Eco Investor Update

A Weekly News Update for Environmental Investors

20 September 2010 - No 1

Welcome to the first issue of Eco Investor Update. This is part of a four week trial and we welcome your feedback at any time.

The purpose of Eco Investor Update is to separate Eco Investor magazine into its news stories and its magazine stories. The Update will be published weekly so we can deliver the news to our subscribers in a more timely and comprehensive manner.

The stories are grouped under the familiar risk/ return headings of ASX 300 Companies, Emerging Companies, Micro Cap Companies, etc, and then in company alphabetical order.

If the trial is successful, the magazine will focus on the longer feature, analytical, comment and guest pieces.

There is no charge for the Update to our subscribers. It is part of your subscription. As a magazine subscriber, you will get the Update weekly as well as the magazine, though this will be smaller without the news.

So please read Eco Investor Update over the next four weeks and let us know what you think.


Victor Bivell


ASX 300 Companies

AGL Energy
AGL Energy has appointed a new chairman with Jerry Maycock to succeed Mark Johnson. It will also have a new non executive director with Belinda Hutchinson to join the board at the end of 2010.

Mr Maycock joined the board in 2006. Hem has spent more than 20 years as an executive at Holcim Ltd, one of the world's largest construction materials companies, and was managing director of Hastie Group leading up its ASX listing in 2005.

He was also managing director of CSR Ltd until his retirement as an executive in March this year. He is also on the Advisory Council of the Australian School of Business (UNSW).

Ms Hutchinson is the chairman of QBE Insurance Group Ltd and a director of St Vincent's Health Australia. She was previously a director of Telstra Corporation, Coles Group, TAB, Crane Group, Energy Australia, Snowy Hydro Trading and Macquarie Group. (ASX: AGK)

DUET Group
Standard & Poors has downgraded its credit rating for two DUET Group businesses - United Energy, and WA Network Holdings and its operating subsidiary, WA Gas Networks - from stable to negative.

S&P said United Energy's aggressive financial profile gives the group minimal headroom to withstand any weakening in cashflow. The WAN opinion was based on the increasing risk to WAN's cashflow due to a recent decision on pricing by the regulator. (ASX: DUE)

Geodynamics' Jolokia 1 well at Innamincka is the hottest Enhanced Geothermal System well in the world and 8 degrees hotter than its Habanero site at the same depth. At 4,900 metres Jolokia is around 278 °C.

The company has also made the world's first images of fractures at these pressures and temperatures, obtaining images in the upper section of the wellbore and temperature data to a depth of 4,575 metres using an imaging tool.

The data is being used to evaluate the fracture network at Jolokia 1. Results reveal potential fractures deeper within the granite at higher temperatures and these will be stimulated to enhance the existing network of natural fractures and create an underground reservoir. This hydraulic fracture stimulation program should be completed in October.

If all goes well Geodynamics will demonstrate its ability to create an underground heat exchanger 9 kilometres from the original Habanero site, and when coupled with another well will demonstrate its ability to circulate hot fluid as earlier demonstrated at Habanero. (ASX: GDY)

Infigen Energy
The recent low share price of Infigen Energy has not detered substantial shareholder, The Children's Investment Fund Management (UK) LLP, which has increased its holding from 21.09 to 22.17 per cent.

Origin Energy
Origin Energy is increasing its renewal energy portfolio with plans to explore for geothermal energy in Indonesia and develop a huge hydroelectric project in Papua New Guinea.

The hydro project involves the governments of Papua New Guinea and Queensland as it would provide 1800 MW of low carbon baseload electricity to PNG, north and far north Queensland, and the Australian National Electricity Market.

The proposed project would provide power for remote and rural villages in PNG and transform their economic development prospects. The electricity would be exported to Australia via Weipa.

PNG Energy Developments Ltd (PNG EDL), a 50:50 joint venture between Origin and PNG Sustainable Development Program Ltd, is evaluating the potential of the Purari Hydro Resource at Wabo in PNG. The region enjoys consistently high year round rainfall that average eight metres per year and provides river flows well-suited for hydro power.

Queensland Premier Anna Bligh said that for an energy project of this size to be viable PNG needs a baseload customer for the power and Queensland looks to become that customer.

Origin's managing director, Grant King, said "This would be the first project to deliver year-round baseload renewable energy into mainland Australia." Origin is familiar with PNG and Origin's LPG gas supply business has been operating in PNG for 30 years.

A feasibility study including environmental, sociological and engineering aspects is expected to be completed in 2012.
In Indonesia Origin Energy is part of a consortium that successfully bid for a geothermal exploration concession in Northern Sumatra.

Origin and Tata Power of India, in consortium with PT Supraco Indonesia, have been awarded the Sorik Marapi geothermal exploration concession that they say could support development of a 200–300 MW generation capacity.

Origin will hold a 47.5 per cent interest in the concession.
The Sorik Marapi resource will be tested over the next 18 months. If the exploration program is successful, a subsequent appraisal program will be conducted. If this is also successful and commercial agreements have been secured, construction is expected to begin in late 2012.

Sorik Marapi is a conventional geothermal resource similar to geothermal resources in New Zealand operated by Origin's majority subsidiary, Contact Energy. (ASX: ORG)

Emerging Companies

Viridis Clean Energy
Viridis Clean Energy may sell its US landfill gas assets for US$13.3 million before completion and transaction costs. Viridis said it is in exclusive negotiations with a US infrastructure fund and the deal is subject to due diligence.
Viridis must apply any proceeds to pay down its $13.4 million corporate debt facility.

Although Viridis' UK landfill assets are also for sale, it has not yet received a suitable offer. A £4.1 million payment is due at the end of September on the UK business and Viridis is in bank discussions to meet the commitment.

Meanwhile, director Robert Webster has resigned from the board. (ASX: VIR)

Willmott Forests
Willmott Forests has been unsuccessful in its effort to restructure its business and its bankers, CBA and St George, have appointed Korda Mentha as receivers and managers to the company.

The banks withdrew a temporary waiver of Willmott's obligations under its syndicated debt facility, making its debts now due, and appointed an administrator.

Willmott had hoped to sell land to repay the debts but ran out of time in a market with many forestry assets for sale.
Willmott joins Forest Enterprises Australia and other plantation forestry companies as a victim of the global financial crisis and the collapse of the managed investment scheme sector.

Despite its effort to diversify its revenue, Willmott still relied on MIS sales for cashflow, but the receiver said 2009-10 sales were only $1.5 million and for the next two years the company would have been reliant on asset sales and increasing debt to fund operations. (ASX: WFL)

Micro Cap Companies

Leo Khouri, a director of chemical substitution company BioProspect, has resigned due to a dispute between BioProspect and major shareholder Solargran Ltd. The company said Mr Khouri is also involved in a case against Solargran and this could have led to a conflict of interest.

BioProspect's proceedings include restraining Solargran from selling BioProspect shares that were part of a 2007 Development Agreement. BioProspect claims it was misled into entering the Development Agreement. (ASX: BPO)

Carbon Conscious
Carbon sink developer Carbon Conscious announced an unexpected maiden profit of $347,000 for 2009-10. The 2008-09 loss was $2.3 million.

Revenue rose from $0.2 million to $6.9 million. The company said it benefited from new plantings and the commencement of long term revenue streams for ongoing managing and monitoring of the tree crops planted under contract.

The company is looking to take advantage of the emissions trading scheme in New Zealand.

Meanwhile, the company has placed further capital to make up the shortfall under its June rights issue. It has now placed $1.58 million with 13 investors. (ASX: CCF)

Cell Aquaculture
Cell Aquaculture has leased a site at Phuket, Thailand to commence immediate commercial scale production. It aims to produce over 500 tonnes per year of premium finfish.

Chairman Perry Leach said the facility is now being fitted out with Cell Aquaculture's production units. It is a low cost environment and with approvals in place the company is now 12 months head of schedule, he said.

Fingerlings will be supplied from the company's hatchery in Queensland and all fish sold through its subsidiary, Cell Aqua Foods. (ASX: CAQ)

Clean Seas Tuna
Fish mortality continues to slow Clean Seas Tuna; this time 80 tonnes of kingfish dying due to human error. The company said it will be a one-off loss of up to $0.7 million before tax in the December half accounts.

For the year to 30 June, Clean Seas Tuna's revenue rose 30 per cent to $39.4 million. The net loss after tax was $$15.6 million. The loss for the second half was much improved at $1.5 million, it said. (ASX: CSS)

Dart Energy
Dart Energy has acquired a stake in Composite Energy, a leading European coal bed methane operator. It has also signed a Gas Sales Agreement for the Liulin project near Beijing in China.

Dart will initially acquire a 10 percent stake in Composite Energy for US$7 million, and has an option to go to 20 percent by January 2011 for another US$5 million.

All of the funds will progress Composite's business in Europe, including accessing a number of high value new licence opportunities, furthering its work program on its existing 17 licences and furthering the evaluation of shale gas potential in several licence areas.

Dart can acquire the remaining 80 percent of the company before the end of June 2011 for US$56 million. If it does not move to 100 percent ownership it can farm-in to 50 percent non-operating stakes in Composite's interests in any new projects in Europe.

Dart chief executive officer and managing director, Simon Potter, said "Composite is an established European CBM business with an existing portfolio of assets, an in-place management team, a strong pipeline of opportunities and a significant NSAI certified resource position.

"The investment therefore provides Dart with a compelling entry platform into the European CBM and shale gas industry, albeit in a staged way that does not detract focus from our existing current activities."

In China, Dart and its partners at Liulin say they are closer to delivering one of the country's first commercial CBM production projects.

The Gas Sales Agreement is to supply gas from the pilot wells on a take-or-pay basis - approximately 1.3 billion cubic feet (BCF) over 15 years. First gas is to be delivered by July 2011 with the take-or-pay obligations commencing 1 July 2012.

The agreed gas price is about $6.90 per gigajoule.

Dart has an underlying 17.5 percent stake in the Liulin project and options to increase this to up to 37.5 percent.
The project currently has certified 3P reserves of 86 BCF and is designated a State Special Pilot Project, enabling the acceleration of the exploration and development program.

In India, Dart's share of the first gas resource certification of two blocks is 450 and 728 BCF respectively. (ASX: DTE)

102 supermarkets in five mainstream supermarket chains are to carry EcoQuest's environmentally friendly nappies by October, and the company has also placed $0.63 million dollars at 8 cents per share with sophisticated investors.

The chains are Progressive Super IGA and Farmer Jacks Foodworks in WA, and Drakes Supermarkets, Romeos Retail Group, and Chapley Group in SA, with Drakes to also stock the nappies and wipes in 12 Queensland stores.

The first shipment for 3 million nappies is due this month.
Chairman, Sylvia Tulloch, said the distribution deals are the tip of the iceberg in terms of global potential. (ASX: ECQ)

Eden Energy
Eden Energy's Indian subsidiary is now a recognised engine retrofitter (RER) for gas and dual-fuel engines following an agreement with Woodward Governor India Ltd, the Indian subsidiary of US-based Woodward Governor Company.

The arrangement covers single and multipoint injection with an emphasis to larger medium speed engines, and adds to Eden's existing capability for undertaking singlepoint injection dual fuel conversions on high-speed diesel engines mostly up 2 megawatts.

The appointment by Woodward gives Eden the additional capability to undertake dual-fuel conversions on the much larger medium-speed diesel generators up to approximately 11 megawatts.

Eden says many millions of diesel generators are installed throughout India in industrial, commercial, and residential applications for either base load power or backup power generation, largely due to the unreliability of the Indian power grid in many parts of the country. A large market is emerging for the conversion of these diesel engines to operate on a dual-fuel system of natural gas and diesel. Payback times for the conversions are often less than 12 months.

Eden Energy is also to collaborate with the Automotive Research Association of India (ARAI) to promote Indian use of hydrogen and hydrogen enriched natural gas (HCNG or Hythane) as a premium blend of natural gas for internal combustion engines.

The Indian Government's Hydrogen Roadmap proposes that 20 per cent of all vehicles run on a hydrogen based fuel by 2020, and 100 per cent of all vehicles by 2050. HCNG is the proposed transitional fuel under the Hydrogen Roadmap.
ARAI, established in Pune, India, in 1966 by the Indian automotive industry and affiliated with the Indian Government's Ministry of Heavy Industries and Public Enterprises, is one of the leading, R&D, testing and certification organizations in India.

Eden and ARAI will collaborate on engine and engine component development for hydrogen and HCNG applications; testing of hydrogen and HCNG engines developed by Eden for different regulations; developing Standards and Regulations; and demonstration projects. (ASX: EDE)

Electrometals Technologies
Tin and copper recovery company ElectroMetals Technologies more than doubled its revenue for 2009-10 to $1.99 million, but reduced its loss only marginally to $1.4 million.
In late August the company received a $1.06 million order for a EMEW electrowinning plant from an existing customer in the US. (ASX: EMM)

Power utility hopeful Enerji says it has reached a significant milestone in the commercialization of the Opcon Powerbox technology with an agreement with construction company Laing O'Rourke Australia.

The memorandum of understanding is for a preferred supplier agreement to facilitate the integration of the Opcon Powerbox systems into Laing O'Rourke's client sites. The Powerbox is a waste heat recovery technology and is suitable for mining and industrial sites. (ASX: ERJ)

Green Invest
Green plumbing group Green Invest made a profit of $0.34 million for 2009-10, turning around a loss in 2008-09 of $3.7 million. The profit was despite a fall in revenue from $7.2 million to $4.7 million.

Despite previous difficulties, the company says it now has many opportunities.

In July it launched two new businesses. IntoEco Pty Ltd is a retail network selling environmentally friendly solar and hot water systems, rainwater tanks, and dual flush toilets. It also assists with registering Renewable Energy Certificates.
Green Electricians International Pty Ltd is similar to Green Plumbers, providing training in services and technology. (ASX: GNV)

Greenearth Energy
Greenearth Energy has finally signed a contract with the Federal Government for its $7 million Geothermal Drilling Program grant at its flagship Victorian project, the Geelong Geothermal Power Project. The company can now begin initial drawdown of funds for the hot sedimentary aquifer project.

Greenearth Energy is also negotiating contracts with the Victorian State Government after being awarded $25 million in late 2009 under the Energy Technology Innovation Strategy program for large scale, pre-commercial, sustainable energy demonstration projects
for its Geelong Geothermal Power Project.

$5 million is for Stage 1 Proof of Resource and after successful completion a further $20 million is available for the Stage 2, 12 MWe demonstration plant. (ASX: GER)

Intermoco saw a 50 per cent increase in revenue for 2009-10, from $3.9 million to $6.06 million. The company said its second half revenue was even stronger, up 62 per cent on the prior corresponding half.

The loss fell from $6.8 million to $1.5 million.

The company said it is still early days for achieving its potential. The company supplies metering and other services to utilities. (ASX: INT)

Jatropha for biojet fuel developer Jatoil is diversifying into coal through the acquisition of coal interests in Indonesia. The company said the move is to provide cashflow while it develops its jatropha plantations.

However, Eco Investor will for now no longer cover Jatoil.

Liquefied Natural Gas
Liquefied Natural Gas has entered into a Strategic Alliance Agreement with Oil Basins Ltd to investigate the development of an LNG project in North Western Australia.

The Kimberley LNG Project is based on utilising the potentially large conventional and unconventional gas resources in the Canning Basin, including gas contained in OBL's acreage and that of its joint venture partners.

LNG has also taken a 4.9 per cent shareholding in OBL, an oil and gas explorer.

LNG is researching three locations around Australia where the potential exists for LNG projects, utilising conventional and or unconventional gas supply.

LNG has invested $5.5 million to become a 5 per cent substantial shareholder in NSW coal seam gas explorer Metgasco. (ASX: LNG)

Marine Produce Australia
Marine Produce Australia says it is on track to meet its key barramundi sales targets. It is experiencing strong operational results at its Cone Bay Ocean Barramundi Operations plant in the Kimberley region of WA, with fish growth and production supporting forecasts for a significant increase in sales for the 2011 financial year.

Contracts have been finalised for the external supply of juvenile barramundi stock, with the first batches of 250,000 juvenile fish successfully transported from Fremantle to Derby and shipped to Cone Bay with no mortalities.

The aquaculture company had a record increase in farm biomass 369,300 kilograms for June 2010 quarter, with total biomass of 1,320,400 kg at 31 July.

The company received $12.5 million from its recent rights issue and used to funds pay off debt, build inventory and buy equipment including a new supply vessel to support farming operations.

The company had an operating loss of $37,000 for the six
months to June 2010 against a December 2009 half year loss $2.392 million. (ASX: MPA)

Nullarbor Holdings
Nullarbor Holdings subsidiary Oakturn has received council approval to fit out and use its new tyre recycling facility in western Sydney.

Chairman Andrew Howard said it is a very important milestone for the future of the company, and allows Oakturn to operate 24 hours per day seven days per week.

Nullarbor has issued an Independent Expert's report on the proposed transaction to acquire the remaining half of Oakturn, but ASIC said the disclosure in the report was inadequate for shareholders to make an informed decision at the upcoming general meeting. (ASX: NLB)

Orbital Corporation
Orbital Corporation made a profit of $4.5 million for 2009-10, turning around the previous year's loss of $2.4 million.

However, there was a $7.7 million profit on the restructure of a loan from the WA Government. The loan has been extended interest free to the year 2025. Excluding this one-off item, the underlying loss was $2.5 million.

Chief executive officer Terry Stinson, said three out of the company's four business segments including Synerject achieved revenue growth. Revenue increased 5.2 per cent to $17 million.

There was also a $2.4 million improvement in he underlying result compared to 2008-09.

However, the strong Australian dollar adversely impacted the result by approximately $1 million compared to the prior year, he said.

"We are on plan," said Mr Stinson. "The second half turnaround should set us up for a return to profits next financial year."

The company is planning a share consolidation on a one for 10 basis. (ASX: OEC)

Pacific Energy
Pacific Energy reported a profit of $4 million for the half year to 30 June, while the loss for the Six month to December 2009 was $6.9 million. The result was despite a $1.5 million fall in revenue.

There was a 29 per cent increase in earnings (EBITDA) for the six months to 30 June of $7.5 million compared with the prior six month period.

Pacific Energy is an emerging power generation and development company.

Managing director, Adam Boyd, said: "The company's 29% increase in EBITDA during the period reflects the robust performance of the company's core business, Kalgoorlie Power Systems (KPS) and new contracted capacity growth secured during 2009."

Two more power stations, an 11 MW power station at Navigator Resources' Bronzewing gold project and an 8 MW power station at Regis Resources' Duketon gold project were recently commissioned by KPS and are forecast to deliver a material enhancement to EBITDA performance during the six months to 31 December, he said.

The company is pursuing contracted capacity growth target of 250 MW by 2012. (ASX: PEA)

Phoslock Water Solutions
Phoslock Water Solutions has raised $1.1 million, in a placement of 22 million shares at 5 cents each to sophisticated investors including 16 current shareholders.

The funds are for expanding sales and marketing in North America and Europe, and to develop a second product.

The company's sales revenue jumped from $0.6 million to $1.5 million in 2009-10, and the loss fell from $2.3 million to $1.8 million. (ASX: PHK)

Adding to recent developments, flooring company Style has signed Chinese company Anji QiChen Bamboo Industry Company to manufacture its strand woven bamboo flooring. Anji already makes bamboo flooring and employs 300 people. Its factory si one kilometre from Style's plant and the two companies will share manufacturing assets and management, said Style. (ASX: SYP)

Initial Public Offerings

Algae energy company Algae.Tec now expects to list on 14 October, having extended the date by two weeks and issued a second supplementary prospectus. The company has varied its arrangement with Empire Equity Ltd so the payment of $0.8 million is only due if Algae.Tec is not listed by 31 December. The date has previously been 30 September. (ASX: AEB)

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