as GAP shares. A significant portion of the price is delayed until August 2013 as the vendors have earn out performance targets for the rest of this financial year.

The acquisition will be earnings per share accretive in FY13, before any potential operational synergies, he said.

Brad Sinclair, part owner and director of Highgrove (Victoria), will oversee the management of the Highgrove product range and implement the growth plans for the business.

He will also spend more time on innovation and product development with the support of GAP. (ASX: GAP)

Reece Australia
Reece Australia’s shares touched a one year high of $22 on 29 November. (ASX: REH)

Margins remain an issue for SteriHealth, said managing director, Dan Daniels. “This makes it difficult to forecast FY13 but the Board is of the view that EBITDA will be in the range $10 million to $11 million and net profit after tax will be in the range $3.1 million and $3.8 million depending on R&D claim, equipment requirements and depreciation,” he said.

The most exciting development in the last 12 months has been growth of the company’s clinical waste collection system. Clinismart is modeled on the company’s Sharpsmart System, and has the potential to revolutionize the clinical waste market nationally as the Sharpsmart System did to the sharps market, he said.

“This new system delivers higher standards in infection control, environmental effectiveness and logistical efficiency. Incorporating a foot pedal opening mechanism and a bagless system means hand contact with the clinical waste collector is no longer required. This results in a dramatic reduction in the infection transfer risk that currently exists with standard clinical waste collectors.

“The new, Clinismart system ensures that once full, each container is removed from the customer’s premises, emptied, and then subjected to a rigorous 6 stage wash and sanitation process, the same as that used in the Sharpsmart service.
‘The clear labeling and easily identifiable design of the Clinismart equipment encourages better waste segregation because the collectors are far less likely to be used for general waste. In addition, the compact design allows the Clinismart collectors to be located at the point of waste generation, eliminating the need to transfer waste to larger bins after disposal.

“The feedback we have had from customers who are using Clinismart has been extremely encouraging, supporting our view that this product has huge growth potential in the coming years,” said Mr Daniels. (ASX: STP)

____ Satellite Securities____

ASX 200

Energy World Corporation
Richard Chandler Holdings has increased its stake in Energy World Corporation from 19.9 to 21.28 per cent. (ASX: EWC)

Emerging Companies

CBD Energy
Shares in CBD Energy fell to a new all time low of 1.5 cents on 29 November.

Hunter Hall Investment Management has been selling down and is now longer a substantial shareholder. (ASX: CBD)

CMA Corporation
CMA Corporation’s shares fell to a new all time low of 4 cents on 23 November.

Chairman Parag Johannes Bhatt told shareholders that the pronounced market downturn for metal recyclers around the world mean that recycling companies, irrespective of their size and reach, must focus on reducing costs and maximizing efficiencies.

In recent weeks CMA has implemented restructuring measures to rightsize its operations and achieve the best results from its core business regions.

“These measures have included staff reductions in some States to lower operating costs. Indeed, we are seeing signs at some key operations that measures to strengthen these businesses are leading to measurable improvements.

“According to our recent strategy CMA will continue to have a significant presence across Australia and throughout the region.” (ASX: CMV)

Energy Developments
Energy Developments’ shares have put on $1 and nearly doubled in less than four months. They were at a three year low of $2.20 in early August and hit a one year high of $3.20 on 29 November.

Energy Developments is conducting an on market buyback and can buy shares at up to $3.33. (ASX: ENE)

Novarise Renewable Resources International
In two weeks shares in Novarise Renewable Resources International have jumped from 15 to 21 cents on 30 November, equaling their year high. There were no announcements in that period. (ASX: NOE)

Pacific Energy
Pacific Energy is forecasting revenue of $40 million for 2012-13, up from $32 million in 2011-12. If achieved, it would be the third consecutive annual rise and will double revenue from $21 million in 2009-10. (ASX: PEA)

Solco is forecasting a 25 per cent fall in revenue for 2012-13 from $22.9 million to $18 million. However it expects earnings (EBIT) to be zero where it was minus $4 million in 2011-12.

The company wants to grow market share, both organically and though acquisition, re focus on its heritage skills in off grid systems including diesel replacement, build on its expertise in pumping, power optimization, and build back confidence with its core customers in service and supply. (ASX: SOO)

____ Pre Profit Securities ____

Micro Cap Companies

Aeris Environmental
Aeris Environmental chairman, Maurie Stang, has acquired 31,500 shares at between 18 and 21.5 cents each. (ASX: AEI)

Australian Renewable Fuels
Australian Renewable Fuels will undertake a capital restructure during 2012-13 to enable its next phase of growth, but gave no further details.

The company is now producing over 3.5 million litres of biodiesel per month and sales are averaging $4 million per month. Revenue continues to rise and for the September quarter was $15 million, which compares with $24.3 million for the June half.

This year it wants to increase production, including having its SA plant on line.

The company can use waste vegetable oils and feedstocks from Asia including recycled mill oils and palm sludge oils. But chairman Philip Garling said “Disappointingly we have not been able to progress with any meaningful shipments of recycled mill oils to date. We continue to explore all options for developing supply channels of recycled mill oils and other waste vegetable oils from throughout the Asia Pacific. We believe we have made good progress on this front and are hopeful of having supply of these materials during the 2013 calendar year.” (ASX: ARW)

Carbon Polymers
Carbon Polymers has signed a three year agreement to supply a minimum of 200 tonnes of used tyre products per month that are suitable for retreading to the Intraco SA de CV Group, a multinational manufacturer with operations in several countries including El Salvador and Mexico.

The initial contract is worth over $1.2 million per year and will be supplied from Sydney. It will be expanded nationally when the company’s other plants have been upgraded over the next few months. This will take annual sales to 7,200 tonnes with a value of $3.6 million per annum.

Managing director Andrew Howard said the company said its need for feedstock has increased dramatically. “To bridge this gap, we are entering into collection agreements with several companies in New South Wales. This will increase our collection capacity by 26 trucks without the need for capital expenditure. This added capacity will underpin our feedstock collection and drive this next wave of growth for the company.

“We have also been negotiating similar arrangements in other states and will inform shareholders once those agreements have been finalized. The additional growth in revenue from these collection arrangements will add a minimum of $750,000 per annum from Sydney.”

Mr Howard said the company’s cost structure can cater to this growth so that this revenue will fall directly to the bottom line.

However, several motions at the company’s annual general meetings were defeated. These were the re-election of Jerry Gordon as a director, the remuneration report, and the acquisition of plant and equipment in WA. (ASX: CBP)

Intermoco has appointed Tim Hunt Smith as managing director. Chairman John Evans said Mr Hunt-Smith has a wide range of experience in senior management roles, including most recently as CEO of a small energy retailer owned by a large Australian public company.

In this role he “drove revenue growth of 300 per cent, significant reductions in customer complaints and churn, and transformed the business from loss making to a very healthy profit. Prior to this, Tim served in management roles covering sales and marketing, operations, and technology in major Australian corporations including Origin Energy.”

Intermoco is likely to seek an additional funding line to replace the La Jolla Cove facility, in which it is still in dispute, and provide balance sheet strength to capitalize on its growth strategy. (ASX: INT)

____ Pre Revenue Securities ____

ASX 100

Lynas Corporation
Rare earths developer Lynas Corporation has made its first feed to kiln and commenced operations at its Lynas Advanced Materials Plant in Malaysia (LAMP). The plan is to move to continuous feed in early December.

“This is a significant milestone for Lynas,” said executive chairman Nicholas Curtis. “The operation of the LAMP is now a reality, and the LAMP will provide real data that will assure people that the LAMP is entirely safe for our local communities and the environment. We are excited to start creating value at the LAMP, and we look forward to sharing that value with all of our key stakeholders, including the communities in which we operate.”

Lynas anticipates a ramp up period of three to four months until first commercial sales and then cash generation. (ASX: LYC)

ASX 300

Dart Energy
Shares in Dart Energy fell to a new all time low of 12 cents on 28 November.

In anticipation of the potential separation of Dart Energy International (DEI) from Dart Energy (DTE), Dart Energy has appointed Kirstin Ferguson as a non executive director.

Kirstin is an experienced non executive director and sits on a range of boards. She was appointed as the first female director of Queensland Rugby Union in 2011 and has received a number of awards for her work as a professional independent director including the Talbot Foundation Scholarship by the Australian Institute of Company Directors in 2012.

Kirstin is currently completing a PhD in Business with a focus on safety governance for ASX listed boards.

Nicholas Davies, Stephen Bizzell and Shaun Scott will revert to being non executive directors of Dart Energy.

Dart has issued 65 million shares as part of the consideration paid by its subsidiary Dart Energy International Pte Limited to acquire GP Energy Limited under their December 2011 agreement. (ASX: DTE)

Galaxy Resources
Galaxy Resources has had a fatal incident at its Jiangsu Lithium Carbonate Plant in China. A blocked fibreglass pipe ruptured in the sodium sulphate crystallisation area during maintenance activities, giving second degree burns to a number of employees and contractors.

One employee has passed away as a result of complications from the injuries. The other injured employees and contractors are stable and recovering in Suzhou and Shanghai hospitals.

The company said it is co operating with regulatory authorities and has launched its own investigation. (ASX: GXY)

Orocobre has appointed a new director and raised $3.7 million from its share purchase plan, which follows $21 million raised from a placement to institutional investors at $1.70 per share.

The proceeds will fund the remaining equity funding obligations of about US$12 million for the construction of the company’s flagship Olaroz lithium project in Argentina; and provide funds to the newly acquired Borax Argentina for short term initiatives and for drilling programs and other activities to develop the business.

Orocobre’s chief executive and managing director, Richard Seville, said “The equity requirements at Olaroz are fully funded, allowing us to commit to full scale construction activities. In addition, we now have funds for our Borax Argentina initiatives and a healthy amount of working capital.”

The company recently announced the commencement of construction at its Olaroz Lithium Project in northwest Argentina.

Orocobre expects the final project debt financing documentation to be executed by its partners over the coming weeks.

Mr Seville said Orocobre is on its way to establishing itself as a significant and low operating cost battery grade lithium carbonate supplier to the world.

Robert Hubbard has been appointed to Orocobre’s board and will chair the company’s Audit Committee.

He replaces Neil Stuart who was the company’s founder and has retired from the board.

Mr Hubbard will soon retire from PricewaterhouseCoopers after having served as a partner for over 20 years. During this time he was auditor for some of Australia’s largest resources companies, and acted as head of the advisory and assurance practices of PwC Brisbane.

Orocobre received an ASX query about the rapid fall of its share price from $1.74 to $1.37. The company said it is not aware of any information that may have caused it. (ASX: ORE)

Micro Cap Companies

Shares in Algae.Tec fell to a one year low of 26 cents on 29 November.

The company’s technical director is confident the Shoalhaven demonstration plant at Nowra will have a successful outcome. Chairman Roger Stroud said “We are hoping that the first substantive production document by the independent expert will be presented by year end. (ASX: AEB)

Shares in AnaeCo fell to a new all time low of 2.5 cents on 26 November.

The company has claimed an R&D Tax Incentive payment of $4.9 million and expects receipt in the first quarter of 2013. (ASX: ANQ)

Trading in BluGlass’ shares has been suspended as the company will soon make an announcement about a capital raising.

The company’s shares have lept in recent weeks on news of technical progress and reached a three year high of 37 cents on 23 November. (ASX: BLG)

Carnegie Wave Energy
Carnegie Wave Energy has raised $5.8 million from private funding and Government, to be used for its Perth Wave Energy Project.

It raised $3.525 million from institutional and sophisticated investors at 3 cents per share, the majority from existing shareholders.

Mike Fitzpatrick has joined the Carnegie board as a non executive director, and his company, 88 Green Ventures, is now Carnegie’s major shareholder. With the capital raising, 88 Green Ventures’ stake has risen from 6.1 to 9.7 per cent.

The latest grant funding of $2.26 million comes from a redistribution of the WA Government’s Low Emissions Energy Development (LEED) program. Total Government funding, State and Federal, now totals $17.7 million.

Mr Fitzpatrick has over 30 years of experience in capital markets and infrastructure investment, and was the founder of Hastings Fund Management which he later sold to Westpac. He was also a driving force of renewable energy company Pacific Hydro.

Mr Fitzpatrick said “Carnegie presents an exciting opportunity to be a major player in the delivery of sustainable clean power and water projects for decades to come around the globe. The scalability of the CETO Wave Energy Conversion system to utility projects presents an exciting opportunity for 88 Green Ventures. I am looking forward to a greater involvement in Carnegie as a director as it continues its path through commercialization to renewable utility scale generation.”

The Perth Project is on track for completion of detailed design and securing of environmental and Government approvals by the end of 2012. It will deliver first power at the end of 2013, said Carnegie. (ASX: CWE)

Earth Heat Resources
Earth Heat Resources expects its shares to recommence trading today. The company has been finalizing a $1.5 million capital raising through a stockbroker, who has been waiting for agreed firm commitments to be received. (ASX: EHR)

Enerji expects its shares to recommence trading today. The company is finalizing a placement for the ongoing operation of its business. (ASX: ERJ)

Geodynamics’ initial commercial project in the Cooper Basin that could underpin further drilling and development may be smaller than originally planned, said chairman, Keith Spence. This is based on the current weak demand outlook for the national electricity market and the cancellation of BHP Billiton’s expansion plans for Olympic Dam.

The geothermal project will target customers with operations in the Cooper Basin and surrounding mineral development areas, he said.

“In reviewing the market opportunities for our Habanero Project, it is quite clear we cannot rely on this project alone to sustain the Company’s activities. We have therefore taken steps this year to broaden our portfolio interests by securing projects that can be progressed at low initial cost and that have potential to provide a shorter path to commercial markets, within existing technical capabilities.”

Mr Spence said the new joint venture in the Gove Peninsula in the Northern Territory is a compelling opportunity to investigate a direct heat geothermal project with a nearby potential customer. The next phase is preliminary geothermal studies and initial exploration drilling.

Recently Geodynamics announced a joint venture opportunity with Kentor Energy to explore a conventional geothermal resource in the Solomon Islands, with the start of an exploration program expected towards the end of 2013.

“We see these new opportunities in the Northern Territory and Solomon Islands as highly complementary. They give us a viable and immediate commercial path forward with some high impact but low cost projects. We now believe the Company has the appropriate mix of capability and cost to allow us to bring forward our Cooper Basin project while continuing to assess and develop new opportunities,” he said.

Minesh Dave has retired from the board. He was a representative for Tata Power but its shareholding has fallen below 10 per cent. (ASX: GDY)

Lithex Resources
Lithex Resources has completed a placement of the shortfall from its recent entitlement issue.

The shortfall shares were placed to clients of the underwriter, Cunningham Peterson Sharbanee Securities Pty Ltd. The $1.4 million entitlement issue at 5 cents per share was fully underwritten. (ASX: LTX)

MediVac shareholders approved all resolutions at the AGM, including the acquisition of Republica Capital and the change in its activities from a commercializer of medical technology to a company also offering financial services.

Executive chairman Paul McPherson said MediVac is in discussions with several local and international players to sell the intellectual property of its SunnyWipes and Diakyne businesses.

MediVac does not have the manufacturing and distribution resources to compete with multinational competitors, and an independent study concluded that the SunnyWipes intellectual property would potentially have higher value in the hands of an international player with a manufacturing capability.

The newly acquired Republica Capital (RCL) business “seeks to deliver a high yield investment return for investors/ shareholders by investing in growth companies using high return convertible note facilities,” said Mr McPherson,

“RCL seeks to make strategic investments in businesses with the aim of restructuring, recapitalizing and/ or amalgamating the investee companies. Republica’s investment strategy involves assembling a diversified portfolio of micro cap growth investment from a range of geographic locations with an aim to obtain high rates of returns.”

As this is not an environmentally positive activity, Eco Investor will monitor how MediVac’s financial service activity and the commercialization of the MetaMizer medical waste technology affects our 50 per cent business activity guideline for environmentally positive businesses.

Meanwhile, RCL has loaned MediVac $2,258,000 and has pledged to raise new capital of up to $5 million to support the merged MediVac business.

“The company intends to focus on its core MetaMizer business and the new Republica investments, in order to generate improved returns for shareholders,” said Mr McPherson.

The proceeds from the capital raising approved at the AGM will payout the La Jolla debt. (ASX: MDV)

Panax Geothermal
Shares in Panax fell to a new all time low of 0.3 cents on 27 November. (ASX: PAX)

Papyrus Australia
Banana tree waste commercializer, Papyrus Australia said it is assessing the option of co-locating its Yellow Pallet trial with Papyrus Egypt as an alternative to locating in Central or Southern America. The decision, expected soon, will be based on who pays the asking price for Papyrus Australia’s patented machinery, which is essential to the project.

The Yellow Pallet project to produce banana fibre product for transport pallets is progressing slowly due to economic circumstances in Europe.

With low cash, “We are seriously considering capital raising options for next year dependent upon progress in Egypt and with Yellow Pallet. I will be advising shareholders of our decision in this regard by end of first quarter 2013,” said chairman, Ted Byrt. (ASX: PPY)

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