Eco Investor Update

A Weekly News Update for Environmental Investors

17 December 2012 - No 111

____ Core Securities ____

ASX 100

APA Group
APA Group’s securities continue to climb and reached an all time high of $5.80 on 13 December.

At the operational level, APA is to spend up to $200 million to expand the compression capacity of the Wallumbilla gas hub in Queensland. The hub is connected to all major gas pipelines that flow into and out of Wallumbilla, including APA’s Roma Brisbane Pipeline and the South West Queensland Pipeline, which was acquired by APA as part of the Hastings Diversified Utilities Fund acquisition.

The additional compression capacity and services that will be available have been contracted with GLNG Operations Pty Ltd under a 15 year agreement, with a further 5 to 10 year option. (ASX: APA)

DUET Group
DUET Group will pay an interim distribution for the six months to 31 December of 8.25 cents per stapled security. The securities trade ex distribution on 21 December. (ASX: DUE)

Sims Metal Management
IOOF Holdings through its subsidiary Perennial Investment Partners is no longer a substantial shareholder in Sims Metal Management. It has been selling down since October. (ASX: SGM)

ASX 200

GWA Group
GWA’s shares jumped 12 per cent from $1.79 to $2.02 on news that it is to restructure two of its businesses and reduce employees by 230.

Dux Hot Water will be combined with the GWA Bathrooms & Kitchens' business, forming a larger business focused on the new dwelling, renovation, replacement and commercial building markets; and Gliderol Garage Doors will be combined with the Gainsborough door and access business.

GWA said the changes will better service the market, deliver cost savings and improve efficiency across the Group. The cost savings are expected to deliver a positive contribution to earnings (EBIT) and operating cashflow this year of $4 million.

The company said Group trading performance has shown some improvement in October and November from the weak trading results in the first quarter. (ASX: GWA)

ASX 300

Tox Free Solutions
Tox Free Solutions has acquired Absolute Liquid Waste Services of Toowoomba, Queensland for $4.9 million.

Absolute provides Toxfree with access to the company’s blue chip client base throughout the coal seam gas sector in the Surat Basin of Queensland, said managing director, Steve Gostlow.

“Absolute has a long term contract with QGC to provide waste services for their upstream drilling campaign; services include the transport and disposal of liquid waste. The contract has a further two years to run, expiring November 2014.”

QGC is owned by the multinational BG Group and is establishing the world's first project to convert coal seam gas into liquefied natural gas.

Toxfree said it has a positive outlook on the resource sector in Queensland with over of $60 billion of capital investment in the CSG sector expected over the next four years. The acquisition will assist its strategy to provide total waste management and industrial services for the oil and gas and mining sector throughout Australia.

Dean Hartog, the managing director of Absolute and who has significant experience in the Toowoomba region and CSG waste management, will continue with Toxfree.

Toxfree expects to improve the financial performance of the business through organic growth, introducing other services, and synergies with its other operations in Roma.

Absolute has assets of $2.5 million. It is on track to achieve earnings (EBITDA) of $1.3 million and is experiencing significant growth in the CSG sector west of Toowoomba, said Mr Gostlow.

Broker Ord Minnett said “While the acquisition itself is not going to add significantly to group earnings in the near term, we believe the price paid was reasonable and it provides TOX with operations on the East side of the Surat Basin, increasing the company’s regional presence given its operations in Roma.

“We expect TOX to continue to look to make small strategic, bolt on acquisitions and remain comfortable in the near term growth outlook for the business.” (ASX: TOX)

Emerging Companies

Energy Action
Shares in Energy Action touched a new all time high of $3.35 on 14 December. (ASX: EAX)

Reece Australia
Shares in Reece Australia reached a new one year high of $22.40 on 13 December. (ASX: REH)

Tassal Group
Tassal chairman Allan McCallum has acquired 7,299 shares at an average price of $1.376 each. Director Christopher Leon has indirectly acquired 20,000 shares at an average price of $1.394. (ASX: TGR)

____ Satellite Securities____

Emerging Companies

CBD Energy
CBD Energy’s energy efficiency business, Parmac, has picked up over $8 million in new projects. Year to date results indicate a turnaround in its performance, and since 30 June it has been involved in 40 projects and should contribute positively to the Group half year earnings.

Melbourne based Parmac is a mechanical services and air conditioning installations business. It employs 58 people and has been designing and installing energy efficient air conditioning and mechanical services on industrial and commercial buildings since 1994.

A large current project is providing mechanical services at Box Hill TAFE Building 7. This commenced in November and is expected to complete in April 2013. The project is a three level facility to be used in training mechanical services apprentices and technicians in the use of different types of air conditioning systems and associated technologies.

Another project is C8 Lifestyle, where it is providing services to a four level serviced office building at Docklands, Melbourne. This commenced in October and expected to be completed in May 2013.

A third project is providing services for a new six floor teaching and administration facility at the Bundoora campus of Latrobe University. Work begins this month and should be completed next September. (ASX: CBD)

Energy Developments
Shares in Energy Developments reached a new three year high of $3.50 on 11 December.

The highest price Energy Developments can pay under its share buyback is $3.4923. (ASX: ENE)

Managing director Earl Eddings has acquired 48,000 shares at 6.5 cents each. (ASX: GCG)

Executive chairman David Richardson has increased his interest in Solco from 45.04 to 46.86 per cent by indirectly acquiring another 4 million shares at 2 and 2.5 cents each. (ASX: SOO)

____ Pre Profit Securities ____

Micro Cap Companies

Cardia Bioplastics
Cardia Bioplastics has won three contracts that should add over $2.2 million to sales, including a contract to supply an estimated $1.2 million per annum of its Biohybrid renewable kitchen waste bags to the Shanghai Pudong City District in China.

Following a successful six month trial of Cardia’s Biohybrid renewable kitchen bags earlier this year, the City District of Shanghai Pudong has increased its supply to cover from 5 to 20 per cent of households in the region.

Managing director Dr Frank Glatz said that the contract was awarded because Cardia’s technology uses considerably less oil to produce an environmentally friendly renewable resin with a lower carbon footprint than conventional plastics.

Shanghai Pudong in recent years has focused on environmental initiatives, such as targeting waste separation at the source. Following the World Expo in 2010, Shanghai implemented an organic waste separation process to separate plant and food scraps at the household level, as these scraps form a large part of the Chinese domestic waste stream.

“This is a critical step towards the efficient management of domestic waste in China,” said Dr Glatz. “Cardia is the only supplier of these products to the Shanghai Pudong City Council – these bags are tailored specifically for the separation and collection of food and domestic waste.”

The contract opens an opportunity to expand the rollout in Pudong and secure additional City Councils in China, said the company. Pudong is one of four Chinese City Councils that have conducted waste trials with Cardia’s products. The other three are Nanjing, Hangzhou and Yuhang.

Dr Frank Glatz said in addition Cardia has a certified compostable offering for its organic waste management business, with trials underway in Australia, New Zealand, Malaysia, Canada, USA, Brazil and the UK.

The company’s share purchase plan will now close on 20 December. (ASX: CNN)

Allan Gray Australia has increased its interest in Nanosonics from 8.83 to 9.84 per cent. (ASX: NAN)

Pacific Environment
A shareholder request for an extraordinary general meeting to remove two Pacific Environment directors has been withdrawn. (ASX: PEH)

Phoslock Water Solutions
Phoslock chairman Laurence Freedman has acquired another 113,671 shares at 4.6 cents each. (ASX: PHK)

Po Valley Energy
Hunter Hall Investment Management has increased its interest n Po Valley Energy from 17.29 to 18.74 per cent by buying 3 million shares at 12 cents each.

On 6 December Po Valley Energy issued 7,416,667 shares at 12 cents each under a private placement. (ASX: PVE)

WestSide Corporation
WestSide Corporation said the party that has made a confidential takeover proposal has requested additional time to conclude due diligence. The date until which WestSide will not solicit proposals from other parties has been extended to 21 December. The company continues to advise shareholders take no action at this time.

The proposal is indicative, conditional, non binding and would involve the acquisition of WestSide for cash of 52 cents per share. (ASX: WCL)

____ Pre Revenue Securities ____

ASX 100

Lynas Corporation
In response to comments in the Malaysian media about the company’s Temporary Operating License (TOL) for the Lynas Advanced Materials Plant (LAMP), Lynas said the TOL remains issued and valid and there is no legal impediment to operations at the LAMP.

The TOL has two key conditions about the solid residues from the LAMP. These are that Lynas 1. Undertake R&D on the commercialization, recycling and re use of residue materials subject to a condition that the material re used must be below 1 Bq/g and 2. Submit the plans and location of a Permanent Disposal Facility.

These conditions must be satisfied within 10 months of the issue of the TOL in September 2012, and Lynas said it is confident of satisfying them.

Detailed activity is underway to safely commercialize the material. Lynas has constructed a plant at the LAMP which is now ready to convert the residue into co products for market trials.

Lynas also said it will ensure that all residue material that is the source of concern to the Malaysian public will be converted into co products, and exported from Malaysia if the co products are not approved for use in Malaysia and an acceptable location for the Permanent Disposal Facility is not approved. The co products must be in a form acceptable for international markets and in accordance with Malaysian regulations and international conventions.

Lynas said it is fully commited to safety, environmental excellence and the creation of sustainable value for its communities through its operations. (ASX: LYC)

ASX 300

Dart Energy
Dart Energy chairman Nick Davies said the company hopes to commence commercial gas sales during 2012 at two projects Airth in the UK and Liulin in China.

“With this we will transition during 2013 into becoming a production company and expect the volumes to ramp up during 2014 and 2015, leading to substantial revenues,” he said.

“In addition, we have plans to bring five other projects into pilot production over the next 12 to 18 months and expect to carry out pilot testing and appraisal at these projects. These include PEL 458 (Fullerton Cove) in Australia, Sangatta West (East Kalimantan), and Tanjung Enim and Muralim (South Sumatra) in Indonesia and PEDL 159 (Solway project) in the UK.” (ASX: DTE)

Galaxy Resources
Galaxy Resources expects to have its Jiangsu Lithium Carbonate Plant refurbished and back in operation in early February 2013 following the recent fatal incident involving ruptured pipework.

Product sales, customer testing and qualification will continue over coming months supported by available product inventory, said the company.

Due to the effect on cashflow of the incident and a six week delay in the cash injection by investor East China Mineral Exploration & Development Bureau (ECE), Galaxy has taken out a $20 million financing arrangement with Deutsche Bank that comprises an equity placement and call option transactions.

The placement consists of 48 million shares at 41.67 cents each. The first tranche of $10 million settles on 17 December and the second $10 million tranche will settle immediately on the re commencement of operations at Jiangsu in early February.

Galaxy said it has purchased cash settled call options from Deutsche Bank to potentially benefit from future appreciation in its share price. Galaxy could receive an additional payment of up to $20 million to the extent its share price appreciates in three years’ time and without requiring Galaxy to issue additional shares.

The net proceeds of the financing arrangement are $15 million after placement, structuring fees and call option premium. (ASX: GXY)

Micro Cap Companies

Shares in Algae.Tec dipped to an all time low of 22 cents on 12 December.

The Parliamentary Secretary for Defence Dr Mike Kelly visited the company’s Shoalhaven facility in NSW which is producing low cost, high grade biofuel using algae. Algae.Tec is providing test biofuels for the Australian defense force, which spends more than $500 million on fuel per annum.

Algae.Tec’s executive chairman Roger Stroud says the biofuels technology at Shoalhaven is the same technology that will be used by the company’s global aviation and transport fuel clients. “We currently have feasibility studies underway with interested parties in Texas, Brazil, China, Sri Lanka and Germany, as well as another site in New South Wales,” he said. (ASX: AEB)

BluGlass said it has been successful in initial laboratory experiments to produce low temperature p type gallium nitride (p-GaN) which is necessary to make the top layers of a nitride LED.

Chief executive Giles Bourne said “While these results are preliminary, they represent highly encouraging progress, ahead of our expectations, towards our next major milestone to prove that a low temperature technology can improve the efficiency of an LED.” (ASX: BLG)

Carnegie Wave Energy
Carnegie Wave Energy has received environmental and maritime safety approvals for its Perth Wave Energy Project (PWEP).

The company said that over two years it has undertaken extensive environmental impact assessment of all elements of the PWEP using in house expertise and external consultants. Two environmental management plans covering marine and terrestrial elements have been completed to ensure that any potential impacts are minimal and confined to the smallest possible areas. These have been supplemented by detailed surveys and assessment of seabed habitat, marine fauna, onshore and offshore terrain and coastal processes.

The Environmental Clearance Certificate says the proposal is considered not likely to cause any significant environmental impacts on the environment.

Maritime safety approvals for the operation of the CETO units and offshore pipelines were received in August.

Chief executive, Dr Michael Ottaviano, said, “Carnegie has designed CETO with zero visual impact and to be as environmentally friendly as possible. We are pleased to receive these key approvals which allow construction to begin in Quarter 1, 2013.” (ASX: CWE)

Earth Heat Resources
Several substantial shareholders in Earth Heat Resources have been diluted due to the recent placement. The prospectus for the accompanying rights issue is now available. (ASX: EHR)

Enerji said it is finalizing a contract with its second major customer. It hopes to make an announcement before the market opens on 20 December.

Enerji has received commitments for $924,500 in a placement of 154,083,334 shares at 0.6 cents each. There is one attaching option for every two new shares.

The placement is to private investors including Cape Bouvard Equities Pty Ltd, a company associated with the Sarich family. The funds are to fund work in preparing for future customers, continuation of the Carnarvon project and working capital.

The company will continue with the suspension of its securities at least until all placement funds have been received. (ASX: ERJ)

Shares in EnviroMission fell to a new low of 2.1 cents on 13 December.

The company has signed an unnamed licensing partner for the development of a solar tower in Texas. A Memorandum of Understanding (MOU) sets out exclusive developer rights to plan, develop and manage Solar Tower renewable energy power stations on the Texas electrical grid.

“This is the first licensing agreement EnviroMission has entered into in the United States that will provide EnviroMission with an initial fee for the assignment of the Solar Tower development rights in Texas as well as equity in the development enterprise and ongoing technology fees for each Solar Tower development,” said chief executive, Roger Davey.

The La Paz Solar Tower development in Arizona remains at company’s main project. (ASX: EVM)

Geodynamics has completed a major stimulation of the Habanero 4 well over a 14 day period, its seismic monitoring network detecting over 24,000 micro seismic events extending up to 1.5 kilometres from the well.

The data from the stimulation is being analyzed to further understand the behaviour of the fracture system at the well. The reservoir will now be allowed to re establish equilibrium conditions before a third open flow test, probably in February. (ASX: GDY)

Hot Rock
Shares in Hot Rock fell to an all time low of 1 cent on 13 December. (ASX: HRL)

The Copulos Group is no longer a substantial shareholder in MediVac. (ASX: MDV)

Panax Geothermal
Panax’s shares fell to a new all time low of 0.2 cents on 10 December. (ASX: PAX)

Water Resources Group
Peter Carre has retired from Water Resources Group after five years as chairman.

The new chairman is Malcolm Richmond, who joined the board as a non executive director earlier this year. He has held senior executive positions with Rio Tinto, including that of managing director, research and development worldwide. His international experience includes major mining projects, business acquisitions and large scale project expansion. He is a director of four other public companies.

The company has completed a placement of 15 million shares at 2 cents each to raise $300,000 from professional and sophisticated investors.

On 30 December, 49,895,961 shares will be released from escrow. (ASX: WRG)

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