Eco Investor Update

A Weekly News Update for Environmental Investors

10 December 2012 - No 110

____ Core Securities ____

ASX 100

DUET Group
DUET Group has completed the internalization of its management. As part of this process, AMPCI Macquarie Management No.1 Limited (RE1) has changed its name to DUET Management Company 1 Limited and AMPCI Macquarie Management No.2 Limited (RE2) has changed its name to DUET Management Company 2 Limited.

Doug Halley is the independent chairman of the boards of RE1, RE2 and DIHL (DUET Investment Holdings Limited). Phil Garling has resigned from the boards of the three entities. Scott Davies has been appointed a director of RE2, with an anticipated retirement date of 30 June 2013.

Securityholders have been issued with shares in RE1 and RE2 so they hold the same number of RE1 and RE2 shares as DUET stapled securities. The shares in RE1 and RE2 have been stapled to the DUET securities, making DUET a six stapled security. (ASX: DUE)

Sims Metal Management
Sims Metal Management has sold its Arizona scrap metal recycling assets, while its Sims Recycling Solutions (SRS) division has acquired the assets of Canadian electronics recycler Genesis Recycling Ltd.

Founded in 1994, Genesis is located in Langley outside of Vancouver and provides recycling services to business, government and industrial customers in British Columbia. Genesis deals with electronics and small appliances. It holds ISO 9001, ISO 14001, OHSAS 18001 and Responsible Recycling (R2) Practices certifications, and has expertise with environmentally sensitive materials.

Steve Skurnac, president, SRS, Americas, said “With our strong presence in Ontario and Eastern Canada, this acquisition was an attractive opportunity for SimsMM to enter Western Canada and further strengthen its North America SRS electronics recycling business.”

The cost of the transaction was not disclosed but is not material.

SimsMM’s Arizona scrap metal recycling assets were sold to SA Recycling LLC (SAR), a joint venture owned equally by SimsMM and Adams Steel. It has operations in California, Nevada and Arizona.

The sale price was US$35 million in cash. The sale was principally the real property related assets for two scrap metal recycling facilities in Phoenix and Tucson, Arizona.

SimsMM retains the working capital assets of the Arizona business which it anticipates will monetize another US$15 million in cash over 45 days following the sale. This would bring the total expected cash from the sale to US$50 million.

The transaction will be accounted for in the first half of 2012-13 and the result is an expected pre tax loss of $12 million. The loss relates to the value of intangible assets not realized in the sale.

Group chief executive officer Daniel Dienst said “The sale of our Arizona assets, following on the heels of our recent dispositions of our Colorado assets, our joint venture interest in Nashville and the acquisitions of assets and businesses in Alabama and Maryland over the past few months, is part of our aggressive repositioning of our shareholders’ precious capital to markets that offer the highest returns on invested capital and meet the long term strategic growth plans we have for the important North American market.

“The transaction also resolves issues related to the SAR joint venture agreement which granted Arizona as a territory to SAR, allowing us to operate, but to not otherwise expand in Arizona. We are pleased to have resolved this issue, while at the same time allowing our important joint venture partner in the Southwestern US to expand. In this transaction we will retain an interest in the profit and cash flow of the Arizona business through our 50 per cent ownership in SAR.” (ASX: SGM)

Emerging Companies

Energy Action
Director Edward Hanna has sold 225,000 shares at $3.0015 each. He retains 1,030,044 shares. (ASX: EAX)

Reece Australia
Shares in Reece Australia reached a two year high of $22.20 on 7 December. (ASX: REH)

Interest Rate Securities

APA Group Subordinated Notes
APA Group’s $100 Subordinated Notes reached a new high of $108 on 7 December, giving initial investors an 8 per cent gain in the less than three months since they listed. (ASX: AQHHA)

Transpacific SPS Trust
Transpacific SPS Trust’s securities reached a new three year high of $90.50 on 5 December. (ASX: TPAPA)

Unlisted Property Funds

Aspen Parks Property Fund
Aspen Parks Property Fund has resumed an active development program at its holiday resorts following a pause since the GFC.

The Fund is building 38 cabins at its Perth Vineyards Holiday Park to capture more of the family, conference and wedding markets.

It is also expanding the number and quality of its cabins at Ashley Gardens in Melbourne.

At Boathaven at Albury-Wodonga it is installing seven new tourist cabins.

It is raising the standard of accommodation at the Myall Grove Holiday Park at Roxby Downs in South Australia, adding 32 rooms, and is looking to expand the village to three to four hectares in size.

At Maiden's Inn at Moama in NSW it is improving the infrastructure, adding new cabins, and moving 24 cabins from the back of the park onto the Murray River frontage where they can command better prices.

In addition to these improvements, it is looking to invest another $10-15 million in developments this financial year.

Chief executive, Lino Brolese, also told the Fund's annual general meeting that the Fund is very conscious of environmental and sustainability aspects such as saving water and energy.

The fund has low debt and continues to look for acquisitions of between $5 million and $20 million each, particularly in southern Queensland, northern NSW and south west WA.

____ Satellite Securities____

Emerging Companies

Shares in Solco fell to an all time low of 2 cents on 6 December. (ASX: SOO)

____ Pre Profit Securities ____

Micro Cap Companies

Carbon Polymers
Carbon Polymers has appointed David Jacobs as chief financial officer. Mr Jacobs is a certified practising accountant and a member of both the Australian Society of CPAs and Australian Society of Accountants. He has over 40 years of experience.

David’s expertise is in a wide range of administration, management and financial functions, designing organizational systems, financial accounting functions and general administration across a range of industries and services, said managing director, Andrew Howard.

The company sees his appointment as a step towards refining and updating its financial and accounting operations to handle and facilitate its current growth phase. (ASX: CBP)

Cardia Bioplastics
Cardia Bioplastics’ shares fell to an all time low of 0.1 cent on 5 December. (ASX: CNN)

Clean Seas Tuna
Frode Teigen has reduced his interest in Clean Seas Tuna from 8.4 to 7.3 per cent. (ASX: CSS)

Steven Kritzler has reduced his interest in Nanosonics from 11.4 to 7.5 per cent.

Nanosonics’ director Michael Kavanagh has acquired 100,000 shares at 49 cents each. (ASX: NAN)

Phoslock Water Solutions
Phoslock Europe has appointed Cimera Estudios Aplicados S.L. of Madrid as its marketing representative in Spain. Cimera is a private limnological consultancy with over 10 years of experience in the evaluation, control and monitoring of aquatic systems.

Director, José Miguel Rodríguez Cristóbal, said “Although Spain is a relatively dry country with comparatively few natural lakes, the country does have major issues with eutrophication in its large number of water supply reservoirs and a solution is badly needed.”

Phoslock’s restoration of two lakes in the Polish city of Gniezno was one of five projects to receive the Best EU Life Environment Project Award 2011. The project involved the treatment of Lakes Jelonek and was funded under the EU’s Life Program. (ASX: PHK)

Po Valley Energy
Po Valley Energy has raised $1.35 million through a placement at 12 cents per share. The placement was to several Australian institutional and sophisticated investors and to several of its non executive directors, which needs shareholder approval.

The proceeds will be used to upgrade the gas plant at Sillaro to increase production rates and for working capital. (ASX: PVE)

Vmoto said production of electric scooters for PowerEagle is on track for 6,000 units by the end of 2012, and at the end of November it had delivered 2,869 of the units.

The company has commenced distribution trials of its electric scooters with groups in Israel, Lebanon and Germany. Samples are en route to the distributors. Decisions to enter distribution agreements typically take 6 12 months, it said.

In Australia the company is in the process of getting compliance approval for its new E Milan, an electric version of its petrol Milan scooter. The approval is expected in the first half of 2013.

The company and its distributor will then launch a marketing campaign. Managing director Charles Chen said the petrol version of the Milan scooter has sold well in Australia. (ASX: VMT)

____ Pre Revenue Securities ____

ASX 300

Dart Energy
Dart Energy appears to be the subject of short selling, with Bank of America and Merrill Lynch involved in the borrowing and lending of 64 million shares and Bank of America suddenly holding a 7.29 per cent interest in the company. (ASX: DTE)

Orocobre and joint venture partner Toyota Tsusho Corporation have executed the loan documentation for the project financing of Orocobre’s Olaroz lithium project in northern Argentina.

The financing, to be provided by Mizuho Corporate Bank Ltd, is a maximum facility of US$191.9 million. The primary debt facility is US$146.3 million and the additional facility is US$45.6 million. The term is 10 years.

The equity for the project by Sales de Jujuy is US$82.8 million, giving a maximum debt to equity ratio of 70/ 30 per cent.

The construction cost is US$229.1 million including $22 million for contingencies.

CEO and managing director, Richard Seville, said “This is the last part of the financing for the Olaroz lithium project. Our valued partner, Toyota Tsusho, has delivered a comprehensive and low cost debt package for the project. Construction has commenced and we are on the way to production in Q2 2014.” (ASX: ORE)

Micro Cap Companies

Actinogen’s shares fell to a three year low of 1.5 cents on 5 December. (ASX: ACQ)

Shares in AnaeCo fell to a new all time low of 2.4 cents on 5 December. (ASX: ANQ)

BluGlass has received commitments of $2.35 million for a placement at 20 cents per share, and will offer a share purchase plan at the same price.

The capital is to help commercialize the company’s RPCVD technology for LED applications; further develop solar cell applications for the RPCVD technology; provide match funding if BluGlass’ application for an AusIndustry Clean Technology Innovation Program grant is successful; and for working capital. (ASX: BLG)

Co-founder of Dyesol Sylvia Tulloch was not re-elected as a director at the company’s annual general meeting on 30 November. The vote was close with 29,125,256 proxy votes for her re-election and 26,026,936 against. However, there were also 4,270,989 discretionary proxies. The resolution was lost on a show of hands. The chairman exercised his discretion not to call a poll on the basis that all of the discretionary proxy votes were known to be voting against the resolution.

Ms Tulloch is the beneficial owner of 17.8 million shares through The Tulloch Family
Trust and 2.1 million shares through The Tulloch Family Super fund. (ASX: DYE)

Earth Heat Resources
Earth Heat Resources’ shares touched a three year low of 0.2 cents on 3 December. On the same day the company raised $220,000 in a placement to sophisticated investors at 2 cents per share.

The placement was managed by DJ Carmichael Pty Ltd and fully subscribed. One free attaching option was issued for every two shares placed, with an exercise price of 0.7 cents each and an expiry date of 31 January 2016.

A fully underwritten renounceable rights issue at the same price to raise another $1.35 million was also announced on 3 December. (ASX: DYE)

K2 Energy
K2 Energy and MEARS Technologies, Inc. have entered into an Agreement and Plan of Merger as announced on 22 October. K2 will send a Notice of Meeting and Explanatory Memorandum to its shareholders in January that will include details of MEARS, the proposed merger transaction and the capital raisings in connection with the merger. (ASX: KTE)

KUTh Energy
KUTh Energy’s subsidiary, KUTh Energy (PNG) Ltd (KPNG) has signed agreements formalizing its relationship with Kula Energy Pty Ltd (KULA) for the commercial development of its geothermal interests in Papua New Guinea.

KULA will take a 49.8 per cent interest in KPNG for a cash injection and ongoing contributions of working capital and management expertise.

KUTh managing director, David McDonald, said “The collaboration between KULA and KUTh will be very important to convert the Licence applications that are in place in West New Britain and Fergusson Island.

“There is no doubt about the valuable background and experience in PNG that the directors of KULA bring to the table and they will contribute significantly as we move through the licence approval, exploration and commercialization phases of this project. In particular KULA principal, Julian Malnic, has a long history in Papua New Guinea and will play an important role in this project.

“At this stage of the company’s evolution it is important that we take on projects and commitments that we think we can add value to, finance and manage with current resources. In PNG, increased mining activity in and around our licence application areas offers us the opportunity to capitalize on future mineral plays and possible large power off take projects.

“We see advantages in getting something started in this country but are cognisant of the many challenges that still need to be resolved to get this project moving. We see KULA personnel extending KUTh’s capabilities in country and we look forward to advancing this project over the coming year.” (ASX: KEN)

Lithex Resources
Lithex Resources has provided an update on its Munglinup Graphite Project 100 kilometres west of Esperance in WA. The Munglinup Graphite Project is one of a suite of projects under a Heads of Agreement with Far North Minerals Pty Ltd.

Lithex said preliminary analysis of the acquired electromagnetic (EM) geophysical data covering 65 per cent of the 166 square kilometre project area has identified a number of strong conductors, interpreted to represent graphite rich horizons.

“In particular, the Munglinup Central tenement exhibits a 3 kilometre strike length of EM anomaly. Two strong lines of evidence indicate that this anomaly may be caused by graphite mineralization,” it said.

Further analysis of the EM data is being undertaken, and will assist Lithex in the design of the maiden drilling program.

Graphite is one of the most conductive of minerals. It is used in industrial high temperature environments such as foundries and steel making, and in batteries, brake linings, and lubricants. (ASX: LTX)

Paul McPherson has stepped down as executive chairman of MediVac and has been replaced by Kieran Honour. Mr McPherson moves to a non executive role and will focus on the sale of the Sunnywipes and Diakyne assets. He will also retain responsibility for the sales and marketing of the MetaMizer medical waste system.

The management change and a cost cutting program follow the merger with Republica Capital and aim to achieve growth and profitability.

Mr Honour has 5,681,818 shares in MediVac. (ASX: MDV)

Shares in Metgasco fell to an all time low of 16 cents on 5 December. (ASX: MEL)

Panax Geothermal
Panax Geothermal has issued 23,333,333 shares at 0.015 cents each to raise $35,000. The deal is part of the share placement facility with Deer Valley Management LLC announced on 9 November. (ASX: PPY)

Water Resources Group
Water Resources Group is to supply and operate an Advanced Sea Water Reverse Osmosis (ASWRO) pilot desalination plant for a client in Saudi Arabia. Operating subsidiary, Water Resources International (WRI), has signed a Memorandum of Understanding with Knowledge Industry Company (KIC) of Saudi Arabia to supply desalination plants that will be powered by hybrid wind and solar energy systems.

KIC is developing community scale desalinated water supply projects that utilize renewable energy. KIC is funding the installation and commissioning of the first ASWRO plant to secure exclusive commercial supply rights from WRI. The commercial scale pilot plant, expected to be operating in Q3 2013, will demonstrate the economics of WRG’s chemical free, low cost modular system powered by wind and solar energy.

A Participation and Supply Agreement is due to be finalized by year end. Under this, WRI will manufacture and supply commercial scale ASWRO systems to KIC with production capacities ranging from 20,000 to 40,000 cubic metres per day. These systems can service towns, industries and regional property developments, it said.

Revenue will be generated from equipment sales, and from WRI operating and maintaining each ASWRO system for the first three years in exchange for revenue from water sales. WRI will also provide technical and maintenance oversight for another seven years.

Chief executive, Brian Harcourt said “This is a very exciting development for us in the world’s largest market for desalination, and it will showcase and launch our combined systems to potentially lucrative markets within the region.”

Dr Khaled AlBulaihed, CEO of KIC said “Due to diversified regions, Saudi Arabia has an urgent need for community based desalination powered by renewable energy. The ASWRO system’s low energy requirements, faster manufacturing and installation time were key factors in our decision. Most importantly, we are very pleased to introduce to Saudi Arabia the first breed of chemical free desalination systems.”

KIC is a technology developer and is said to have substantial investor backing for the launch of water desalination systems powered by renewable energy. (ASX: WRG)

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