Eco Investor Update

A Weekly News Update for Environmental Investors

6 December 2010 - No 12

ASX 100

APA Group & Hastings Diversified Utilities Fund
APA Group has again lifted its stake in Hastings Diversified Utilities Fund from 16.8 to 19.77 per cent, just below the maximum allowed before having to make a take over bid. HDF owns gas pipeline owner Epic Energy.

Orbis Investment Management reduced its substantial holding from 12.7 to 11 per cent. (ASX: APA and HDF)

Origin Energy
Origin Energy's majority owned New Zealand subsidiary Contact Energy has received Environment Court consent to proceed with its Waitahora wind development. The decision covers all the consents and turbine locations sought by Contact Energy, with a final set of conditions for Court approval to be submitted by 17 December.

The Waitahora wind energy project will be located at the Puketoi Range, south-east of Dannevirke in Southern Hawke's Bay and will generate enough energy to power up to 70,000 average homes, which is said to be more than enough electricity to power every home in Napier, Hastings and Dannevirke.

The wind resource on the Puketoi Range is world-class and the court's decision confirms that the relatively remote site is ideal for a wind farm in nearly every respect, said Contact Energy. (ASX: ORG)

ASX 200

Eastern Star Gas
Eastern Star Gas expects to finalize its coal seam gas to LNG project feasibility study for Newcastle by the end of December, and to have significantly progressed LNG marketing, said managing director David Casey.

The company expects to commit to the Front-End Engineering and Design (FEED) early next year.

Approvals processes for the project are well underway, he said. "We aim to have these processes completed by late 2011, at the same time that FEED is expected to be completed, LNG off take commitments secured and project equity and financing arrangements put in place."

Mr Casey said a key difference with other, larger CSG to LNG export projects is that Eastern Star Gas needs to secure only a small number of modestly sized off take commitments to achieve viability, and that partner Marubeni could in its own right take a meaningful portion of the foundation off take.

"Importantly, ESG already has an equity interest in gas reserves sufficient to underwrite a commitment to development of the project," he said.

"Indications to date are that prospective purchasers of LNG have a keen interest in taking equity in upstream activities, including gas production. We see a partial sell-down of project equity as a way to fund the equity portion of project development costs, thereby potentially reducing or eliminating the need for further equity raisings and maximizing the return to long standing ESG shareholders."

Eastern Star Gas intends to maintain majority control of the Narrabri CSG Project that would supply the project. (ASX: ESG).

ASX 300

Ceramic Fuel Cells
Ceramic Fuel Cells has received a conditional order for up to 200 integrated power and heating units from German energy company EWE. If it proceeds the order will generate revenue of up to 4.9 million over two years.

The order is conditional on EWE receiving partial funding under the German government's national hydrogen and fuel cell technology innovation program. A decision is expected in early 2011.

If the units also meet performance targets, EWE will order 70 units for delivery in 2011 and 130 units for 2012. EWE will install the units in homes in the Lower Saxony region of northern Germany.

"This is a significant follow-on order from EWE, and it will see us selling many more of the integrated products we have developed with EWE and our local partner Bruns," said Ceramic Fuel Cells' managing director Brendan Dow.

"We are confident that the German government will support the project and we look forward to continuing to deploy products with EWE, our longest standing customer and partner. We are also encouraged by the very strong interest in our low emission products in Germany."

Ceramic Fuel Cells will supply the core Gennex fuel cell module and related components.

Ceramic Fuel Cells and its local manufacturing partner, Gebrüder Bruns Heiztechnik GmbH, will integrate the fuel cell module with a boiler into an integrated power and heating product for EWE.

The units use Ceramic Fuel Cells' technology to convert natural gas into electricity and heat with the world's highest level of efficiency, and will provide the homes with low emission electricity, hot water and heating. (ASX: CFU)

Geodynamics is to acquire 100 per cent ownership of Geothermal Exploration Licence 268 (GEL 268) in the Cooper Basin. The vendor is Clean Energy Australasia Pty Ltd, and consideration is 1.5 million shares in Geodynamics.

The acquisition links Geodynamics current exploration areas and means it will have total geothermal acreage in South Australia and Queensland of 3,059 square kilometres.

GEL 268 is prospective for Enhanced Geothermal Systems and is possibly suitable for Hot Sedimentary Aquifer exploration, it said. The initial assessment shows potential for deep granite below a large section between Innamincka and the Queensland border, complementing the company's main Cooper Basin project.

Geodynamics' managing director, Dr Jack Hamilton said "Through this transaction, Geodynamics will own the greatest volume known of prospective EGS geothermal resources in Australia, in the hottest known place on Earth outside of volcanic centres. Linking the tenement areas together places Geodynamics in an even better position to provide future clean energy from this great Cooper Basin resource."

Geodynamics has released details of the salary package for incoming managing director Geoff Ward. (ASX: GDY)

Tassal Group
Australia's largest aquaculture company, Tassal has been recognized by a BRW Magazine survey as the Most Respected Industry Leader in agriculture, forestry and fishing.

Participants were asked nominate and rank companies they most respected in all industries, and rate them across five criteria including corporate social responsibility and their responsiveness to economic change.

Managing director mark Ryan said "Investors, our customers and the broader community expect companies like Tassal to be socially and environmentally responsible. We have put in place systems to meet and exceed these expectations."

Acorn Capital has ceased to be a substantial shareholder, selling 2.1 million shares at an average of $1.44 each. (ASX: TGR)

Emerging Companies

Environmental Group
Environmental Group shareholders have approved a one for three share consolidation and a share buyback of up to 15.8 million post consolidation shares. Following the consolidation but before the buyback, EGL will have 79 million shares on issue.

The share buyback, for capital management, begins on 109 December and will go for up to 12 months. (ASX: EGL)

Solco expects to significantly increase its share of the growing solar pumping market and boost the margins and profitability of its Solar Pumping division with an exclusive supply arrangement with solar pump manufacturer, Lorentz of Germany.

Lorentz is one of three major solar pumping manufacturers in the world. The supply deal commenced on 1 December and goes for at least three years.

Solco's chief executive officer Mark Norman said the supply agreement is a major milestone in Solco becoming one of Australia's largest wholesale suppliers of solar pumping equipment.

"This agreement will allow us to supply a wider range of products and substantially increase our market share," he said. "By being able to import equipment directly from Lorentz - rather than through third party distributors - we will be able to generate greater revenue and create higher margins and profitability, as well as delivering more attractive sales packages for our customers."

Solco main clients are farmers, pastoralists, mining companies and remote communities with no access to mains water and electricity supplies. (ASX: SOO)

Micro Cap Companies

AnaeCo has completed a placement to professional and sophisticated investors, raising $2 million at 10 cents per share. The funds are for working capital while stage 2 of the company's first municipal waste management system is constructed, and to repay a short term loan facility (ASX: ANQ)

BioProspect's rights issue saw it receive 586 applications for 169,013,730 shares with a value of $845,068.65. This represented 53 per cent of the total offer.

It also received 497 applications for 139,046,171 loyalty options with a value of $139,046.17. This represented 44 per cent of the offer.

The total shortfall funds were $927,226, which is covered by the underwriter and sub underwriters.

Managing director, Charles Pellegrino said the results show that shareholders "are right behind the future direction of the Company and this take up on the rights issue gives confidence to the board for the way ahead". (ASX: BPO)

Carbon Polymers
Following some delays, Carbon Polymers is aiming to have a small production run for its new tyre recycling plant before Christmas. Full production would then commence on 4 January.

Initial production is likely to be 500 tonnes per month. The target is 2,000 tonnes per month by the start of the second quarter.

Chairman and managing director, Andrew Howard, said the company will be one of the most technologically advanced recycling companies in Australia.

The company also has a plan to recommission its plastics recycling plant in the next two months.

It aims to be cashflow positive for calendar 2011.

Godfrey Vella has joined the board. (ASX: CBP)

Carnegie Wave Energy
The hydraulic pump for Carnegie Wave Energy's commercial scale demonstration unit has met all tests and is now being shipped to the company's Fremantle Wave Energy facility.

The French-based manufacturer, Douce Hydro, said the commercial scale pump completed its factory acceptance testing regime including pressure testing, friction measurement, full extension and retraction test and detailed dimensional checks.

On arrival, the pump will be integrated into the onshore testing program. (ASX: CWE)

Dyesol has released a little more information about its commercialization plans for the automotive industry, telling the annual general meeting it is set to supplement battery powered vehicles for short journeys.

SureVolt is dye solar cells on a flexible substrate, and the technology will ultimately have the potential to address "the entire automotive envelope".

It can also be used to expand the built in photovoltaics market through uses such as on blinds. (ASX: DYE)

Electrometals Technologies
Waste metals recoverer Electrometals Technologies has appointed Michael Nugent as a non executive director. Mr Nugent is a former chief executive of Goodman Fielder and also has experience in the engineering and infrastructure industries and in international business, marketing and finance. (ASX: EMM)

EnviroMission non-executive director, Guoxiang Ma, failed to win sufficient support from shareholders to be re-appointed to the board.

The board said it is disappointed to lose Mr Ma's contribution and "looks forward to an ongoing positive relationship with Mr Ma in relation to Solar Tower development in China".

EnviroMission said it is interviewing suitable directors to expand the board to support the delivery stage of the Solar Tower project in Arizona. (ASX: EVM)

Geothermal Resources
Geothermal Resources is monitoring other investment opportunities, particularly in the precious and rare earth metals sector, and may invest in a suitable opportunity if it presents itself, said the company.

The strategic shift follows failure to attract investment support from institutions and utilities for its geothermal projects, its low cash position of $249,000 at the end of the September quarter, and the need to generate shareholder value in the short to medium term.

"Even if it were possible, directors do not feel it is appropriate to ask shareholders to put up the entire $17 million risk capital to do the "proof of concept" drilling, when other well cashed up potential partners (eg energy utilities) and investors (institutions and pension funds) are unwilling to do so," it said.

The company is also reluctant to move into offshore geothermal energy projects that provide little benefit for Australia, "although this may be the only way forward for geothermal explorers in the immediate future".

An alternative is to diversify into other commodities that have more immediate appeal and for which capital can be raised. "This uses the company's exploration skills and could provide shareholders with more immediate returns whilst waiting for an improvement in the geothermal exploration investment climate," it said.

The company has temporarily suspended work on its work Frome project while it seeks a partner to assist with funding of the proof of concept drilling.

It continues to work on its Penola-Robe Project to identify the best location for its first Hot Sedimentary Aquifer test well. (ASX: GHT)

Hot Rock
Hot Rock director Stephen Bizzell has acquired 250,000 shares ta an average price of 5.5 cents each. Mr Bizzell is a large shareholder in Hot Rock both directly and indirectly and also has numerous options. (ASX: HRL)

Hydrotech International
Hydrotech International has won two contracts for its MPS water ingress system and two contracts for its coatings division, Hydrotech Waterproofing Solutions.

The largest contract is to install an MPS system at the Hong Kong Club in central Hong Kong with work to be completed by June 2011.

The second MPS system is for the basement of the Mira Hotel in Hong Kong.

Hydrotech did not indicate the expected revenue but said it is confident of winning further contracts in the next three months.

The Coatings Division's contracts are for the second phase of the ATL Logistics Centre's Cargo Handling Facility at Hong Kong, which is already a client, and to waterproof a residential building managed by one of Hong Kong's largest property managers. (ASX: HTI)

Intec has received the payment of $5 million from JX Nippon Mining & Metals Corporation for the cross licencing of their respective patent portfolios in the field of halide-based hydrometallurgy for processing base and precious metals.

Intec's Corporate Development Manager, Dave Sammut, said the transaction did not involve Intec equity or debt and there was no dilution of shareholders.

Intec has the Intec Process and JX Nippon has the Nikko-chloride process, he said. "Both are hydrometallurgical technologies, with certain commonalities. The mixed halides of the Intec Process are effective in the extraction and recovery of gold. It is publicly known that JX Nippon has constructed and is operating a demonstration plant in Perth at which it is treating copper-gold concentrate from Newcrest. The cross-licensing gives Intec access to the Nikko-chloride process patents, and JX Nippon access to the Intec Copper Process patents."

Managing director, Philip Wood, said JX Nippon already had some limited rights to access the Intec Copper Process as a "club licencee" from its investment during the 1990s and operated an Intec Copper Process pilot plant in Japan in the early 2000s.

"The current agreement sells for $5 million some non-exclusive limited additional rights to Intec's patents on copper and gold, as well as giving Intec access to JX Nippon's technology in the event that it might be useful to us. It doesn't prevent Intec or our partners from pursuing our own projects, nor does it extend access to JX Nippon for Intec's other intellectual property - the galvanizing patent, the zinc patents, the metalliferous oxides patents, and so forth."

Mr Sammut said the one-off payment to Intec is without royalties or long-term ties between the two companies, and Intec will not have any involvement in Nippon's Perth plant.

"We believe that we have captured important value for our shareholders, at a time when such immediate value was most useful, and we do not believe that we have sacrificed any key intellectual property position to do so," he said.

As foreshadowed, Intec has fully repaid the convertible note issue by La Jolla Cove Investors. (ASX: INL)

Intermoco is forecasting 2010-11 revenue of $9 million. If it achieves this it will be the fifth consecutive year of revenue growth, said the company. 2009-10 revenue was almost $6 million. (ASX: INT)

MediVac said it is in discussions with numerous potential distributors following its display at the Medica Trade Fair in Germany.

The new MetaMizer 240 SSS and SunnyWipes medical range "received very favourable responses". Companies from the USA, Canada, Peru, Mexico, Turkey, Italy, France, Spain and Romania expressed interest in distributing the new MetaMizer in their territories.

The new SunnyWipes medical range attracted interest from potential distributors in Brazil, UK, Italy, Holland, Poland Norway, Belgium and India.

The company said it will follow up over the coming months. (ASX: MDV)

Papyrus Australia
Papyrus Australia is entering the Egyptian market with a memorandum of understanding with Egyptian entity, Tawazon For Solid Management SAE, a company that is the vehicle for investment in the region's solid waste management industry by Citadel Capital.

The agreement is for the establishment of Papyrus Egypt and Papyrus Europe and contracts to secure and banana plantation feedstock for the proposed factory.

It also covers the establishment of contracts for Papyrus' subsidiary Australian Advanced Manufacturing Centre Pty Ltd to supply plant and equipment for the factory.

Sale and purchase agreements will be set up to sell the factory's product into Europe.

Tawazon holds the Egyptian Company for Solid Waste Recycling (ECARU) and the Engineering Tasks Group (ENTAG), said to be leading waste management enterprises with extensive operations in Egypt as well as exposure in Malaysia, Sudan, Libya and Syria.

Established in 1997, ECARU collects and processes more than 500,000 tons per year of agricultural solid waste, particularly rice straw. The company's current focus is on the conversion of rice straw into compost, but it has pioneered a technology to produce animal fodder and is investigating the feasibility of producing medium-density fibre board, fuel pellets and paper from rice straw.

ENTAG was established in 1995 and designs, manufactures and erects solid waste management systems using equipment partly supplied by the world's leading waste management equipment producers and partly designed and made in Egypt.

Citadel Capital is a private equity firm in Cairo and listed on the Egyptian Exchange (EGX). It makes control private equity investments in the Middle East and Africa and has more than US$8.3 billion under management.

Papyrus said the MOU is a tangible step towards establishing a factory in a prolific banana growing province with the prospect of selling product into Europe. However, significant work remains to be done before any operations in Egypt become a reality, and the success of the project depends on a wide range of factors including the conclusion of satisfactory commercial arrangements that benefit all parties.

Russell Burton failed to be elected as a director at the annual general meeting where he received 5 million votes for and 34.8 million votes against his election.

Executive chairman Edward Byrt said the company is disappointed with the lack of sales generated this year from its Walkamin factory, but the company's commercialisation strategy is to become a technology licensing company rather than a banana veneer and fibre producer.

"Production today for sales and revenues is important but only as part of the validation process – it is not the end game – it is a necessary stage in developing and achieving our international commercialisation strategy," he said.

Nonetheless, larger volumes of veneer are now being produced and the company is working to establish a market for the veneer.

Fibre for panel production is being produced in increasing volumes so the company can undertake panel production to achieve international standards and accreditations and for commercial market testing.

"The market for banana veneer and the market for banana fibre panel and the potential market for simply banana fibre – and these are very different markets - is in its infancy at best," he said.

"We have received genuine market interest for banana veneer from Australia and Egypt and Europe. The expressed interest in Australia, for example, for banana veneer is coming from various potential customers – ranging from end users at home, to cabinetmakers and furniture makers. We have responded to that interest by producing a variety of banana veneer product which has been given to a number of customers including furniture makers – and floorboard makers – to test the application of banana veneer to various substrates."

But the company is not in the business of furniture making, he emphasized. (ASX: PPY)

Phoslock Water Solutions
As approved by the annual general meeting, Phoslock Water Solutions' managing director Robert Schuitema has acquired 1.5 million shares issued at 5 cents each, and fellow director Dr David Garman has indirectly acquired 1 million shares also issued at 5 cents each. (ASX: PHK)

Po Valley
Hunter Hall has upped its substantial holding in Po Valley Energy from 12 to 13.3 per cent. In July Hunter Hall reduced its holding to 12 per cent from 17.7 per cent. (ASX: PVE)

Unlisted Companies

NEP Solar
NEP Solar (Eco Investor March 2010) is part of a consortium that has won a $3,235,710 grant to support an applied research project to develop a hybrid solar concentrator PV/ thermal (CPVT) system that can efficiently deliver both 150oC heat and solar electricity.

The other collaborators are the Australian National University, Chromasun, CSIRO, and University of NSW.

The intended product is a complete building energy solution which can compete against the retail price of electricity and natural gas, they said.

‘The technical focus is on spectral splitting to thermally decouple the PV cells from the 150oC circulating fluid, thus capturing high value heat whilst at the same time keeping the PV cells cool to increase efficiency," said the grant citation.

"The linear hybrid solar concentrator receivers to be developed will split sunlight into several bands based on wavelength, directing the optimum wavelength to the PV cells and to thermal absorption."

As the industrial collaborators, Chromasun with its micro concentrator and NEP Solar with its macro concentrator have two complementary linear concentrators and if the project is successful they may adapt their collectors to accommodate the hybrid receiver and market a new product.

ANU and CSIRO will also use the 150oC heat to aim to demonstrate improved performance and economics for solar air conditioning.

International Companies

Ocean Power Technologies
Ocean Power Technologies is to delist from the Alternative Investment market (AIM) of the London Stock Exchange, effective 14 January 2011.

OPT will maintain its listing on NASDAQ Global Market, which accounts for the bulk of its share trading. The AIM shares will be transfered to the US stock processing system.
OPT joined AIM in October 2003 and NASDAQ in April 2007. (NASDAQ: OPTT)

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