Eco Investor Update

A Weekly News Update for Environmental Investors

13 December 2010 - No 13

ASX 100

AGL Energy and Origin Energy
AGL Energy and Origin Energy have been cleared by the Australian Competition and Consumer Commission (ACCC) to acquire assets under the NSW Government's electricity privatization if their bids are successful.

AGL can acquire Country Energy or Integral Energy plus one of the Eraring, Delta Coastal or Delta Western Gentrader bundles and one or more of the generator development sites.

Origin can acquire either EnergyAustralia, Country Energy, or Integral Energy or both Country Energy and Integral Energy, plus one of the Eraring, Delta Coastal or Delta Western gentrader bundles and one of the development sites.

Meanwhile, Origin says a comprehensive investigation into traces of the dangerous BTEX chemicals found in coal seam gas water at its Australia Pacific LNG project confirmed there is no significant risk to the environment or human health.

"The investigation identified possible sources of BTEX contaminants, including small amounts of lubricants and diesel which may have been introduced inadvertently in the course of operations. Processed mineral oil present in an additive previously used in [Hydraulic Fracture Stimulation] HFS fluids was also identified as containing trace levels of TEX chemicals (well below Australian Drinking Water Guidelines)," it said.

These potential sources are being addressed with stronger control measures.

"The investigation has also indicated that trace levels of BTEX may be naturally occurring under certain conditions and operations will be conducted in a manner that manages environmental risk and protects water sources both at the surface and below the ground.

"Australia Pacific LNG already has strict controls in place to ensure that water produced from wells is contained in lined and fenced ponds and tanks ahead of treatment as part of its current operational practice. This ensures that produced water is isolated from water courses and livestock during its treatment."

The Queensland Department of Environment and Resource Management (DERM) has confirmed the proposed monitoring and reporting guidelines to manage HFS programs are appropriate. Following implementation of the additional controls, Australia Pacific LNG will recommence its HFS operations.

At AGL, the company has commenced legal proceedings for the ACCC to withdraw a Notice under the Trade Practices Act that alleges AGL took advantage of its market power in the South Australian wholesale electricity market to prevent competition in the state's retail electricity market.

AGL rejects the claims that it the summers of 2008, 2009 and 2010 it bid significant amounts of offered capacity at Torrens Island Power Station into the National Electricity Market at greater than $9,000 per megawatt hour and prevented or hindered South Australian electricity retailers from obtaining hedge contracts at reasonable commercial prices by refusing to supply hedge contracts to those retailers.

AGL said "The Notice goes on to assert that the consequence of the alleged conduct was that retailers in South Australia were required to pay prices close to the spot price for wholesale electricity on days of high demand and higher prices for forward hedge contracts in South Australia."

AGL rejects the assertions in the Notice. (ASX: AGK and ORG)

DUET subsidiary United Energy has now installed 87,500 smart meters or close to 15 per cent of its planned 650,000 meter roll-out in Victoria. This places it ahead of the 10 per cent required by regulation.

Smart meter revenue was $22.6 million in the six months to 30 June 2010. Forecast revenue for calendar years 2011 and 2012 is around $48 million and $60 million respectively.

The roll-out is scheduled to finish in December 2013. (ASX: DUE)

ASX 200

GWA Group
GWA Group has acquired Gliderol International Pty Ltd, a maker and distributor of residential and commercial garage doors and openers.

Gliderol has factories in all major states and revenue of $70 million. Its international activities are not part of the deal.

GWA managing director Peter Crowley said Gliderol is a logical extension to GWA's Doors and Access Systems Division.

The purchase cost is $42 million, which is to be funded from existing bank facilities. The deal should be earnings per share positive in the first year.

To prevent possible insider trading by directors and company officers, GWA Group has introduced a policy designating periods and exceptional circumstances during which staff may trade shares.

Personnel are unable to trade shares from 30 June until the release of GWA's full year results to the ASX, and 31 December until the release of the half year results to the ASX, unless otherwise decided by the board.

Potential insiders include directors, GWA, divisional executives and management personnel, head office staff, staff involved in material transactions, and any other staff member likely to be in the possession of insider information.

Individuals possessing unpublished insider information about GWA are prohibited from trading in its shares. (ASX: GWA)

Infigen Energy
Hedge Fund The Children's Investment Fund Management has increased its holding in Infigen Energy form 22.1 to 23.2 per cent over the past two and a half months.

ASX 300

Tassal Group
Tassal Group may become the object of a takeover and said it will talk to third parties about any change of control proposals they may have.

The move follows the news that major shareholder, Webster Group, is to sell its 19.8 per cent interest to Pacific Andes Resources Development (PARD) for $1.79 per share.

The announcement came only days after Tassal rejected an indicative, conditional and non binding expression of interest from private equity group Pacific Equity Partners at $1.80 to $1.90 per share. However, Tassal said the indicative valuation materially undervalued the company.

During the long sale process by Webster to PARD, a number of parties expressed interest in acquiring a controlling interest in Tassal, and Gresham advisory Partners has been appointed to look at potential options to maximize shareholder value.

Following the sale of shares by Webster shares, director Roderick Roberts resigned. (ASX: TGR)

Transfield Services Infrastructure Fund
Transfield Services Infrastructure Fund has appointed Andrew Rowley-Bates as chief financial officer, Mr Rowley-Bates has been acting CFO since the 2010 annual general meeting and has worked with TSI in project and financial roles since April 2009.

A chartered accountant, prior to joining TSI, Mr Rowley-Bates spent over eight years with Transfield Services as Group Financial Controller and in interim CFO positions.

TSI chairman, Peter Young said "Andrew has extensive corporate financial experience, an excellent understanding of our business and a proven track record of delivery. He has brought an additional skill set to TSI Fund."

TSI's interim distribution for the six months to 31 December is expected to be in the order of 4.1 cents per stapled security. The actual distribution will be announced around 15 February 2011 when TSI releases its results for the half year to 31 December. (ASX: TSI)

Emerging Companies

Clean TeQ Holdings
Formed six months ago, Clean TeQ Holding's New Zealand subsidiary has won its first major New Zealand customer. U-V Guard New Zealand has a long term agreement to supply ultra violet disinfection systems and services to a leading water treatment supplier.

Sales to the client are expected to be around $500,000 in the first year.

Clean TeQ chief executive, Peter Voigt, said UV for water disinfection is a growing business for Clean TeQ in Australia and New Zealand. (ASX: CLQ)

CMA Corporation
CMA Corporation is looking for a new chief executive, following an announcement that the appointment of Craig Tuhoro is at an end. His resignation is effective immediately. No further details were released. (ASX: CMV)

Micro Cap Companies

Infrastructure fund manager, Palisade Investment Partners has given final investment approval to fund Stage 2 of AnaeCo's DiCOM waste management facility for the Western Metropolitan Regional Council (WMRC) in Perth.

Contracts have been signed. The facility will be constructed by AnaeCo joint venture partner Monadelphous. AnaeCo said it has completed the front-end engineering design and work and construction can commence immediately.

Mayor Ron Norris, chairman of the WMRC, said "This will be the first time in Australia that an existing transfer station has been retrofitted with alternative waste processing technology."

With financial close, the sale by AnaeCo of its 16.4 per cent interest in the facility to Palisade can proceed. The sale will net AnaeCo $1.9 million with settlement by 14 January. (ASX: ANQ)

Australian Renewable Fuels
Australian Renewable Fuels is to help Logicoil Pty Ltd supply biodiesel to run the new IMX Resources Cairn Hill mine in South Australia. Logicoil is the supplier to IMX for biodiesel blended fuel to replace diesel for mining and haulage. ARF will supply the biodiesel.

"The Cairn Hill mine operations is a significant user of diesel product, and is the first Australian mining operation to use biodiesel as a component in every part of the process - mining all the way through to shipping," said ARF managing director, Tom Engelsman. (ASX: ARF)

Dart Energy
Dart Energy has signed a coal seam gas production sharing contract for the Muralim block (formerly known as the Kebur block) in South Sumatra, Indonesia with Medco Energy.

Medco is a leading independent Indonesian energy company.

The participating interest in the block is shared equally, with Dart acting as the operator for coal seam gas.

The production sharing contract is for 30 years, with a six year initial exploration and appraisal period.

During the first two years of appraisal, 2011 and 2012, Dart plans to undertake studies and drill two core wells each year. During the third year it plans to complete up to three pilot wells – though this could be accelerated if early results are encouraging.

Dart's share of costs for the initial three year program is approximately US$8 million.

The agreement is for an area of 983 square kilometres. (ASX: DTE)

The large NSW Franklins supermarket chain is the latest to stock EcoQuest's Little Taka's range of biodegradable nappies. Franklins will sell the nappies in 80 stores.

The Supabarn chain will also stock the nappies in seven stores in NSW and ACT.

EcoQuest said early sales from its earlier stockists are ahead of expectations.

Director Stephen Moncur has acquired 200,000 shares at 8 cents each. (ASX: ECQ)

Greenearth Energy
Greenearth Energy subsidiary Energy Pty Ltd (Greenearth Solar Energy) and Israel based ZenithSolar Ltd are introducing to Australia what they say is a state-of-the art High Concentration Photovoltaic (HCPV)/ Combined Heat and Power (CHP) solar technology, the ZenithSolar Z20.

Under a Conditional Distribution Agreement, Greenearth Solar Energy and ZenithSolar will trial the ZenithSolar Z20 technology in Victoria in early 2011. A successful trial will see them establish an Exclusive Distribution Agreement for Australia, New Zealand, Indonesia and some Pacific Island nations.

The technology was developed in Israel and has been operating there successfully since April 2009.

The ZenithSolar Z20 has two 11 square metre collectors mounted on a dual axis tracker that concentrates incoming solar power onto a receiver. A multi junction PV is coupled to a heat exchanger that efficiently converts concentrated solar flux into DC electrical power and thermal energy. The DC electrical power is converted to AC power and fed to either direct to a customer or the grid.

Thermal energy from the ZenithSolar Z20 is pumped through a closed loop system to nearby customers such as hospitals, aged care facilities, hotels, municipal offices, swimming pools, universities and industrial users.

The thermal energy can also be used for cooling, desalination and brackish water purification.

The combined efficiency is more than 72 per cent, said to be the industry's highest.

Managing director of Greenearth Energy, Mark Miller said ""We believe the ZenithSolar Z20 CHP solar technology has the potential to efficiently deliver the dual benefits of emissions free power and hot water to a wide range of customers.

"This latest strategic initiative further underpins our objective to deliver our core geothermal energy projects in the Australian market and wider Pacific Rim while concurrently establishing aligned and complementary technologies in the broader renewable and energy efficiency sectors". (ASX: GER)

Liquefied Natural Gas
Liquefied Natural Gas is to hold an extraordinary general meeting on 10 January 2011 to among other things agree on a share placement of up to 30 million shares (14.06 per cent of issued shares) within three months of the approval.

The capacity to issue placement shares will be in addition to the company's right to issue up to 15 per cent of its issued shares in any 12 month period without shareholder approval.

No specific placement has been approved, but the company said it wants to be able to do so quickly.

Funds raised from the placement shares will be for specific opportunities to develop LNG projects including the Gladstone Fisherman's Landing LNG Project and to market the company's OSMR LNG process technology.

The meeting will also b asked to approve an amend to the constitution in regard to dividends, establish a new Performance Rights Plan for employees, and issue performance rights to five directors. (ASX: LNG)

Marine Produce Australia
Marine Produce Australia has placed 27,024,165 shares at 3 cents per share to raise $810,724 before costs from sophisticated investors. The capital is to assist with acquisitions and working capital.

Director Miles Kennedy has indirectly acquired another 1,473,962 shares at 3 cents each and a total of 45,573. (ASX: MPA)

Pacific Energy
Pacific Energy is to raise $3.8 million via a placement to institutional investors at 30 cents per share. The capital will fund the early conversion of the Exchangeable Bonds recently approved by shareholders and growth capital for its main business, Kalgoorlie Power Systems (KPS).

The company said demand for KPS' off grid power systems is increasing. (ASX: PEA)

Panax Geothermal
Panax Geothermal has been asked by the ASX if it knows why its share price increased from 5.4 cents on 7 December to an intra day high of 8.4 cents on 8 December.

The company said it is not aware of any information that could explain the trading. However, on 29 November it released a comprehensive research report by the Bakers Investment Group that "highlights the underlying value of the company's strategy of pursuing lower risk, short time-to-market projects with clear returns from long-term power purchase agreements (PPAs) at highly favourable tariffs, such as our Indonesian projects".

"Bakers ranks Panax as a "Strong Buy" with a target price of $0.289 in 12 months," it said. (ASX: PAX)

Unlisted Companies

ABCOV Australia
ABCOV Australia Ltd is commercializing what it says is a world-first green asbestos removal technology that can efficiently destroy all hazardous materials associated with asbestos.

The ABCOV Method makes the asbestos completely inert and it can then be 100 per cent reused for products such as cement or paving.

"It is the only non-thermal, chemical process in the market today and also allows governments to reclaim and remediate toxic landfill sites," says the company.

The technology was developed in the US and has been successfully applied in over $400 million worth of asbestos abatement projects, including Madison Square Gardens, US Army, Naval and Air Force bases, Walmart and Bloomingdales, it said.

ABCOV Australia has a partnership with ABCOV Conversion Systems, LLC and an exclusive licence for the ABCOV Method in the eastern hemisphere.

ABCOV said the Environment Protection Authority (EPA) and State and Federal Government departments have expressed a favourable opinion on the technology. The Northern Territory and Australian Governments have expressed interest in using the technology to remove a large amount of asbestos from 59 Aboriginal communities in the Northern Territory.

ABCOV aims to raise capital on the Australian Small Scale Offerings Board to fund the commissioning of the first processing facility.

Chairman, Graham Duff, AM said "ABCOV estimates that there is $1.5 billion worth of work in abating all of the asbestos that is stored in landfill sites and that there is around 40,000 tonnes of raw asbestos removed from buildings and buried annually.

"Since raw asbestos only makes up 15 per cent of the dangerous material the annual market for asbestos remediation in Australia is estimated at $267 million per annum."

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