Eco Investor Update

A Weekly News Update for Environmental Investors

24 December 2010 - No 15

Please note the next Eco Investor Update will be on Monday 17 January. Merry Christmas and Happy Investing in 2011.

ASX 100

DUET subsidiary Dampier to Bunbury Natural Gas Pipeline has refinanced the debt facilities associated with its Stage 5B expansion project which mature in June and August 2011.

DUET said the refinancing is with a syndicate of eight investors and was oversubscribed. The new facility is in two parts - $150 million for three years and $300 million for seven years.

DBP's next maturing debt is in April 2012. (ASX: DUE)

Origin Energy
Origin Energy's majority owned new Zealand subsidiary Contact Energy has received all consents it applied for to develop the Tauhara 2 geothermal development in Taupo.

Contact's chief operating officer, Graham Cockroft, said it is another milestone in Contact's geothermal development program and reflects both the technical strength of the application and the focus on addressing the issues.

The Tauhara 2 geothermal development will proceed when market conditions allow. It will be built on farmland about 5.5 kilometres north east of Taupo and would produce about 250 megawatts of electricity. (ASX: ORG)

Sims Metal Management
Sims' share price has hit a two month high of $22.36 from a low of $15.23.

One active investor has been director Robert Lewon who bought and sold 29,500 American Depository Receipts (ADR) for a profit of US$193,165 after deducting US$451,055 for the price of exercising the options. He retains 61,500 options for ADR.

A seller has been M&G Investment Funds group which has reduced its interest from 8.9 to 7.9 per cent. (ASX: SGM)

ASX 200

Hastings Diversified Utilities Fund
Hastings Diversified Utilities Fund subsidiary Epic Energy will receive an additional approximately $33 million in revenue over the next 20 years following its settling of the remaining conditions for an agreement with the Dampier to Bunbury Pipeline (DBP).

The deal leases a portion of the capacity on Epic Energy's Burrup Extension Pipeline (BEP) gas pipeline to DBP. Capacity on the BEP which is not part of the lease remains available to Epic for existing and future customers.

DBP has the option to increase its leased capacity on the BEP during the 20 year period, which would give Epic further cashflow and revenue of approximately $28 million.

The conditional agreement was announced on 16 May 2008. (ASX: HDF)

Infigen Energy
Infigen Energy has finalized a project finance debt facility agreement with Westpac for the Woodlawn wind farm in NSW that is now being built.

The satisfaction of the conditions to allow financial close and drawdown is expected in the first half of 2011.

The facility is for $50-$55 million and covers construction plus three years of operation, The interest rate is the Bank Bill Swap Bid Rate plus margin, which Infigen said is comparable to recent wind farm project finance transactions in Australia. The facility can be increased with an eligible off-take agreement.

The 48.3 MW Woodlawn wind farm is adjacent to Infigen's 140.7 MW Capital wind farm and is scheduled to be completed in the second half of 2011. (ASX: IFN)

ASX 300

Ceramic Fuel Cells
Ceramic Fuel Cells continues with its early sales, selling three BlueGen gas-to-electricity generators to E.ON, one of the UK's leading energy companies.

The company said two BlueGen units will be installed at demonstration sites, and the other will be installed in early 2011 at the E.ON training centre in Tipton where E.ON's Property Services department trains its staff in the installation and maintenance of gas and electrical appliances.

Each BlueGen unit can produce three times the electricity needed to power an average UK home, and enough heat for its daily hot water needs.

Ceramic Fuel Cells said it is continuing to make progress towards having BlueGen certified under the Microgeneration Certification Scheme to access the UK Government's feed in tariff for small scale co-generation products. It will give an update on this towards the end of January.

The feed-in tariff pays 10 pence for every kilowatt hour of electricity generated, plus an extra 3 pence for every kilowatt hour of electricity sold back to the local power grid.

Ceramic Fuel Cells and E.ON are also working to develop fully integrated power and heating products for the UK market. Integrated units have been installed with appliance company Gledhill and in a test house with EA Technology.

Under a 2009 product development agreement, Ceramic Fuel Cells and E.ON are moving towards the production of commercial units, and are now discussing the details of the next phase of development and deployment.

In Australia, Ceramic Fuel Cells has installed a BlueGen unit at an electric vehicle charging station at Adelaide's Central Market. This was done with the Adelaide City Council and the South Australian Government.

The BlueGen unit at the ChargePoint recharging station can generate at least 12,500 kilowatt hours of electricity each year, enough for the average South Australian home and two electric cars traveling 15,000 kilometres each per year. The new station is free to users and can charge two vehicles at a time. Power not needed for vehicle recharging will be fed into the grid.

The Central Market is said to be South Australia's most visited tourist attraction.

"We are excited to have a BlueGen unit at Adelaide Central Market and we are thrilled that the Capital City Committee has recognised BlueGen's potential to power electric cars," said Ceramic Fuel Cells' managing director Brendan Dow. "BlueGen is an ideal companion technology to electric vehicles."

Adelaide Lord Mayor Stephen Yarwood said he believed the BlueGen installation was a world first – a public charging station powered by an innovative Australian-developed fuel cell. (ASX: CFU)

Geodynamics raised $16.2 million from its Share Purchase Plan (SPP), issuing 40.6 million shares at 40 cents each. This is about 46 per cent of the maximum it had hoped for.

The funds are mainly to advance the work program for the Cooper Basin Geothermal Project leading to the final investment decision for the 25 MWe commercial demonstration plant. This includes development activities such as the commissioning of the 1 MWe pilot plant to deliver the first power using EGS technology in Australia.

For every share subscribed under the SPP, shareholders have been granted one option exercisable at 55 cents and expiring on 31 March 2012. 39.7 million options will be granted to shareholders who satisfied the conditions.

The company's share capital is now 333.6 million shares.

At the operational level, the Innamincka ‘Shallows' Joint Venture has bene delayed due to extensive rainfall in the Cooper Basin, with further flooding predicted through to mid-January.

This has delayed the mobilisation of Rig 100 for spudding the ‘Shallows' Joint Venture's first Hot Sedimentary Aquifer (HSA) exploration well.

By mid January Geodynamics expects to better understand the timelines for the rig move and commencement of drilling. (ASX: GDY)

Emerging Companies

Clean TeQ Holdings
Clean TeQ Holdings has been engaged by the WA Dept of Housing to design and build two water treatment plants for remote communities.

The plants will use the Microvi biotech technology, for which Clean TeQ has the Australasian licence, to remove nitrate from groundwater and make it suitable for domestic use.

"The use of an intensified biochemical approach for the removal of nitrate, ammonia and other nitrogen containing compounds is a big step forward as a water treatment solution," said chief executive, Peter Voigt.

"Biological systems, unlike their chemical and membrane based counterparts, are energy efficient and do not produce a waste stream. The technology being applied by Clean TeQ is highly efficient and mimics what nature does but at a much faster rate. The removal of nitrates from groundwater using biocatalysts in less than 10 minutes has not been possible in the past."

Mr Viogt said the Mocrovi approach reduces costs and lowers greenhouse gases production through more efficient energy use at plants.

No financial details of the contract were given. (ASX: CLQ)

CMA Corporation
CMA has acquired a holding company that owns 65.2 million CMA shares that had been owned by former managing director Doug Rowe and WMRI Investments. The acquisition was part of the settlement of a legal dispute brought by CMA against Mr Rowe and WMRI Investments.

The shares are 6.7 per cent of CMA's capital and said to be valued at $5.6 million. The shares must be sold within 12 months unless an extension is given by ASIC.

As a result, major CMA Corporation shareholder, Scholz Ag has increased its holding in CMA from 39.3 to 42.2 per cent. (ASX: CMV)

CO2 Group
CO2 Group's joint venture CO2 New Zealand Limited Partnership has finalised mandates for the sale of over 2.5 million New Zealand Units (NZUs).

Prices for spot NZUs throughout 2010 have fluctuated between NZ$17 and NZ$21 valuing this portfolio update between NZ$42.5 million and NZ$52.5 million.

CO2 New Zealand operates as a developer, manager, trader and risk manager of physical and financial carbon assets. It provides tailored carbon management solutions for organizations liable under the New Zealand Emissions Trading Scheme, investors and land owners.

Chief executive of CO2 Group, Andrew Grant, said it is becoming the premier carbon reforestation company in New Zealand, and is ahead of expectations with NZUs now under management being significant.

CO2 New Zealand LP is a commercial partnership between the Maori commercial development company Tukia Group, CO2 Group and investment and advisory firm Carbon & Energy Partners. (ASX: COZ)

DoloMatrix International
The DoloMatrix share register has become even tighter with substantial shareholder Weston Aluminium increasing its interest from 11.5 to 12. 5 per cent. (ASX: DMX)

Greencap subsidiary ENV Australia has won a major contract with the Water Corporation of Western Australia for sustainable water resource management. The project involves changing the water consumption behaviour of residents as part of a state-wide water behavioural change program by the state government.

The program for the WA northwest aims to reduce the water consumption of participating households by 15 per cent over 12 months. The program also has potential to defer major new water supply infrastructure works in the region.

ENV is leading a team and has customised a Community Based Social Marketing methodology to deliver the program using personalized over-the-phone ecocoaching, indoor appliance audit, community forums, meter reading and participatory data collection, analysis and evaluation.

ENV managing director Scott Bird said that the project is a significant step in ENV's push into sustainability consultancy work. "This project allows ENV to harness its strong technical skills in the emerging area of sustainable water resource management. There are more significant projects on the horizon and this Water Corporation project positions ENV extremely well for these projects."

Another Greencap subsidiary, Leeder Consulting has won a two year service agreement with QGC Pty Ltd to provide specialized field sampling and analytical testing services at QGC's operations in the Surat Basin. The services include sampling and analysis of water, gas, soil and air. (ASX: GCG)

Shares in SteriHealth are at a four month low of $1.70. Their 12 month high was $2.20 in late October. The decline does not appear to be related to any specific news. (ASX: STP)

Micro Cap Companies

Agri Energy
Agri Energy is on environmental watch following an agreement that give it the right to acquire 100 per cent of Triton Petroleum Pte Ltd, a private Singaporean company focused on oil and gas exploration in the Middle East and North African regions.

Triton's main asset is a 20 per cent beneficial interest in Block 9 Syria, a 10,032 square kilometre petroleum exploration licence in north-western Syria. Syria Block 9 hosts discoveries of over 6 tcf of gas and 400 mmbbl of oil. A two well drilling program is planned for 2011 with 100+mmboe targets identified.

Triton chairman, Joseph Naemi, has been appointed a non-executive director of Agri Energy. In the deal proceeds in full, Mr Naemi will become chairman and chief executive.

The move into oil exploration lowers Eco Investor's rating of Agri Energy's commitment to being an environmentally positive company. Whether it remains a company the Eco Investor follows is now open. (ASX: AAE)

Apollo Gas and Dart Energy
Apollo Gas will be suspended from trading on the ASX on 29 December following its successful takeover by Dart Energy. (ASX: AZO and DTE)

Natural products provider BioProspect says its REGEN business has been boosted with product and distribution deals for Australia and China, and made a natural products acquisition. Its intellectual property has been strengthened with finalization of the registration of REGEN and Demurer trademarks and logos in Australia.

Australian sales of REGEN therapeutic products are expected to expand through a distribution arrangement with Doward International.

Melbourne-based Doward International is a family-owned company with over 90 years of experience in the Australian pharmacy and retail sector, supplying quality personal care, bath and body products, giftware and confectionary to the wholesale and retail trade.

BioProspect's managing director, Charles Pellegrino, said Doward International has an extensive range of more than 4,000 products and together with its national distribution network it makes an excellent partner in the growing Australian therapeutics market.

"This agreement with Doward International will greatly improve market penetration and sales of the REGEN range, which we have strengthened with new brands and products, including the flagship REGEN Pain Relief Spray," said Mr Pellegrino.

"Doward International is an ideal distributor for our products, given its strong position in the market, national sales team and quality customer service."

REGEN Pain Relief Spray was developed for sufferers of arthritis and muscular and joint pain. It features a unique Transdermal Solvency, which the company says can achieve rapid and longer term benefits from its active components.

BioProspect is also hoping to boost REGEN sales in China. Mr Pellegrino said "After extensive due diligence and market research, we are very pleased to announce the signing of a Memorandum of Understanding for the distribution of REGEN therapeutic products in China with Dalian, China-based Liaoning Yicheng Grain and Oil Trading Company, together with Queensland-based EasyLife Pharmaceuticals Australia."

"This agreement will form the basis for negotiations for the supply and sale of selected REGEN products, including REGEN Emu Oil Capsules. With the support of our new partners and their connections in China, we anticipate increasing sales in the world's fastest-growing major economy."

BioProspect has also signed a Deed of Assignment with Nova Vita for the rights to the L'Azure cosmetic range, which is based on natural plant extracts, in return for the issue of 25 million BPO shares.

BioProspect will own all intellectual property related to the L'Azure products, including formulas, brands, trademarks, and exclusive rights to the supply of Bioeffectives from Solagran Ltd for use in cosmetics for China, Malaysia and Singapore, and non-exclusive rights to the supply of Bioeffectives in cosmetics globally.

"The L'Azure range of plant extract-based natural products perfectly complements our current Demurer range of cosmetic products based on emu oil, where we already have 12 core products targeted at local and overseas markets," said Mr Pellegrino. (ASX: BPO)

Carbon Conscious
Carbon Conscious has secured a $2.3 million senior debt facility with the Commonwealth Bank, with the finance to be used for the establishment of mallee eucalypt carbon forest sink plantings.

The debt is a principal and interest facility over an eight year period and is secured through mortgages on freehold land and charges over the company.

"To our knowledge this debt arrangement is the first such facility negotiated between a carbon sink provider and a main stream lender and again highlights the strength of the CCF business model" said Peter Balsarini, chief executive of Carbon Conscious. (ASX: CCF)

Carbon Polymers
Carbon Polymers is due to commence full tyre recycling production at its new main Sydney recycling plant on 4 January. This follows successful testing of the plant. (ASX: CBP)

Dyesol and CSIRO say they have completed the first stage of their two year project to develop higher performing dyes for dye solar cells (DSC). This first stage of the program included the establishment of a research-scale assembly and testing facility manufactured by Dyesol and installed at CSIRO in Newcastle, which will be used to further the dye development project.

The joint steering committee approved the milestone delivery report, bringing Stage 1 to a close. The project is ahead of its performance schedule and within budget.

Stage 2 will commence in the new year, ‘with several promising avenues to be explored", they said.

Ruthenium based dyes, also known as organo-metallic dyes, are one of the key components in DSC technology, ensuring high power conversion efficiencies in DSC. In recent years, considerable developments have been made in the engineering of novel dye structures to enhance performance.

The project leverages Dyesol's knowledge and experience developing DSC technology, in particular ruthenium based dyes, with CSIRO's extensive modelling and research capability. It is funded by an investment of up to $1.17 million from CSIRO's Australian Growth Partnership. (ASX: DYE)

Hot Rock
As part of the underwriting of Hot Rock's recent rights issue, Bizzell Capital has exercised its right to subscribe for a further 7.4 million shares at 5.5 cents each. This gives Hot Rock another $0.4 million and brings the total capital raising to $3.5 million.

Three directors participated in the raising. Peter Barnett acquired 1.4 million new shares, Stephen Bizzell 2.1 million new shares, and Mark Elliott 2 million new shares.

The capital is for the South American and Australian geothermal projects, and working capital. (ASX: HRL)

Intec has achieved stable operation of its Burnie spent pickle liquor recycling plant and since November has produced iron oxide, zinc metal, gypsum, and regenerated hydrochloric acid from 5,000 litres of spent pickle liquor waste.

Another 25,000 litres is in process or awaiting processing.

Completion of phase 2 trials is expected in the first quarter of 2011.

Spent pickle liquor is a waste product from the galvanizing industry. (ASX: INL)

MediVac could sell up to 30 of its new MetaMizer medical waste processing units and earn $15 million in revenue under a Memorandum of Understanding signed through its Sri Lankan distributor, CME Medical Pty Ltd, with the Sri Lanka Ministry of Health.

The sales are part of a plan to establish "Clinical Waste Management Systems in the Needy Hospitals in Sri Lanka".

MediVac chairman Paul McPherson said MOU was at the invitation of a senior Sri Lankan government review committee – Standing Cabinet Appointed Review Committee – following the committee's acceptance that a conceptual proposal based upon the MetaMizer 240 SSS presented by CME Medical Pty Ltd, was beneficial for the economic development of Sri Lanka.

The MOU is for CME Medical to prepare a final proposal for the supply, installation and operation of medical waste disposal systems to 30 hospitals. The preparation of the final proposal is well advanced and will be submitted to the Sri Lankan Ministry early in 2011, he said.

The project is subject to entering final contractual and funding arrangements.

On his return from Sri Lanka, Mr McPherson said the project will involve the sale of at least 25, and possibly up to 30, of the new MetaMizers.

"This project is by far the most significant in the history of MediVac and validates the significant investment of our shareholders in this unique technology," he said.

"The project would, with the supply of spares and ancillary equipment, provide revenue in excess of $15 million to the company."

MediVac's share purchase plan closes on January 7. (ASX: MDV)

Mission NewEnergy
Mission NewEnergy's biodiesel refineries have received International Sustainability & Carbon Certification (ISCC). Mission says it is currently the only non-European palm oil biodiesel producer to receive the ISCC.

Biodiesel producers must meet ISCC standards to sell to the German market, the world's largest mandated biodiesel market.

"Through early adoption of the certification process we expect to achieve a market advantage as obligated parties can only comply with their biodiesel blending requirements by using certified products," said Nathan Mahalingam, Mission NewEnergy's managing director,

"With our refineries now certified, we can supply ISCC certified biodiesel sourced from certified vegetable oil suppliers. We are working closely with a number of key suppliers to complete the ISCC certification throughout the biodiesel supply chain."

The European Union's biofuels targets for 2020 require all EU states to blend a minimum of 10 per cent of biofuels into traditional mineral based transport fuels. The biofuels have to meet certain criteria to be part of the 10 per cent, including sustainability criteria as defined in the Renewable Energy Directive (RED).

One criterion requires biofuels to reduce Green House Gas (GHG) emissions by at least 35 per cent compared to fossil fuels, and from 2017 the reduction has to be 50 per cent.

Beginning in 2011, all biofuels sold in Germany are required to have a sustainability certification in compliance with RED. The ISCC is been accredited as the standard for delivering proof of sustainability conformance under the German Biomass Law for Sustainable Biofuels and German Biomass Law for Sustainable Power Generation, said the company.

Mission NewEnergy expects the German ISCC developed certification will be an accepted Renewable Energy Directive compliant standard for other EU states.

Mission NewEnergy has joined the Jatropha Alliance, a platform for collaboration within the Jatropha industry. The alliance disseminates industry information from its members and fosters the exchange of practical information and regulatory compliance.

Other members of the Jatropha Alliance include JOil, Neste Oil, Jat Oil, Sun Biofuels and others.

"We actively seek to collaborate with participants in the development of the Jatropha industry and believe that such collaboration will greatly assist with the industry at large" said Mr Mahalingam. (ASX: MBT)

Orbital Corporation
Orbital Corporation has boosted its cash position with the sale and lease back of its Perth land and buildings in the suburb of Balcatta. The sale is to Balcatta Properties Pty Ltd.

The sale price is $8.65 million, giving a profit of approximately $4.3 million.

The lease is for 10 years plus two five year options. The rental is $745,000 per year subject to fixed increases of 3 per cent per year and market value reviews on exercise of the options.

Settlement is in February 2011, subject to an environmental report with any remediation work to be undertaken by Orbital.

Keith Halliwell, Orbital's chief financial officer, said "We will unlock significant capital which will be used to invest strategically in cash generating assets. Orbital has a strong balance sheet and the sale will provide a substantial cash reserve." (ASX: OEC)

Pacific Energy
Pacific Energy's Kalgoorlie Power Systems business (KPS) has signed a new electricity supply contract with Norilsk Nickel subsidiary, Lake Johnson Pty Limited (Norlisk) for a three year term.

The new contract provides for the re-establishment of full scale operation at the KPS 12 MW Lake Johnson Power Station at the Lake Johnson Nickel Project, 350 kilometres north of

The new contract increases KPS' contracted capacity by a net 7 MW, as the power station has an existing contracted capacity of 5 MW.

Pacific Energy's managing director, Adam Boyd, said "The signing of this new contract to re-establish full-scale operations at the KPS owned Lake Johnson Power Station increases the KPS contracted capacity to approximately 142 MW at 15 mine sites around Australia."

"We are continuing to advance new electricity supply contract negotiations and look forward to securing new and/or expanded electricity supply contracts in 2011," he said. (ASX: PEA)

Unlisted Companies

AquaGen Technologies
AquaGen Technologies has installed its first SurgeDrive wave energy system at Lorne Pier, Victoria and is now generating emissions free electricity from the ocean's waves.

The installation of the company's first open water wave power unit was marked at the pier by managing director, Nick Boyd and director Martin Buden meeting with Victorian Transport Minister, Terry Mulder and the Member for Corangamite Darren Cheeseman.

The demonstration unit is a 1.5 kilowatt system that uses the waves under the Lorne Pier to generate up to 1 MW hour (MWhr) of electricity every month.

The results of the trial will inform a scale-up of the design for a commercial demonstration wave farm project under development, with multi megawatt wave farms planned for the future. Meanwhile, the trial system may be used to power the lights on Lorne Pier.

The generation of electricity on the pier adds to earlier proof of concept work. AquaGen's technology was originally proven in a world-class test facility that showed effective operation under all simulated ocean conditions and a greater electricity output than predicted.

The SurgeDrive technology overcomes the main issues typically associated with wave power. Its two-stage design means that all critical equipment is installed out of the ocean, significantly reducing electricity generation costs and the need for expensive equipment, while avoiding storm damage. The system demonstrates high power extraction and has low visual and environmental impact.

SurgeDrive can also be deployed in other applications, covered under the company's international patent protection, such as in marine vessels, oil rigs and other offshore structures.

The commercial prototype system is the first wave energy technology to be developed in Victoria.

In August 2010 AquaGen was awarded a Commercialisation Australia grant to support its Lorne pier project. The project is ahead of schedule which places the company well to apply for a $2 million Early Stage Commercialisation grant in 2011.

The company is looking for backers to provide private equity capital to support the next stage of development to achieve commercialisation.

Mr Boyd said the company plans to grow from its commercial prototype stage to commercialisation over a five year period.

"We are currently in discussions with the coastline owner of one of the best wave resource sites in Victoria and indeed Australia. The technology is highly modular so the commercial prototype trials at Lorne Pier will readily lead us to such commercial expansion.

"The SurgeDrive technology can also generate 100 per cent emissions free desalinated water providing great potential to reduce the fossil fuel reliance of the world's desalination plants.

"An opportunity exists right now for investors to obtain early equity in AquaGen," he said.

Hepburn Wind
REpower Systems has completed the manufacture of Hepburn Wind's two wind turbines at its factory in Germany and the nacelles and blades are now making their way to Australia on a cargo ship expected to dock in Melbourne in early February.

The civil engineering works are well underway with the access roads, crane hardstands and drainage now almost complete, while Hepburn's local electricity distributor, Powercor, has completed upgrading the power lines that cross the site.

In the new year, REpower's subcontractors will dig the foundations and prepare for the concrete pour.

The company offered a membership in Hepburn Wind as a Christmas gift. Although the normal minimum investment for investors outside the Hepburn community was $1000, it was lowered for Christmas to $100 for investors in Victoria. Hepburn said it had "a great response to the Christmas Gift Campaign".

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