Eco Investor Update

A Weekly News Update for Environmental Investors

7 February 2011 - No 19

ASX 100

Origin Energy
Origin Energy reported record production for the December quarter of 68.2 petajoules equivalent (PJe) and sales revenues of $424 million for the half year to 31 December 2010.

Origin executive director, Finance and Strategy, Karen Moses, said the production was a 38 per cent increase on the same period last year, and sales revenues was a 48 per cent increase.

"The strong result for the 2010 half year period is the result of increased contributions from the Kupe Gas Project and the Otway Gas Project in which Origin increased its interest during 2010, as well as a significant increase in Australia Pacific LNG's production," she said.

"Australia Pacific LNG increased production by 44 per cent for the 2010 half year. Production capacity reached levels in excess of 320 terajoules per day (TJ/d) during the period. Notwithstanding severe weather conditions late in the December 2010 quarter, Australia Pacific LNG has continued to meet all of its domestic customer requirements," said Ms Moses.

Production for the quarter to 31 December 2010 was 31.1 PJe, 16 per cent lower than the September quarter 2010. Origin said this was in line with expectations and reflects seasonal demand, planned shutdowns at the Kupe and Otway gas projects and adverse weather in Queensland and the Cooper Basin.

For the December quarter, sales volumes and revenues were 14 per cent and 15 per cent lower respectively, reflecting the reduced production.

Commonwealth approval for the Australia Pacific LNG project's Environmental Impact Statement is expected by 22 February. (ASX: ORG)

ASX 200

Energy World Corporation
Energy World Corporation has upgraded its planned LNG plant in Papua New Guinea from 2 to 3 million tonnes per annum, and signed a Project Funding Construction Agreement and a Shareholders Agreement with its partners InterOil Corporation and Liquid New Niugini Gas Ltd, which is a joint venture between InterOil and Pacific LNG.

The plant will be developed in two phases utilizing Energy World's 500,000 tonne per annum trains.

Train 1 will process 2.25 trillion cubic feet of gas over 15 years.

Energy World will fully fund the plant, and receive 14.5 per cent of LNG sale proceeds, subject to adjustments.

Energy World's chairman and managing director, Stewart Elliott, said use of Energy World's modular LNG plants will enable will enable economic development of the Elk and and Antelope gas fields in a much shorter time frame than the conventional LNG approach.

The project's final investment decision is expected by 30 June.

Meanwhile Energy World has received an underwritten US$200 million debt package to finance the 120 megawatt expansion of its Sengkang Power Project in Indonesia.
The first 60 MW gas turbine should be operational in the third quarter of 2011 and the 60 MW steam turbine in the third quarter of 2012.

Energy World has also received the permit from the Philippines Government to construct and operate its Liquified Natural Gas Hub Terminal and Re-gasification Facility.
The Hub Terminal will supply gas to a proposed two 150 megawatt CCGT plant the company proposes to build later. (ASX: EWC)

Geodynamics & Origin Energy
Geodynamics and Origin Energy should soon spud their first hot sedimentary aquifer (HSA) exploration well, with Origin Energy, the operator of the Innamincka Shallows Joint Venture, planning to commence moving a rig to the Celsius 1 location once weather and road conditions permit.

Mobilization of the rig had been delayed following extensive rainfall in the Cooper Basin region and predicted flooding of the Cooper Creek.

The initial exploratory work includes drilling and testing two wells, Celsius 1 and Celsius 2, to a depth of approximately 2,200 metres, said Geodynamics' managing director, Geoff Ward. (ASX: GDY)

Emerging Companies

CBD Energy
CBD Energy said it expects to exceed its record $8.5 million profit in 2010 this year with revenue and earnings continuing to be driven by strong demand for rooftop solar installations.
In a half year market update, CBD said that similar to 2010 where it reported the majority of its profit in the second half, it expects revenue and earnings to increase in the second half of 2011 .

eco-Kinetics continued revenue and profit growth in the first half of 2011, It is currently installing 400 units a week, has a backlog of 3,000 systems to be installed, and a growing order book, supported by an an exclusive supply and install arrangement with Harvey Norman Solar and Harvey Norman Commercial. It is also expanding nationally.

Receipts for the December quarter were $41.6 million.

CBD says it is the only firm in Australia able to assemble the key components for rooftop solar PV installation - inverters and modules. The company's inverter and module assembly facilities were both recently completed and production runs should commence in the second half of 2011.

Its International Projects division has quoted on projects with a revenue value of $1.3 billion, and it expect to sign contracts this month for 60 1MW solar installations in Italy with a further 20 MW expected in third quarter of 2011. It also expects to install 3MW per month for the remainder of this financial year, which could deliver approximately $8.4 million in earnings (EBIT).

The news has given CBD's shares a lift. (ASX: CBD)

Energy Developments
Energy Developments December half results will include a non-cash impairment charge of $34 million after tax against the carrying value of the West Kimberley Power Project (WKPP).

As a non-cash item, it will not affect the company's cash-flow, and ENE's debt covenants are unaffected, it said.

ENE managing director, Greg Pritchard said "The WKPP is operating well, however, a re-assessment of the current and likely future trading conditions impacting the project indicates that the reduction in carrying value is appropriate."

"EDL continues to pursue considerable opportunities to provide other remote power generation solutions in Australia, especially in the strong resource growth regions of Western Australia, Queensland, and the Northern Territory."

"ENE's interest in these opportunities is unaffected by the WKPP impairment charge." (ASX: ENE)

Viridis Clean Energy
The bad news for Viridis Clean Energy can't get much worse with the company appointing voluntary administrators.

Daniel Bryant and Nicholas Martin of PPB Advisory are the voluntary administrators of Viridis Investment Management Ltd, the responsible entity for Viridis Clean Energy.

Two days prior to the administration, Viridis suspended its shares.

This was on the same day that Viridis completed the sale of its US landfill gas to energy business to Montauk Energy. Viridis retained ownership of the 7 MW Penrose landfill gas to energy project in California.

The net proceeds of the sale of $7.4 million will pay down the corporate debt facility, leaving an outstanding balance of $7.3 million.

No further details on the voluntary administration have been given so far. (ASX: VIR)

Micro Cap Companies

AAQ Holdings
With the end of its Deed of Company Arrangement and its $2.75 million capital raising, AAQ Holdings' reconstruction is complete. It now has 418 million shares on issue and net assets of minus $302,344.

Accumulated losses are $26.4 million.

The company hopes to be relisted soon, and will pursue as strategy of using its technology to develop an aquaculture business based in South Australia, where last year it acquired the early stage SEAS aquaculture business. Its focus will be Atlantic salmon and Rainbow trout. (ASX: AAQ)

Advanced Engine Components
Shares in Advanced Engine Components are at an all time low of 2.4 cents, despite the company recording December quarter sales of over $700,000, the highest quarterly sales since the September 2009 quarter and more than double the September 2010 quarter sales.

The low share price may be due to the company depleting its working capital facility more quickly than expected.

The company said that to achieve breakeven cash flow, it "must change the corporate and management structures; change the financing; and change the strategy for ACE in China. In addition, with the margins on sales to India, based on high volumes, the board and ACE management must immediately address the high cost of component purchasing, duties and financing associated with the existing contract."

The December quarter sales were split evenly between Australia and China, and a number of positive developments in the quarter should continue into the future.

"High quantities of sales and advanced sales schedules of spares and consumables to France have recommenced; another 100 hybrid natural gas vehicle system (NGVS) kits were delivered to Deutz Dalian Engine Co Ltd (DDE) Advanced Engine Components Ltd's (ACE) largest customer in China; orders for engines with ACE NGVS were received from Thailand as the first part of a very large order; a contract for converting further Transperth buses in Perth, Western Australia, to the ACE NGVS system commenced; components for over 750 vehicles have now been delivered to India with scheduled increases for future deliveries; engine developments in China progressed; and joint presentations between ACE and Norinco Equipment to potential large China export customers advanced," it said.

"However, delays in customer receipts; high cost of letter of credit funding; high cost of components to meet short delivery time frames ; high import and customs duties into India; delays in converting China opportunities to sales; development delays; and the high ongoing research and development cost, continue to have a negative impact on the Company's operating cash flow." (ASX: ACE)

Algae.Tec's shares have halved in value in a week from a peak of 67 cents to 34 cents. They are still ahead of their 20 cent IPO price. The rise prompted an ASX query, but no specific news accompanied the price fall. (ASX: AEB)

Australian Renewable Fuels
Australian Renewable Fuels says it has reached an agreement with Global Biofuels Trading Inc on the supply of feed stock to its Picton plant. The feedstock is a recycled mill effluent that allows for a very rapid conversion to biodiesel.

The supply is based on a minimum 30 million litres per year, which will be converted into biodiesel and exported through a take or pay arrangement for not less than a three year period. Exported will be through GBTI's distribution channels and third parties.

The company said it will gain a strong benefit from the lower cost feed stock and be able to continue the recent rampup of product distribution.

The feed stock logistics is planned to commence in April, said chief executive, Tom Engelsman. (ASX: ARW)

Dyesol says a demonstration facility for its solar energy roofing product is scheduled for release at the end of this quarter.

At the PV Accelerator at Shotton in Wales, key elements of the next milestone have been achieved in the Scale-Up or Beta phase - the approval of the next generation technology and product roadmap and the pilot production modules.

"The Shotton demonstration roof will be an excellent visible example of the continuing progress in the technology and product collaboration between Dyesol and Tata Colors," said Dyesol.

The project is targeting the multi hundred billion dollar roofing market. Dyesol says this is the main game in long-term renewables commercialization.

In the US, DyeTec Solar Inc, a joint venture of Dyesol Inc, is to receive a US$1 million grant from the Ohio Third Frontier Commission to develop technology for the mass manufacture of glass based building integrated photovoltaics (BIPV), building applied photovoltaics (BAPV) and Automotive Integrated Photovoltaics (AIPV) products.

DyeTec's technology utilizes optimized transparent conductive oxide (TCO) glass and dye solar cell (DSC) materials made by the joint venture partners, and enables downstream suppliers in the glass market to mass produce high performing DSC–TCO glass based products for use in BIPV, BAPV and AIPV.

The initial DyeTec efforts will focus on developing prototype dye solar cell based BIPV glass panels and related equipment to lay the foundation for future high volume manufacturing capability.

"DyeTec is fortunate to be able to leverage Toledo's rich history in glass processing and solar technology as well as a talented workforce. And with strong government and shareholder support, Ohio represents an ideal environment for DyeTec Solar to grow its R&D and manufacturing centres" states Marc Thomas, chief excutive Dyesol Inc., and president of DyeTec Solar.

BIPV and BAPV are the largest markets for both dye solar cell and and transparent conductive oxide technology.

Richard Caldwell, executive chairman of Dyesol Ltd and director of DyeTec Solar, said "Dyesol is poised to respond to this extraordinary opportunity. Here we bring together the very best possible partners to assist in providing an energy solution for the global market place. Glass based DSC products have the ability to the transform the utility of any light absorbing surface and their commercial potential is very considerable." (ASX: DYE)

European Gas
At around 45 cents, shares in European Gas remain close to their 12 month high of 50 cents.

The price would not have been hurt by the release of MHA Petroleum Consultants' independent estimate of resources and an update of the reserves status with recommendations for future exploration and testing.

The assessment of European Gas' Alsting Anticline exploration concession in eastern France "confirms the exciting prospectivity of this region", said the company.

The Contingent Resources of C1 is 40 BCF, C2 2.35 TCF and C3 7.91 TCF for the study area.

MHA also reviewed the previous well tests on EGL's Folschviller #2 exploration well, which EGL plans to production test in the first half of this year.

Chief executive, Peter Cockcroft, said "This independent assessment by such a reputable company as MHA has confirmed not only the exciting upside potential of our coal bed methane licences, but will also assist EGL with the design of the forthcoming production testing program.

"As this region is in a robust, high price gas market, commercial development of these resources could be advanced more quickly than in an Australian context." (ASX: EPG)

Green Rock Energy
Green Rock Energy's 50 per cent subsidiary, CEGE has exercised its option to purchase a well with the potential to become the first geothermal power project in Hungary.

CEGE did so as evaluation of the well data acquired in late 2010 indicated a sizeable geothermal reservoir capable of supporting several megawatts of power generation capacity.

Subject to regulatory approval, the target for first power production remains 2012.

The cost to Green Rock for acquiring the data and purchasing the well is about $1 million. (ASX: GRK)

Utilities management provider, Intermoco has entered a five year agreement with Melbourne based property development, Statewide Developments, to supply and install an embedded network to a new residential development property.

The agreement is for the supply of electricity, voice and data services to 425 tenants of the Kingsway Towers property which is now commencing the construction phase.

The company expects to receive a total of $3.5 million in revenue over the five years,with an additional $118,000 in capital costs to be received in the third quarter of 2011-12 once the development is completed.

The new contract follows a previous agreement to provide embedded network services to another property managed by Statewide Developments.

Intermoco chief executive officer, Ian Kiddle said in the past 10 months Intermoco has secured a number of long term contracts with an increasing stable of strategic partners, significantly bolstering project flow and future contract opportunities.

"The agreement illustrates Intermoco's strategy to establish and cultivate partnerships with property developers to gain access to an increasing range of new and existing properties. The company's strategic partnerships underpin the expected growth in revenue as new developments continue to come online, and with more and more developers utilizing Intermoco's embedded network services, Intermoco is gaining increasing scale in its recurring revenue base," he said.

Mission NewEnergy
Mission NewEnergy says its latest planting season has been very successful with a 30 per cent increase in overall productive acreage and the addition of 15,460 new farmers to its network.

Mission planted around 64 million Jatropha trees verses a target of 50 million, including providing 32.7 million Jatropha saplings to existing contract farmers, which will increase their future productivity.

Mission added 46,118 new Jatropha contract farming acres, bringing its total productive acreage to 194,323.

Expansion has been concentrated in the most productive locations.

The company said the Indian Government has identified 40.8 million acres of waste land as suitable for Jatropha cultivation and has encouraged Jatropha development throughout India. Mission's existing acreage is less than 0.5 per cent of this available acreage.

Mission monitors and supports its contract farming operations with a proprietary agronomy GPS enabled management system. (ASX: MBT)

Pacific Energy
Pacific Energy has more than doubled its share price since June last year, rising from a 12 month low of 19 cents to a year high of 40 cents.

Its unaudited December half earnings (EBITDA) are $8.9 million, a 19 per cent increase from the 2010 second half of $7.5 million.

The company has appointed Glen Ladbrook as general manager of its Kalgoorlie Power Systems (KPS) power generation business.

Mr Ladbrook is an MBA qualified electrical engineer with a track record of implementing innovative, commercially focused engineering solutions, optimizing operating business assets and project construction management and delivery, it said.

Pacific Energy chief executive, Adam Boyd, said "Our major focus over the coming 12 to 24 months is to expand our power generation infrastructure and electricity supply business in Australia and abroad – and Glen will play an important role in achieving this strategic outcome with the existing talent in the KPS team." (ASX: PEA)

Panax Geothermal
Panax Geothermal has made several key management appointments, including a new chief financial officer and company secretary, Ms Kerry Angel, on a part time basis.

Ms Angel is a certified practicing accountant with over 20 years of experience, a significant proportion in key roles in the mining industry. She has managed accounting, treasury, finance and shared service functions for a number of large mining and mining service groups, and has held accounting and regulatory reporting roles for a number of ASX-listed junior companies.

John Bruce has been appointed senior commercial advisor, also on a part time basis. Mr Bruce has many years of experience in the mining and resources sectors, including senior executive and commercial roles with Santos, CH4 Gas and Arrow Energy.

He will assist with commercial negotiations and agreements projects in Indonesia and manage Australian projects.

Further key appointments to the Panax Management team are expected soon. (ASX: PAX)

Shares in Petratherm are trading at a 12 month low of around 10 cents. In February last year they were at 32 cents.

The decline has been mostly steady all year. It shows a distinct protracted fall after the government postponed the Emissions Trading Scheme last April,and seems to have kept on going. But there appears to be no company related news to coincide with the 12 month low.

Managing director Terry Kallis says the drivers of investment in geothermal companies and projects would be a price on carbon, capital funding of projects, and investment in network connection. (ASX: PTR)

Phoslock Water Solutions
Phoslock director Laurence Freedman has indirectly acquired another 1 million Phoslock shares at 7.9 cents each, a total of $79,450. He now holds 35.6 million shares. (ASX: PHK

Refresh Group
Refresh Group' shares have hit a year low of 4 cents, almost halving from 7.8 cents in October.

The company had revenue of $2.0 million for the December quarter, bringing its half year receipts to $3.2 million.

However, with negative net operating cashflow for the quarter of minus $402,000 it has cash at hand of only $242.000. (ASX: RGP)

Style enjoyed December quarter sales of $2.4 million, 46 per cent growth over the September quarter and due mainly due to increased orders in the US and Australia.

The company also had positive operating cash flow of $542,000 for the quarter, due to increased receipts from customers and significant improvements in working capital thanks to the Cooperative Manufacturing Agreement with Anji Qichen Bamboo Industry Company.

Cash at 31 December was $1.48 million.

Style said the quarter delivered positive earnings (EBITDA) that were slightly ahead of its internal budget for the quarter. EBITDA for the half year is in line with budget. (ASX: SYP)

Environmental investors now have a listed biochar option with micro cap and would be broadcaster and minerals explorer WAG exercising its option to acquire 100 per cent of
Pacific Pyrolysis Pty Ltd.

Pacific Pyrolysis or PacPyro is an early stage renewable energy and biochar developer, commercializing technology that converts low value non-food biomass into renewable energy and biochar using a process of slow pyrolysis.

The company's technology can produce electricity from a variety of organic waste streams including municipal green waste, sewerage and industrial sludges, forestry and commercial wood wastes and agricultural residues that would otherwise go to landfill or remediation.

PacPyro is said to have "an extensive project pipeline with major corporations and councils, including projects at scoping, feasibility and memorandum of understanding stages across a diverse range of feedstocks".

Energy from its projects will qualify for Renewable Energy Certificates, offering further revenue opportunities.

WAG said PacPyro's Agrichar biochar has been tested internationally through independent scientific trials and shown to improve crop performance through increased yields and reduced fertilizer and water usage. PacPyro has also completed a biochar abatement study funded by a Government grant to seek accreditation to qualify as a carbon offset. The company is currently carrying out biochar field trials in Australia and internationally with partners including the Department of Industry & Investment in NSW and the CSIRO.

The company has an operating demonstration plant at Somersby, north of Sydney, and has modular designs for 2 tonne per hour and 4 tonne per hour commercial scale units. It is also designing smaller scale units that can be easily relocated.

"Subject to the successful signing of a contract, the business is on track to begin construction of its first commercial scale project within 12 months and commission this project within the next two years," said WAG.

PacPyro also has an MOU with Transfield Services to identify and develop project opportunities.

Consideration for PacPyro is $3.75 million in WAG shares. The deal is subject a share sale agreement, shareholder approval and regulatory approvals. WAG has already paid $500,000 to PacPyro as interim funding for the ongoing commercialization of the technology.

WAG will undertake a capital consolidation at an as yet unspecified ratio before lodging a prospectus to raise at least $1 million at 20 cents per share.

WAG will issue 625 million shares to the vendors of PacPyro, valued at $3.75 million, and these will be consolidated at the same ratio as for existing shareholders. The vendor shares will be escrowed.

The acquisition changes WAG's nature of activities as defined by the ASX, and WAG proposes to change its name to PacPyro Limited.

WAG recently withdrew from the Ruoutevare and Kallak Magnetite development projects, but said it will "continue to explore investment opportunities in the resources sector as well as in the broadcasting sector". (ASX: WAG)

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