Eco Investor Update

A Weekly News Update for Environmental Investors

18 October 2010 - No 5

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The four week trial for Eco Investor Update is now over and I'm pleased to say that all of the feedback has been positive, so we will now be continuing with the Update each week. Thank you for your responses.

ASX 200 and 100

Eastern Star Gas and APA
Eastern Star Gas is a step closer to commercializing and exporting its gas reserves with an agreement with Marubeni Corporation to expedite commercialisation of ESG's proposed LNG Newcastle (LNGN) Project.

Under the prospective arrangements, Eastern Star Gas will make available to Marubeni and other LNG buyers an equity interest in the Narrabri Coal Seam Gas Project in NSW, and Marubeni and other prospective LNG buyers will take equity in the LNGN Project. Marubeni will have a lead role in offtaking and LNG marketing.

The APA Group will assume responsibility for the construction, ownership and operation of a gas pipeline to deliver coal seam gas from Narrabri to Newcastle, subject to a satisfactory gas transportation agreement.

David Casey, managing director of ESG, said "A key benefit from Marubeni's involvement in the LNGN Project is the expertise it brings in LNG offtaking, marketing and shipping and in taking an active role in securing foundation LNG buyers.

The availability of equity in the Narrabri CSG Project is intended to help in achieving this goal as well as to provide devolvement funding. Importantly, ESG will retain a controlling interest in the Narrabri CSG Project. Through the collaboration with Marubeni, by year end a decision can be confidently taken to commence front end engineering and design for the LNGN Project."

The Feasibility Study for the LNGN Project should be completed before year end.

Marubeni Corporation is an active global LNG trader and marketer, and is a shareholder in LNG projects in Qatar, Equatorial Guinea and Peru LNG.

Eastern Star Gas has a 65 per cent interest in the Narrabri Coal Seam Gas Project, with the balance held by Santos. (ASX: ESG)

Infigen Energy
Infigen Energy has appointed Craig Carson as chief executive officer for Infigen US. Mr Carson will lead the US business and take responsibility for all of its operations, commercial activities and asset management activities.

Mr Carson has over 20 years of senior management experience in the US energy industry. Prior to joining Infigen, he was vice president, US Cogeneration for BP Alternative Energy, where he was responsible for BP's US Cogeneration business with an operating capacity of 2,000 MW and 600 MW of projects in early development.

He has also held senior positions with BP Alternative Energy, ConocoPhillips and SkyGen Energy. He has led the development, construction and commercial management of a number of wind, cogeneration and thermal power facilities and has extensive experience across all aspects of asset management, construction and operations.

Infigen managing director Miles George said Mr Carson has a key role in the business. "With 18 wind farms across the United States having a total installed capacity of over 1,500 MW and the highly regarded Bluarc asset management group, our US business represents a major component of our global activities.

"As we work towards bringing the operation of our US assets under direct control, we expect to see continued improvements in availability and production performance, and tight control of operating costs."

At 63 cents, Infigen's shares are at a two year low. (ASX: IFN)

ASX 300

Geodynamics says its $90 million grant under the Federal Government's Renewable Energy Demonstration Program (REDP) is now unconditional and funding will commence in line with agreed milestones.

The $90 million grant was awarded in November 2009. The funding will assist in the establishment of a 25 MW commercial demonstration plant (CDP) in the Cooper Basin and will be staged over the life of the CDP project. First payments will be received following achievement of agreed project milestones, commencing with the drilling of the next planned well in the program, Habanero 4.

Further payments will be made for drilling subsequent wells and construction of the CDP with the final instalment to be received following commissioning of the CDP, expected to occur in early 2015. (ASX: GDY)

Transfield Services Infrastructure Fund
Transfield Services Infrastructure Fund has improved its cash position by $25 million, thanks to the extension of the concession and refinancing of the Macarthur Water Filtration Plant for another 10 years to 2030, as well as an ownership restructure of partner, United Utilities Australia. The Macarthur Water transactions are subject to conditions.

The net impact on the Fund is expected to be an $8.6 million increase to earnings (EBITDA) for 2010-11 to $104 million.

2010-11 net profit after tax is expected to be at least 25 per cent higher than the May 2010 forecast. FY11 distribution guidance of 8.2 cents per security is unchanged.

Some of the cash improvement will be applied to the Macarthur Water shareholder loan. This benefit will be partially offset by the Fund not executing its extended operating agreement for Collinsville Power Station for the FY11 summer months, it said.

"The extended operating agreement for Collinsville has not been executed due to the prevailing low electricity pool prices in Queensland and will be reviewed on an annual basis. There is no impact on the power station's long-term power purchase agreement," said outgoing chief executive officer, Steve MacDonald.

The fund expects to recontract its Starfish Hill wind farm once the Renewable Energy Certificate market improves when the revised legislation separating Renewable Energy Certificates for large-scale renewable energy generation is implemented on 1 January next year.

Power from Starfish Hill is currently being sold on the merchant or spot market, and this has affected its financial performance due to low spot prices and low prices for renewable energy certificates.

The I January changes will benefit wind farms and should lift the demand for TSI's wind energy. This should improve its ability to recontract the energy generated by Starfish Hill.

The Fund said it continues to evaluate options for Collinsville Station when its power purchase agreement finishes in 2016. Option are potential conversion to solar and coal seam gas. (ASX: TPI)

Micro Cap Companies

AAQ Holdings
AAQ Holdings, which is under a deed of company arrangement and was formerly known Australis Aquaculture, has had four directors removed and three new directors appointed.

The outgoing directors are: David O'Sullivan, Anthony Mitton, Michael Cohen, and Joshua Goldman. The incoming directors are: Guy Touzeau, Keong Chan and Nikolce Jovanovski. Mr Chan is also the new company secretary. (ASX: AAQ)

The Western Metropolitan Regional Council (WMRC) is to proceed with the development of AnaeCo's full DiCOM bioconversion waste processing system at the JFR (Jim) McGeough Resource Recovery Facility in Perth.

The Council has voted to proceed with expanding the DiCOM trial plant into the full-scale system. When the plant is constructed the WMRC will enter a 20 year contract to deliver waste to the DiCOM plant.

The DiCOM system was invented in WA and developed by AnaeCo in conjunction with its Australian Alliance partner Palisade Investment Partners. It will process up to 55,000 tonnes of household waste per annum. The system sorts the waste to separate recyclables and then breaks down the organic components to produce market-quality compost and biogas. The generated biogas will power the plant and surplus will be exported to the grid as renewable energy.

WMRC chairman and Town of Mosman Park mayor, Ron Norris, said this is an exciting prospect for residents. "This will be the first DiCOM® plant constructed in the world. The project will demonstrate world-leading technology developed here in Western Australia."

"It will also be the first time in Australia that alternative waste processing technology has been constructed at an existing transfer station. When fully operational the plant will divert between 65 per cent and 80 per cent of our waste from landfill," he said.

Construction is expected to commence before the end of 2010 and commence operations by March 2012. The finished plant will consist of three processing vessels, three water storage tanks, a materials recovery building, power generation equipment and a waste receival and loading area.

The power generation equipment is fully enclosed with a sound attenuated gas engine to eliminate noise. Digestion takes place within a sealed vessel to control odour. (ASX: ANQ)

BioProspect says it experienced a surge of new orders for its REGEN products after its REGEN Pain Relief Spray was featured on Channel Nine's A Current Affair program in September.

"The sales boost has been greatly encouraging in our efforts to expand the REGEN therapeutic and DEMURE skin care product ranges in Australia and selected overseas markets," said chief operating officer, Peter May.

The product was developed for sufferers of arthritis and muscular and joint pain. It utilizes a blend of natural plant oils combined with emu oil as an excipient ingredient.
Meanwhile, the company says its natural termite solution, TERMILONE, is set to reach a major commercialization milestone with the upcoming release of field trial results from North Queensland and manufacturing study results from Southern Cross University (SCU). The manufacturing study is focused on commercial-scale processing to determine the efficiency and cost of extraction.

The company said it is also evaluating a number of other new business opportunities consistent with its long-term strategy. (ASX: BPO)

Carbon Conscious
In what it says is an Australian first, Carbon Conscious has been contracted to supply 10,000 future internationally exportable Australian Government backed Assigned Amount Units (AAUs).

The client is Perenia Pty Ltd, for whom Carbon Conscious will plant 50,000 to 70,000 mallee eucalypt trees in WA. Carbon Conscious said it will deliver the AAUs to Perenia in line with tree growth and under the Government's Carbon Farming initiative.

The delivery price is $16 per AAU, giving the deal a value of $160,000.

Perenia is carbon solution provider owned by Mitsui, Pacific Hydro and Snowy Mountains Engineering Corporation.
Carbon Conscious chief executive, Peter Balsarini, said he believes the deal is the start of a large potential market for Carbon Conscious and other carbon sink providers. (ASX: CCF)

Carbon Polymers
Nullarbor Holdings has changed its name to Carbon Polymers Ltd. The change as approved by shareholders along with a number of other matters including a share placement, the Oakturn share acquisition, the Simultech share sale, and acquisition of the Smithfield property.

Carbon Polymers aims to be a leading carbon and plastics recovery and recycling business. Its main activities are tyre and plastics recycling.

The company said it aims to be cash flow positive in the next few weeks before its main tyre recycling plant is operational.

Its plastics recycling business can collect ad utilize unwashed plastics due to the advanced technology employed for the recycling process. The company can extrude advanced composite polymers to replace existing polymer products. (ASX: NLB)

Electrometals Technologies
Electrometals Technologies expects to make a significant loss of between $2-2.5 million for the second half ending 31 December 2010. Its full year 2009 loss was $1.5 million.

The company said it is having difficulty completing sales. It has been conducting laboratory and pilot demonstrations of its EMEW electrowinning technology for metal extraction and this may lead to new sales in 2011.

A legal dispute brought by a client has been "resolved amicably" on undisclosed terms. (ASX: EMM)

Enerji says it is closer to commercializing its Opcon Powerbox technology with a memorandum of understanding with Horizon Power to look at establishing a power purchase agreement. The parties will work to integrate an Opcon Powerbox into Horizon's Carnarvon Power Station in WA.

Enerji said it has earmarked the first third generation Opcon Powerbox which has been engineered for Australian compliance conditions for the Carnarvon station. The Opcon Powerbox converts waste heat to electricity. (ASX: ERJ)

Green Rock Energy
Subject to shareholder approval, Green Rock Energy is proposing to issue a total of 3.5 million share options three of its directors. The options are a performance incentive. The proposed exercise price is 50 per cent above the closing price on the day of the general meeting.

Greenearth Energy
Advance Publicity Pty Ltd has become a substantial shareholder with a 12.6 per cent interest. (ASX: GRE)

Greenpower Energy
Greenpower Energy said it is transfering it 20 per cent interest in the joint ventures exploring for coal seam gas and natural in the Gunnedah Basin permit 428. The company said the consideration is not material.

Greenpower said it wants to concentrate on its exploration interests in WA, SA and Victoria where it has 100 per cent ownership. (ASX: GPP)

Metals recoverer Intec is beginning Phase 2 trials this month at its spent pickle liquor recycling project Demonstration Plant at Burnie, Tasmania. Operations will continue during November and should conclude this quarter.

The custom zinc electrowinning cell has been installed, and the first tranche of 50,000 litres of spent pickle liquor from Intec's Victorian project partner, GB Galvanizing Service Pty Ltd (GBG), has arrived at the facility.

If Phase 2 confirms technical and economical feasibility, Phase 3 of the project will involve the construction of a full-scale spent pickle liquor recycling project at GBG's operating site in Victoria. This will recycle a minimum of 1 million litres per annum of waste liquor.

Intec said its China-based associate, Green Resources, has ceased development of the Liuzhou Steel Project, mainly due to significant decreases in the zinc grade of the primary steel dust residue feedstock. Instead it is developing a similar project concept elsewhere in China, and will release further details after the selected feedstocks are secured.
Intec could begin receiving meaningful royalty payments from Bass Metals Ltd in mid-2011.

Bass Metals said its Hellyer Mine Project, from which Intec can receive royalties of up to $5 million at $2.50 per tonne throughput, has been brought forward "to complete all of the plant commissioning prior to Christmas and… start treating Fossey ore early in the New Year 2011".

Allowing for ramp-up of the Hellyer Mill during the March 2011 quarter, and for lag in the payment of royalties by Bass Metals, Intec said it does not expect to receive royalties until mid next year.

Meanwhile, Intec had cash at the end of the September quarter of $29,000.

The directors said they consider the company's available cash, receivables and other liquid current assets are sufficient for immediate working capital needs and that additional capital will be raised as required. (ASX: INL)

Marine Produce Australia
The ASX has given Marine Produce Australia permission to delist. The move requires shareholder approval.

The delisting is to reduce overheads, allow great flexibility in future development, and restore value to the company. (ASX: MPA)

PetraTherm España and its 50 per cent exploration partner Enel Green Power have selected what they say is a highly prospective geothermal target on the active volcanic island of Tenerife.

PetraTherm España is now undergoing the drilling approval process in preparation for a planned geothermal test well scheduled for the second quarter of 2011.

The Tenerife Regional Government has expressed support for the drilling program and potential future exploitation of geothermal energy.

Several tenders to undertake the contract drilling works have been received and negotiations are underway to secure a drilling contractor.

PetraTherm says the Tenerife conventional volcanic geothermal energy project provides a major opportunity to build a conventional geothermal project. The island's current primary power is based on imported diesel. (ASX: PTR)

Po Valley Energy
Po Valley Energy has appointed Giovanni Catalano as chief executive officer. He succeeds Michael Masterman, the founding chief executive who moves to a non-executive role as deputy chairman.

Mr Catalano joined Po Valley in July as deputy chief executive officer and chief operating officer. He holds a masters degree in geology and has 32 years in the upstream oil and gas industry.

Po Valley Energy said it has achieved strong production and revenue from its north Italy gas fields in the September quarter.

The higher production in the quarter reflected the first full quarter of production from the 100 per cent owned Sillaro field, which more that offset the unexpected decline of production from the Castello field during the June quarter.

The September quarter production comprised 8.92 million cubic metres (315 million cubic feet), up 95.8 per cent on the June quarter, with the Sillaro field contributing 8.59 million cubic metres (308 million cubic feet) and the Castello field, 336 thousand cubic metres (12 million cubic feet).
The Sillaro field averaged 94,500 cubic metres/ day (3.3 million cubic feet/ day) from its two production wells with stable plant and pressure performance.

Castello produced at limited rates during the quarter while planning to proceed with a deviation of the well a priority.

Subject to drilling success, production is planned to recommence around in the June quarter of 2011 and is expected to be 50-70,000 cubic metres/ day.

Sillaro has passed the Bank of Scotland 90 days completion test, so borrowing costs will fall from 300 basis points over EURLIBOR to 180 basis points - a significant reduction in interest costs, said Po Valley.

Revenue for the September quarter was approximately 2.43 million ($3.2 million), reflecting the higher production. Gas prices remained on an average of 0.30 per cubic metre in the September quarter. (ASX: PVE)

Unlisted Companies

AquaGen Technologies
AquaGen (Eco Investor Aug 2010) has won a Commercialization Australia grant of $186,496 to help develop its AquaGen SurgeDrive Wave Energy Demonstration Unit on Lorne Pier in Victoria.

AquaGen is developing a new technology for harnessing the energy of the ocean's waves to produce electricity or desalinated water. The Commercialisation Australia Project will enable the manufacture, installation and demonstration of the first pilot version of the patented SurgeDrive system.

Bioremedial soil company Geomite (Eco Investor Aug 2009) has been placed in the top 50 innovations by One Billion Minds of India, second place in Anthill magazine's top 100 innovations, and two abstracts by the chief executive, Barry Hayes, were placed at the International Biochar Conference in Brazil. The company has qualifies for R&D taxation rebate of 175 per cent.

"Despite this I have been unable to raise investment interest here," said Mr Hayes.

"However the Province of Chihuahua in Mexico has declared it their preferred soil management system - they grow around half the garlic and chillis imported into Australia. Geomite is also the preferred system for Mexico's Agave Jet Biofuel development."

Tenders for the production of Geomite will be released in Mexico in a few months, he said.

Mr Hayes said he has decided to move there when the legal arrangements are finalized "as it would be great to see my work realized".

The Geomite system includes technology for producing biochar from bamboo grown under specific condition. The method is a fully sustainable process, and the biochar retains sufficient phosphorus to obviate a future need for rock phosphate mining.

Hepburn Wind
Community wind energy developer Hepburn Wind has commenced construction, turning the first sod on its rural Victorian project.

More than 120 supporters attended the event, including the Victorian Minister for Environment & Climate Change, Gavin Jennings, and the Federal Member for Melbourne, Adam Bandt.

Hepburn Wind has inspired the establishment of Embark, a new and separate non-profit organisation established to support other communities to achieve sustainable solutions. The executive director of Embark, Mary Dougherty, spoke of her passion to support hundreds of other communities to develop their own community energy projects.

Hepburn Wind said the only disappointing aspect of the day was a protest organised by a group with the misleading name 'Australian Environment Foundation'. The group denies the existence of climate change and supports Landscape Guardian groups to target renewable energy projects, supplying signs, banners and protesters. The protesters numbered around 20 and included few locals.

On the evening before the ground-breaking ceremony, Hepburn Wind director Martin May received the Climate Alliance 'Innovator of the Year 2010' award "in recognition of exemplary innovation in the area of managing the opportunities and risks of climate change".

The award recognizes Hepburn Wind's community-oriented business model and the role it has played in achieving the local community's energy sustainability goal.

MBD Energy
The Queensland Government has committed $1 million for a trial to use algae to soak up carbon emissions from the Tarong coal fired power station.

Premier Anna Bligh said Tarong near Kingaroy will be the first coal-fired power station in Australia to try the technology as part of the $5 million trial with MBD Energy.
MBD Energy will start construction on a one hectare algal biomass display plant beside Tarong Power Station in December.

MBD Energy had also agreed to build facilities next to power stations in Victoria (Loy Yang A) and New South Wales (Eraring Energy), with construction underway first at Tarong.
The Tarong Power Station test plant is expected to capture about 700 tonnes per annum of CO2, the equivalent of taking 170 cars off the road for a year.

It is also expected to produce one tonne of algal biomass per day, 120 tonnes per annum of algal oil and 240 tonnes per annum of algal meal by 2012.

MBD Energy managing director Andrew Lawson said "If successful we expect to commercialize the Tarong project by expanding to approximately 80 hectares, thereby producing 11 million litres per annum of algal oil and 25,000 tonnes of algal meal and abating approximately 70,000 tonnes of CO2 during 2013."

The captured CO2 will be used to produce bio-diesel, stockfeed and bio-plastics.

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