Eco Investor Update
A Weekly News Update for Environmental Investors
August 2011 - No 43
Chief executive David Bartholomew said the offer will materially degear DUET and bring it into line with its listed peers. "The offer is part of a range of initiatives to enhance security holder value, simplify DUET's portfolio and further strengthen its capital structure."
DUET has simplified its portfolio with the upcoming sale of Duquesne and the recent acquisition of additional interest in the Dampier Bunbury Pipeline (DBP) and Multinet and divestment of its interest in WA Gas Networks. When the Duquesne sale is completed, DUET will have a portfolio of majority interests in three regulated energy utilities - 80 per cent of DBP, 100 per cent of Multinet and 66 per cent of United Energy.
"Our simplified portfolio is expected to deliver predictable and growing distributions to investors, with our FY2012 distribution guidance fully covered by forecast operating cash flows. In addition, United Energy's regulatory mandate for network growth provides our investors with attractive growth prospects.
DUET's distribution guidance for 2011-2 is 16 cents per stapled security. This is less than the 20 cents per security of recent years, though still around 10 per cent on recent security prices. The group is targeting 3 per cent annual growth in distributions over the medium term.
David Bartholomew said the 2011-12 distribution level aims to deliver a sustainable and growing cash yield to investors.
The offer will allow DUET to repay all DUET corporate level debt, repayment all subordinated debt (SOLA) owed to DUET, and reduce Group gearing to around 75 per cent. (ASX: DUE)
Dart Energy hopes the agreement will result in early first power and monetization of its NSW assets. First gas sales and initial cashflows are targeted by the end of 2013.
Dart Energy holds seven CBM licences in NSW covering over 23,000 square kilometres and with an independently certified prospective gas resource of 19 trillion cubic feet (TCF). Dart
The near-term focus is on two types of projects. Small 1 to 8 MW highly efficient, reliable, environmentally friendly co-and tri-gen integrated gas to power solutions for industrial and other customers. These are most relevant to Dart's PELs 458 at Newcastle and 463 at Cumberland. Secondly, integrated, mid-scale up to 30 MW grid-connected stations. These are most relevant to Dart Energy's PELs 458 at Newcastle, 456 at Narrabri and 460 in the Hunter Valley.
PEL 463 includes Sydney and the controversial site for a possible well in the suburb of St Peters. This again drew media attention following what appears to have been a lively public meeting in Sydney.
The company said it expects the ability to deliver smaller-scale power generation projects will enable it to benefit sooner from the significant need for increased gas-fired power generation capacity expected in NSW in coming years and the expected rising gas prices and retained margin opportunities in the expanding market.
Clarke Energy is a leader in the Australian small to mid-size gas fired power stations market and designs, supplies, commissions, operates and maintains power plants using GE Jenbacher gas generator sets. Clarke Energy and Arrow Energy, from which Dart was spun out, have previously collaborated on the co-development of the first coal seam gas-fired power project at Daandine in Queensland. (ASX: DTE)
"As the first significant rare earth mine to be opened outside of China for many years, the Mt Weld project brings an important new capacity to Western Australia's already diverse and globally important resources sector," he said.
"It will give WA a stake in some of the 21st century's most exciting technological developments, and strengthen our economic links with Malaysia.
The mine is expected to contribute at least $17 million in annual royalty payments to the State.
The Mt Weld deposit is the richest known deposit of rare earths in the world. The mine is expected to be in production for 20 years, with its first phase producing an estimated 33,000 tonnes per annum of rare earth concentrates.
Lynas intends to produce 11,000 tonnes per annum from Phase 1 of the Mt Weld project, increasing to 22,000 tpa from Phase 2. Lynas could be supplying about eight per cent of the world market when Phase 1 reaches full capacity in 2012 and about 14 per cent when Phase 2 commences in 2013. (ASX: LYC)
ANZ had paid this sum under a call made by Unitywater on bank guarantees (Performance Bonds) provided by Anglian when it owned the shares in EGLMS.
EGLMS and Anglian will each contribute according with their obligations under their Share Sale Agreement. EGLMS has paid $375,000 plus interest and costs.
The two companies say their Co-operation Deed provides for a positive framework for them to work co-operatively over any action EGLMS decides to take against Unitywater about recovering the money paid under the Performance Bonds and EGLMS's wider claims including a claim about higher costs associated with influent quality.
Importantly, the Co-operation Deed further reduces the limited indemnity EGL provided to Anglian under a Security Deed Poll in connection with the Share Sale Agreement and otherwise provides for certain releases by each party, said EGL.
EGLMS has now commenced court proceedings against Unitywater to account for the money it received under the Performance Bonds and other security held. (ASX: EGL)
Micro Cap Companies
Australian Renewable Fuels
Mr White was managing director of Biodiesel Producers Limited (BPL), an unlisted public company that manufactures biodiesel from tallow and waste cooking oil. He was most recently a director and chief operating officer of Infrastructure Capital Group Ltd, an investment management business with over $1 billion of equity funds under management.
"With Andrew in this crucial management role, the company will be able to leverage all resources to focus on the optimal performance of the assets, as well allowing the further strategic development of opportunities, both in the feed stock area, as well as in the business expansion", said executive chairman Tom Engelsman.
"ARFuels acquisition of Biodiesel Producers Limited has cemented the positioning of the company as Australia's leading biodiesel producer," said Mr White. "
"Given that Australia currently uses some 18 billion litres per year of fossil based diesel, half of which is imported, it is clear that the usage of an alternate locally produced fuel will not only have major benefit for the environment, but will also positively impact the trade balance for the country."
"Many of Australia's leading companies are either using biodiesel or are currently undergoing biodiesel trials," he said.
With contracts established with Shell, Finemores, Border Express, Greenfreight and other large users of fuels, BPL's acquisition extended ARFuels' geographic reach into the east-coast.
Mr White has sat on the board and management committees of various large energy projects including Neerabup Power Station, Kwinana Power Station, and the Esperance Energy Project. He has a chartered accounting background. (ASX: ARW)
Carnegie Wave Energy
The two studies assessed a number of potential near-shore sites along Ireland's west coast, looking at wave resource, grid connectivity, constructability and environmental sensitivities, among the factors.
A site specific conceptual design was then developed that looked at the complete CETO system design from the near-shore CETO unit array to the onshore power plant. This concluded that a CETO wave energy project is viable with existing Irish ocean energy incentives including the 500 MW ocean energy target, grant support and the ocean energy feed-in-tariff.
The study was half funded by the Sustainable Energy Authority of Ireland (SEAI) under the Ocean Energy Prototype Research and Development Program, and payment has been received by local subsidiary, CWE Ireland. (ASX: CWE)
Clean Seas Tuna
"Demand for the product continues to outstrip supply to the extent that Clean Seas expects the kingfish operations to remain cash flow positive in the current year to 30 June 2012." it said.
"The kingfish business moved to cash flow positive during FY11 by $1.2 million, with strong net cash inflow of $900,000 during the fourth quarter, boosted by steady price increases and the sell-down of frozen inventory."
Notwithstanding the high dollar, continuing improvement in kingfish sale prices in the export and domestic markets saw farm-gate returns increase by over 15 per cent during the ended to 30 June.
An annualized positive cash flow contribution from the kingfish business is expected as fish prices continue to improve and operational costs are further reduced, said managing director, Clifford Ashby. (ASX: CSS)
The rights issue raised $460,000 before costs. The proceeds will be put towards installation costs for the Carnarvon Power Station project.
The options have an exercise price of 3 cents and expire on 30 June 2015.
Enerji has appointed Steve Lowe as director of Business Development to accelerate power purchase agreements with several existing prospects, progress engagements with prospective customers, and identify and develop new sales opportunities.
Enerji said it will benefit from the strong senior relationships that Mr Lowe has developed with major energy and mining companies in national and international markets. His most recent role was as the Head of Energy Services with Tricom. Prior to that he was general manager trading with Integral Energy.
He is also the executive chairman of Carbon Conscious Ltd, and will divide his time equally between that role and Enerji.
Mr Lowe has worked in the capital
and financial markets for more than 30 years with 13 years experience
in energy commodities. Mr Lowe has consulted to Enerji since October
Hensel Phelps will deliver the site specific project schedule and a Guaranteed Maximum Price for the development. Subject to mutual agreement of these, Hensel Phelps will be contracted to deliver the Construction Phase Services for the first 200 MW Solar Tower power station.
Hensel Phelps, Western District Manager and Vice President, Steve Grauer, said "Hensel Phelps has assigned a dedicated team to the project and has the board's commitment of all corporate resources to support the successful completion of the project and will assume all of our pre-construction expenditures through the close of project financing."
EnviroMission's chief executive Roger Davey said "Hensel Phelps' proven processes and procedures, and track record of delivering challenging, diverse, and complex projects will bring the necessary level of expertise to Solar Tower development."
Hensel Phelps has delivered major projects such as renovation of the Pentagon, rocket launch facilities at Cape Canaveral and Vandenberg Air Force Base, and numerous hospitality, healthcare, industrial, commercial and transport projects. (ASX: EVM)
Green Rock Energy
The partners said initial projects of at least 25 MW are contemplated in both Basins and these should lead to hundreds of megawatts of generation from each Basin in the coming decade.
Both companies will promote the opportunity for upstream investors to farm-in and substantially fund drilling to prove the resources.
Pacific Hydro will have the right to at least a 51 per cent interest in each power project company, with the buy-out of Green Rock's and the upstream partner's interests set according to a valuation formula to be agreed in the initial joint venture agreement.
Green Rock managing director Richard Beresford said drilling of the first well in one or both basins is expected next year.
In May 2011 the two companies agreed to cooperate on the development of geothermal power projects. (ASX: GRK)
Green Box Energy
The company will receive $350,000 in the transaction.
With increased competition in the National Energy Market, rising energy bills and the prospect of carbon reduction legislation, the board decided that its market opportunity in energy management services is significantly larger than in energy retailing.
Executive director Simon Barnes said "JGI has not traded as a retail unit since the new board assumed control of the Group. It therefore contributes no revenue and would require significant investment of capital and management's focus to re-enter the retail market."
The disposal of JGI will also remove conflicts of interests with potential energy retailing and energy network customers with whom GreenBox is in discussion, he said.
"Importantly, this transaction will enable GreenBox to intensify its focus to maximize the significant smart energy opportunity locally and overseas for the benefit of our shareholders."
GreenBox said that as a result of the decision to focus on its core technology business it is consulting with ASX about de-listing. (ASX: GBN)
Its Hong Kong based coatings subsidiary, Hydrotech Waterproofing Solutions, has won a project to replace the roof waterproofing for the Hongkong and Shanghai Banking Corporation's (HSBC) headquarters in Hong Kong's central business district. The value of the project is $220,000.
The company has also won waterproofing contracts for Bank of America Tower managed by Jones Lang La Salle, The Ruttonjee Centre managed by CB Richard Ellis, and the Hong Kong Club.
These are also all high profile buildings within Hong Kong's central business district, and their combined value is $80,000.
"The award of these projects firmly establishes Hydrotech Waterproofing Solutions as a supplier of premium waterproofing solutions to Grade A commercial buildings in Hong Kong and is leading to further acceptance of our systems by designers and specifiers of waterproofing systems," said chairman, Philip Gray. (ASX: HTI)
The expected rapid sign up of new EN's will lead to a depletion in cash and for prudence Intermoco wishes to raise cash now, said the company.
The company has previously said its pipeline for potential EN's is robust and growing, and it is likely to secure new EN contracts at a rapid rate as it converts opportunities. This will require Intermoco to invest cash to establishing the new Ens.
The price of the shares will be a 12.5 per cent discount to the volume-weighted average closing price for the five days of trading before the offer closes, and subject to a minimum price of 0.3 cents per share. (ASX: INT)
Shareholders can subscribe for two shares for every three shares held. The price is 4.3 cents each. A shortfall facility will allow shareholders to subscribe for additional shares. The underwriter is Veritas Securities Ltd .
The proceeds will be used as working capital.
This will be for minor exploration and regulatory works to facilitate the next stage of development at the company's geothermal projects in Tasmania and Queensland. In Vanuatu it will be for working capital for management, legal agreements, project packaging, structuring and planning to bring all component parts of the project to the point of implementation.
The company will also seek new business opportunities and some early stage exploration will be needed to determine the value proposition and possibilities to secure future development rights. (ASX: KEN)
Managing director, Peter Henderson, said "This capital raising program provides Metgasco with over $21 Million in new funding to progress our high value exploration and commercialization agenda. With our significant 2P reserve position and demonstrated gas flows from our CSG pilot wells Metgasco is well placed to progress our commercial plan. (ASX: MEL)
The Malaysian B5 Palm Oil Biodiesel blending mandate was launched in June. It obligates all oil majors in Malaysia, namely Petronas, Shell, Esso, Chevron and Boustead Petroleum Marketing to reach a 5 per cent biodiesel blend by 1 November 2011 for the central region of Malaysia.
The ramp up period will allow the supply chains to be finalized and optimize logistics. During this ramp up period Mission will supply about 2,500 tonnes of biodiesel.
Mission said it has commenced early sales via direct purchase orders ahead of anticipated longer term sales contracts in November 2011.
The mandate should increase sales volumes over time, improve our capacity utilization, increase revenue and provide a positive impact to the company's bottom line, said Nathan Mahalingam, Group chief executive of Mission NewEnergy.
With deliveries in May, June and July, Mission has completed its contract to supply ISCC sustainability certified product. This represents full completion of the initial term of the contract with an international oil company. However, the parties have agreed not to exercise the option to extend the contract, although no reason was given. (ASX: MBT)
The increase was due to the organic growth and expansion with new offices in South Australia, Western Australia and Gladstone contributing to revenue generation capabilities for 2011-12.
Net negative operating cash flows for the quarter was $0.13 million and $0.95 million for the year, mainly attributed to non operational payments for legal costs and aged historical creditors from before 30 June 2010.
"We expect continued strong cash collections in line with the improved performance during the first quarter of FY12, along with negative operating cash flows for the first quarter of the new 2012 financial year, as we continue our strategy to pay off the remaining $0.1 million in historical creditors and $0.1 million in convertible notes," said the company. (ASX: PEH)
The placement was to institutional and sophisticated investors and managed by Taylor Collison, which also managed the company's recent rights issue and had the right to place up to an additional $1 million in equity. The placement was on the same terms as the rights issue.
Since 1 July 2011 Panax has raised its cash reserves by $3.7 million through the $2 million renounceable rights issue, a $350,000 final instalment under its Geothermal Drilling Program Grant for the Salamander-1 well at Penola, a $550,000 cash rebate under the Federal Government's Research and Development Tax Concession program, and the $770,000 placement.
The cash will be used to advance Panax's portfolio of near-term geothermal development projects in Indonesia, to provide the certainty that company needs to commence development of these Indonesian projects, and for working capital. (ASX: PAX)
The raising is underwritten by Cygnet Capital Pty Ltd and will offer one new share for every three shares at 4.5 cents each.
The capital will go towards the maintenance of the Company's geothermal projects, the identification and review of potential resource opportunities, costs of the offer and working capital. (ASX: TEY)
WestSide has also secured ownership of the Schramm TXD 180 drill rig as settlement with its Indonesian partner.
WestSide chief executive officer Dr Julie Beeby said WestSide invested some $2 million in the PT Seamgas Indonesia joint venture and had commissioned the rig which Bumi acquired in 2008 for US$4.2 million.
PT Bumi Resources Tbk is Indonesia's largest coal miner, a foundation shareholder in WestSide, and retain 8.8 per cent of its equity.
Dr Beeby said confirmation of WestSide's tenure and operatorship had not been forthcoming to enable progress to an exploration campaign. The subsequent entry of new participants in the Production Sharing Contracts granted in 2009 and coal mining operations, including State-owned energy company PT Pertamina, PT Energi Mega Persada and Tata, further diluted WestSide¡|s potential interests, complicated the joint ventures and prompted WestSide to reconsider the value of participating in a non-operating role, she said.
WestSide has been using the rig since October 2009 at Tilbrook, Mount Saint Martin and Paranui and at Pretty Plains for the Meridian SeamGas joint venture.
The decision enables WestSide
to "focus on our aggressive drilling campaign to increase both gas
production and reserves at Meridian SeamGas, our other Bowen Basin projects
and a new
"Investing to increase certified 2P reserves within our producing gas field, where we have the added benefit of immediate gas sales, offers a superior and timelier return on shareholders' funds than pursuing greenfield Indonesian prospects better suited to international energy majors."
The Schramm TXD 180 rig is one of the largest dedicated coal seam gas rigs in Australia and will be leased at commercial rates when not needed by WestSide. The rig is ideal for drilling the horizontal wells required within the Meridian field. (ASX: WCL)
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