Eco Investor Update

A Weekly News Update for Environmental Investors

5 December 2011 - No 60

ASX 100

APA Group
On 1 December APA Group's securities hit a new four year high of $4.65. The securities have been rising since August.

APA has released its sustainability report discussing its environmental, investment, operational, customer, employee, and community initiatives to improve its sustainability.

Managing director Mick McCormack said "APA supports a national carbon policy that provides an economic incentive for large energy users to adopt cleaner fuels. This will fundamentally change our energy landscape and will see natural gas play a significant role as a transition fuel in the medium term, as well as supporting intermittent renewable energy technologies in the medium to longer term needed to meet the carbon reduction targets set by the Commonwealth Government.

"Over the coming years, APA remains well positioned to play a major role in providing supporting gas infrastructure to facilitate Australia's transition to low emission energy and thus providing attractive returns to our security holders."

The strategy to build a sustainable business is to invest in attractive long-term assets such as the Amadeus Gas Pipeline and the Emu Downs wind farm, and to expand its pipeline infrastructure in east Australia and the Mondarra Gas Storage Facility in Western Australia.

"APA launched the National Health Safety and Environment Management System, "Safeguard" to deliver on APA 's commitment to a zero harm work environment to ensure that all business activities are conducted in a manner that protects all of our people, the environment and the greater community," said Mr McCormack.

The report outlines three company policies to be environmentally responsible:

1 To contribute to government policy and respond to climate change initiatives to promote the use of gas as essential to a cleaner energy mix.

2. To include the environment in all investment and procurement decision making,
complying with emissions reporting obligations, and conserving and rehabilitating the natural state of the land it disturbs.

3. To evaluate complementary clean energy projects.

The report details activities generated by these policies, such as contributing to the Federal Government's review of carbon emissions and energy measurement methods, investment in renewable generation through the Emu Downs wind farm and North Brown Hill wind farm, contributing to the review of the National Greenhouse and Energy Reporting (Measurement) Determination, formulate a water management strategy, and participate in the Australian Pipeline Industry Association's Carbon and Energy Efficiency Opportunities Program.

APA also has a community investment program "Building Brighter Futures" that is involved with charities and local programs to build goodwill in the community. (ASX: APA)

Sims Metal Management
Sims director Gerald Morris has sold 20,000 American Depositary Shares worth US$267,291. The average price was US$13.36. He retains 15,000 American Depositary Shares and 143,500 options to acquire American Depositary Shares.

Under its share buyback program Sims has so far bought 1.39 million shares for $17.7 million. Prices have ranged from $11.92 to $13.95. (ASX: SGM)

ASX 200

Dart Energy
Dart Energy received a high vote against it remuneration report of 24.5 per cent, and just missed breaching the 25 per cent level that would have seen a strike recorded against it.

Motions to issue options to director Peter Clarke and to director Simon Poidevin also both received high no votes.

Dart's presented the annual general meeting with some interesting data on its commercialization time frames and gas markets.

It expects first gas sales in China, India and Indonesia in the second half of 2012, the UK in the first half of 2013, and Australia in the second half of 2013. All of these markets have a significant gas deficit.

On community issues it says its policy with local communities is to work actively and be sensitive to customs and culture; with land owners to show respect, give fair compensation, and share information openly; and with contractors to use local companies as far as possible.

Dart says unconventional gas is an economically viable, greener energy source and it wants to communicate this benefit clearly through all its actions. (ASX: DTE)

Hastings Diversified Utilities Fund
Securities in Hastings Diversified Utilities Fund have hit a two year high of $1.825. No news accompanied the rise, but there has been media speculation that APA Group may be looking to increase its 19.9 per cent stake. (ASX: HDF)

Qube Logistics
Kawasaki Australia has reduced its substantial stake in Qube Logistics from 9 per cent to 6.8 per cent. (QUB)

Transpacific Industries Group
Transpacific Industries' subsidiary, Transpacific Cleanaway and micro cap AnaeCo are to undertake a joint commercial and technical feasibility study with a view to installing AnaeCo's DiCOM System at a Transpacific facility on the east coast.

The proposed facility will be designed to handle significantly larger volumes of waste than AnaeCo's facility at Shenton Park in Perth.

The parties expect to make a decision on the results of the feasibility study and whether to proceed with the project by mid 2012.

AnaeCo's chief executive Patrick Kedemos said "We are very pleased to have this opportunity to work with industry major Transpacific. We believe the unique attributes of DiCOM such as its ability to deal with a mixed waste stream, generation of renewable energy, odour management, advanced process control system and compact plant footprint, will prove to be very effective in this proposed metropolitan area project.

"Given the scope and scale of Transpacific's business initiatives, we see this project as the beginning of a long and mutually rewarding relationship."

Transpacific directors Martin Hudson, Raymond Smith, Bruce Brown and Gene Tilbrook participated in the company's recent entitlement offer.

Warburg Pinus Group, which also participated in the offer, has seen its holding fall from 35.8 to 33.9 per cent after the retail component of the offer. (ASX: TPI)

ASX 300

Ceramic Fuel Cells
Ceramic Fuel Cells has received a new order for 105 units from E.ON UK, one of the UK's leading power and gas companies.

New agreements have been signed with E.ON covering Ceramic Fuel Cells' BlueGen modular generator and its micro combined heat and power unit in development. Each product uses CFCL's Gennex fuel cell module.

E.ON has ordered 41 BlueGen electricity generators to be used under the EU's Fuel Cell and Hydrogen Joint Undertaking's Joint Technology Initiative (JTI) fuel cell demonstration program. The JTI project partners are E.ON, CFCL, Ideal Boilers Ltd of the UK and HOMA Software BV of The Netherlands.

Under the JTI project, the BlueGen units will be installed in homes and other buildings in the UK, Germany and The Netherlands during early 2012.

Ideal Boilers has produced boilers for over 100 years. HOMA Software specializes in remote monitoring and control of micro combined heat and power systems.

An additional four BlueGen units will be deployed by E.ON in demonstration and commercial customer sites.

Ceramic Fuel Cells said the development work under the Product Development Agreement signed with E.ON in 2009 is now complete.

Ceramic Fuel Cells and E.ON are continuing to work together to develop a range of product configurations for UK market segments and customer requirements. Once the Product Development Agreement is completed during 2012 the next stage in their collaboration is to negotiate a Product Supply Agreement for commercial products.

Under the JTI project, Ideal and Ceramic Fuel Cells will develop up to 60 integrated units, to be installed in homes in the UK, Benelux and Germany from late 2012. These integrated units will be manufactured by Ideal in the UK. They will provide power, hot water and home heating. Ceramic Fuel Cells and Ideal have built two prototype units for testing during the 2011-12 heating season.

Unlike BlueGen, integrated units provide home heating, and target the market for replacement home boilers, which in the UK alone comprises 1.6 million units per year.

In other news, NRW Bank has extended the term of the grant received by Ceramic Fuel Cells.

In December 2009 the company received a grant of 1,386,000 from the NRW Bank, the government-owned development bank in the German state of North-Rhine Westphalia, where it has built its volume manufacturing plant. The extension is to December 2012.

Ceramic Fuel Cells has extended its rights issue to 5 December, saying there were delays in some Australian shareholders receiving their rights issue. (ASX: CFU)

Galaxy Resources
M&G Investment Management has increased its holding in Galaxy Resources from 11 per cent to 12 per cent.

The Vanguard Precious Metals & Mining Fund has increased its interest from 6,3 to 7.3 per cent. (ASX: GXY)

CO2 Group
CO2 Group reported net profit after tax of $1.5 million for the year ended 30 September 2011. This compares to a loss of $3.34 million for the previous reporting period and represents a turnaround of $4.8 million.

Earnings before interest and tax (EBIT) was $2.2 million.

CO2 changed its reporting period in FY2010, and the FY2011 results compare to a 15 month period for the 2010 financial year.

Revenue of $35 million was a record and compared to $27 million FY2011. Revenue growth was driven by increased demand for carbon forest projects and by a diversification of activities into broader environmental and financial services, most notably the launch of the carbon credits and renewable energy certificates trading business Carbon Banc.

Other new services include forestry mapping and consulting services, carbon accounting, and site rehabilitation activities.

CO2 now has 22,300 hectares of plantings managed on behalf of clients, up from 17,900 hectares the prior year, and this will further expand with the 2012 planting program.

Chief executive Andrew Grant said "Whilst the Federal Government's legislation on the pricing of carbon has been a pleasing development, CO2's growth has been achieved prior to the passage of the carbon pricing legislation. Our growth to date has been driven by servicing the needs of governments and blue chip organizations to assist them achieve their carbon offset strategies.

"Our revenue growth is particularly encouraging. This, and the conversion of listed options into shares, means CO2 now has cash on hand of $35 million and no debt. This places us in a very strong position and gives us the flexibility to invest in our growth."

Mr Grant said "We have an active pipeline of new business opportunities across all our service lines, carbon plantings will definitely expand and we are reviewing other growth opportunities and potential acquisitions that complement CO2's operations. With over 500 large carbon emitters in Australia looking at carbon offset strategies, we are very well placed to tap what is now a large, proven and established industry." (ASX: COZ)

SteriHealth has completed the acquisition of KDL Products, a Gold Coast based manufacturer and distributor of point of use waste containers and accessories for hospitals. The acquisition complements the range of containment solutions offered by the company and is in line with its strategy of enhancing products and services in its traditional markets.

Chairman Lorenzo Coppa said SteriHealth delivered sustained organic revenue growth in 2010-11 thanks to increasing market share in clinical waste along with the launch of new products and services. The most exciting of these was the launch of the Clinismart suite of products and services, an extension of the Sharpsmart range.

The Clinismart clinical waste management system is designed for hospitals and provides higher standards of infection control than currently available, he said. It also more environmentally effectives and logistically efficient

A foot-pedal opening mechanism and a bagless system mean hand contact with the clinical waste collector is no longer required. This gives a big reduction in the infection transfer risk compared to standard clinical waste collectors. The reusable collector system has a container that is removed from the customer's premises, emptied, and then given a six-stage wash and sanitation process, as for the Sharpsmart System.

Customer feedback suggests the product has huge growth potential in coming years, said managing director Dan Daniels.

The Sharpsmart range has continued to perform above expectations, with sales growing over 9 per cent in 2011.

Mr Daniels said significant progress has made in expanding the geographical footprint of the business. A significant milestone during the year was the commencement of services to customers in far north Queensland for the first time, which leaves us well placed to service other regional parts of Queensland. (ASX: STP)

Micro Cap Companies

Algae.Tec has signed a contract to build its first algae biofuels production facility in Sri Lanka, its first Asia. The facility will be in conjunction with Holcim Lanka Ltd, a cement and building materials company.

Holcim Lanka sees the Algae.Tec technology as a way of reducing its carbon footprint by channelling waste carbon dioxide into the algae growth system, and generating biofuel at below market cost.

The biofuels production facility will initially comprise five photo-bioreactor modules. This will allow Holcim to evaluate the benefits of capturing more of the waste carbon dioxide in a much larger facility. It is expected that the Algae.Tec technology could be rolled out at other sites.

Holcim Lanka chief executive Mr Huber said "The Algae.Tec facility is designed to reduce the cement manufacturing carbon dioxide emissions with an off-take into the algae growth system... this exciting development is aligned with our focus on sustainability and a commitment to the environment." (ASX: AEB)

AnaeCo and Transpacific Industries' subsidiary, Transpacific Cleanaway, are to undertake a joint commercial and technical feasibility study with a view to installing AnaeCo's DiCOM System at a Transpacific facility on the east coast.

The proposed facility will be designed to handle significantly larger volumes of waste than AnaeCo's facility at Shenton Park in Perth.

The parties expect to make a decision on the results of the feasibility study and whether to proceed with this project by mid 2012.

Chief executive Patrick Kedemos said "We are very pleased to have this opportunity to work with industry major Transpacific. We believe the unique attributes of DiCOM such as its ability to deal with a mixed waste stream, generation of renewable energy, odour management, advanced process control system and compact plant footprint, will prove to be very effective in this proposed metropolitan area project.

"Given the scope and scale of Transpacific's business initiatives, we see this project as the beginning of a long and mutually rewarding relationship."

Newly appointed chairman, Shaun Scott, who replaces professor Michael Dureau, said it is "very encouraging to see the "green shoots" of commercialization pushing through" with the Transpacific Industries Cleanaway project.

"We are confident we will see more similar developments through 2012, as well as the identification of project opportunities internationally."

AnaeCo raised $529,000 from its share purchase plan. The issue price is 4 cents, a 15 per cent discount to the average market price for the five days up to 29 November. (ASX: ANQ)

Carbon Conscious
Carbon Conscious director Robert Payne has decided not to stand for re-election at the company's annual general meeting and will retire as a director. (ASX: CCF)

Carbon Polymers
Carbon Polymers has acquired the assets and operations of Tyre Recycling Group Pty Ltd (TRG) in Melbourne. TRG has a five stage processing plant capable of processing 2 tonnes per hour.

The acquisition helps Carbon Polymers with its national rollout strategy and means it will now operate five tyre recycling facilities with the capacity to produce high quality fine granules and powder, said chairman, Andrew Howard.

The acquisition will increase the speed to market of products competing in the supply of softfall surfacing, additives for road binding agents and adhesives manufacture. The operation in Melbourne will also facilitate other lines of business.

Mr Howard said the new cost structure means the company can operate with lower costs and compete in several market segments. The additional capacity and existing plants will take Carbon Polymers to 60,000 tonnes per annum, with further upgrades to existing plants to enable it to deliver 70,000 tonnes per annum.

The company raised $1 million via convertible notes to fund the acquisition and integration, and the offering was fully subscribed. The notes have a maturity of three years, an interest rate of 10 per cent and convert at 25 cents into shares. The notes also have a 1 for 1 attaching option with an exercise price of 30 cents and expiry of April 2014.

Mr Howard said Carbon Polymers' processing capacity for used tyres is four times its nearest competitor, and that the demand for its end product outstrips supply by a factor of five.

Powdered rubber is $600 to $800 per tonne and is used as a direct replacement for diesel duel which is $1,350 per tonne, polymers which are $1,200 per tonne, styrene-butadiene-styrene (SBS) and ethylene vinyl acetate (EVA) polymers which are $3,000 per tonne, and EPDM synthetic rubber which is $3,000 per tonne.

Only 25 per cent of tyre feedstock is recycled, he said.

Carbon Polymers is now the largest listed rubber recycling company in Australia, and the company sees itself recycling over 10 million tyres by 2014, he said.

During the past year the company raised over $3 million to fund acquisitions and plant upgrades. It acquired the assets of Reclaim Industries, Pincott's Recycling Services, and Tyre Recycling Group, was awarded a Government tender to supply rubber products, restructured its operations, commissioned the Smithfield Plant in Sydney, and increased staff from 12 to 42. (ASX: CBP)

Carnegie Wave Energy
Shares in Carnegie Wave Energy hit a four year low of 4.9 cents on 1 December. On the same day the company announced a share purchase plan to raise up to $4 million at 5 cents per share. The price was a 27 per cent discount to the 20 day average share price.

The funds are for working capital purposes during the commercial demonstration project. The details and location of the demonstration project will be announced in early 2012.

Managing director, Dr Michael Ottaviano, said "Carnegie has a number of material milestones in 2012 which even in the current difficult market conditions will move the company forward significantly.

"These include the decision on the location of its first revenue producing CETO project, the deployment of the next generation CETO unit by the French Government owned power utility EDF and multiple Government project grant decisions.

"We want to give our existing shareholders full access to participate in this capital raise given the compelling issue price."

The offer closes on 23 December. (ASX: CWE)

Credit Suisse World Water Trust
The net asset value for the Credit Suisse PL100 World Water Trust as at 1 December was $1.0285 per unit.

The Fund has issued an update on its Notional Portfolio. (ASX: CSW)

Shares in EcoQuest have hit a new all time low of 0.6 cents.

Mariner Corporation has become a substantial shareholder with 7.2 per cent due to the payment of fees in shares. (ASX: ECQ)

Eden Energy
Eden Energy is expanding its OptiBlend fuel into the renewable biogas market, said executive chairman, Gregory Solomon.

OptiBlend sales will expand to include renewable biogas from landfills, digesters and waste water treatment facilities, as well as syngas from sawdust, wood chips or similar carbon-neutral agricultural waste in gasification equipment. These biogases have similar composition to the natural gas/ syngas/ hydrogen feedstocks used in the OptiBlend system, he said.

Developed for subsidiary Hythane Company, the OptiBlend system is currently being validated for commercial use with both hydrogen-rich renewable biogas and syngas fuel feedstocks.

Mr Solomon said that several projects in the US have recently been proposed that would use biogas produced on-site to displace as much as 70 per cent of high-cost diesel fuel at electrical power plants using engine-driven generator sets.

An OptiBlend kit has been purchased by a biogas equipment supplier for testing on their in-house genset. After successful performance testing and integration activities, the OptiBlend system will be included as the default genset conversion kit for these projects.

Mr Solomon says early research demonstrated the ability of hydrogen-rich gaseous fuels to displace diesel and improve the efficiency and exhaust emissions of diesel engines in distributed electrical power generation applications.

As well as the economic benefit of replacing diesel with renewable methane from waste, the OptiBlend applications will result in a significant reduction in greenhouse gases from the power generation.

In many remote areas of the world, small-scale electrical power generation depends on engine generator sets running on diesel fuel, he said. This fuel must be shipped or air-lifted in small tanker trucks or drums at a very high cost.

Many of these diesel-based power plants exist to provide power to agricultural industries that provide sufficient waste material for production of their own renewable biogas. Timber mills, food processing plants, and landfills are a few of the many potential applications. Installation of an OptiBlend system in such applications would greatly reduce operating costs, and drive further sales.

The Hythane Company has also improved its technique for dispersing carbon nano-tubes, which may help to improve concrete.

The company is researching concrete reinforced with carbon nano-fibres (CNF) and carbon nano-tubes (CNT) using carbon produced at its laboratory in Colorado.

Hythane Company says it has developed a greatly improved technique which it says enhances the even dispersion of carbon nanomaterials in concrete and mortar composites.

Even dispersion of the carbon is a major obstacle to develop bulk commercial applications for the great strength and thermal and electrical conductivity that nano-carbon materials can provide. (ASX: EDE)

EnviroMission's president of EnviroMission (USA) Inc., Christopher Davey, has been appointed to the position of vice chair of the Arizona Energy Consortium, a committee of the Arizona Technology Council with over 250 members from the state's energy sectors.

The appointment provides EnviroMission with a voice at the industry council, and access to frontline energy thinking, determinations and influence in the same state in which the company's Solar Tower power station technology is being delivered, said EnviroMission company spokesperson, Kim Forte.

Mr Davey is an Australian based in the US with expertise in renewable energy and financial markets.

At the project level, EnviroMission has engaged aerial mapping and land surveying services from Ritoch-Powell & Associates (RPA), a well established Arizona engineering and surveying consulting services company.

EnviroMission chief executive, Roger Davey, said the mapping and surveying services are a vital aspect to the front end engineering and design phase of Solar Tower development. (ASX: EVM)

Geothermal Resources
Shares in Geothermal Resources will be suspended from quotation on 6 December 2011 after a successful takeover offer by Havilah Resources NL. (ASX: GHT)

Greenearth Energy
Greenearth Energy chairman Robert Annells has indirectly acquired another 77.866 shares for $5,514, an average price of 7 cents. (ASX: GER)

Hot Rock
Hot Rock Limited is finalizing an agreement for Energy Development Corporation (EDC) to farm-in/ joint venture in four projects in Chile and Peru.

EDC is the world's largest pure play geothermal company with a total of 1,130 MWe of installed capacity and over 30 years of operational experience.

The companies have the framework and main commercial principles for the acquisition by EDC of a 70 per cent interest in the volcanic Calerias and Longavi geothermal projects in Chile and the Quellaapatcheta and Chocopata geothermal projects in Peru.

This would be through sole funding by EDC of some resource development costs for each project. HRL currently holds a 100 per cent interest in the projects.

The companies aim to finalize the farm-in and joint venture agreements (FIJVA) by 21 December.

EDC would also pay US$2.6 million to Hot Rock on execution of the FIJVA. A further US$1.4 million is payable following the grant of certain geothermal regulatory consents and approvals by the Peruvian government.

Hot Rock said that following receipt of the consideration it will have sufficient funding for its planned geological and geophysical programs in 2012 for its other 100 per cent owned projects.

Executive chairman, Dr Mark Elliott, said "EDC is a very high quality partner for HRL and will bring an important depth of experience and endorsement to the HRL projects to advance them from early stage exploration right through to financing and operation."

"We look forward to working closely with the EDC team and to commencing exploration activities on our projects in early 2012 commencing with detailed MT surveys and preparation for drilling later in the year when weather permits, following completion of the proposed transaction."

EDC's president and chief operating officer Richard Tantoco said the four projects are some of the best geothermal concessions in both Chile and Peru.

EDC is a public company on the Philippine Stock Exchange and has a market capitalization of around US$2.5 billion. The World Bank-International Finance Corporation, Government of Singapore Investment Corporation and First Gen are key investors. EDC owns 8 drill rigs and has drilled more than 900 geothermal wells over the last 35 years. It has one of the most experienced geothermal operations team in the world and is on an aggressive growth strategy to build its geothermal business. (ASX: HRL)

Kimberley Rare Earths
Kimberley Rare Earths' independent non-executive director, Peter Rowe, did not seek re-election at the annual general meeting, though he remains as technical consultant to the company.

Non-executive director, Gerry Kaczmarek is also to stand down, but will do so once a board restructure is complete, likely by end of March, 2012. (ASX: KRE)

Mission NewEnergy
Mission NewEnergy's jatropha harvest season runs from late November to the end of February 2012.

"We anticipate an increase in yield now that further acreage has reached maturity. We continue to see unprecedented demand for Jatropha oil in the aviation, transport fuel and power oil markets globally," said managing director, Nathan Mahalingam. "Reduction of feedstock cost is set to position Mission well to win additional long term biodiesel off-take agreements." (ASX: MBT)

Orbital Corporation
Orbital Corporation's key customer Ford Australia has been awarded "Best Large Car Under $60,000" at the Australia's Best Cars awards for its new Ford Falcon EcoLPi. Orbital is the principal supplier of fuel system components for the Falcon EcoLPi from its assembly facility in Sydney.

The annual awards are presented by the Australian Automobile Association (AAA) in conjunction with the seven major state and territory motorists' clubs.

The Falcon EcoLPi 4.0 litre 6-cylinder engine has a liquid phase LPG injection system which Ford Australia describes as a "major step forward from the venturi-style vapour system used on the previous E-Gas Falcons."

Chief judge Mark Borlace said the victory was significant because it tackled a number of key concerns facing consumers in the market – especially in the large car market. "First of all, LPG is considerably cheaper than regular petrol, which makes the EcoLPi cheaper to run."

"On top of that, LPG burns a lot cleaner than petrol or diesel, which means that the Falcon EcoLPi emits just 203 grams of CO2 per kilometre, compared with 236 in the regular petrol-fueled Falcon."

Managing director of Orbital, Terry Stinson, said the EcoLPi project was the company's first automotive project to enter series production. "The launch of Falcon EcoLPi and its recognition by the AAA provide us with confidence that our focus on engine and fuel systems for alternative fuels is a move in the right direction. We hope that the AAA recognition will result in increased sales of the Falcon EcoLPi and will help to raise motorist's awareness of the cost and environmental benefits of using LPG."

"Working with Ford Australia, we've proven Orbital's innovation capability and our ability to deliver world-class automotive engineering projects that meet or exceed customer targets in terms of performance, economy and environmental friendliness. We have also proven that we can take an automotive project to production. This is a great example of Australian Innovation "

Orbital sells a growing range of aftermarket LPG fuel systems which use similar Liquid LPG injection technology as the Falcon EcoLPi. (ASX: OEC)

Water Resources Group
Water Resources Group has had 34,822,473 shares released from escrow, bringing its marketable shares to 253,252,700. At around 2.6 cents, its 25 cents shares continue to trade close to their recent all time low of 2.5 cents. (ASX: WRG)

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