Eco Investor Update

A Weekly News Update for Environmental Investors

2 April 2012 - No 74

____ Core Securities ____

ASX 100

Hastings Diversified Utilities Fund
Financial close has been achieved for the refinancing of all of Epic Energy’s debt facilities, totaling $1.375 billion, said Hastings Funds Management Limited, the responsible entity for Hastings Diversified Utilities Fund, which owns Epic Energy.

The new facilities will be used to replace all existing senior and mezzanine debt facilities, and consist of three tranches: an 18 month debt facility of $250 million, a $720 million three year term facility and a $355 million four year term facility, as well as a $50 million three year capital expenditure facility.

Commercial benefits of the refinancing include reduced interest costs and increased available annual cash flows, and an enhanced ability to access global debt markets and implement longer debt maturity tenors.

Funding has been received from ANZ, BTMU, Commonwealth Bank, JP Morgan, National Australia Bank, the Royal Bank of Canada, Sumitomo Mitsui Banking Corporation and Westpac Banking Corporation. (ASX: HDF)

ASX 300

Tassal Group
Three Tassal directors have resigned: David Groves, Gary Helou and Clive Hooke. No reason was given, but chairman Allan McCallum thanked each for their contributions and wished them well in their future endeavours. (ASX: TGR)

Tox Free Solutions
Shares in Tox Free Solutions achieved a new 10 year high of $2.87 on 28 March.

IOOF Holdings seems to have taken advantage of the high price to realize some profits as it has reduced its stake from 10.66 to 9.14 per cent. (ASX: TOX)

Unlisted Share Funds

Climate Advocacy Fund
Australian Ethical Investment, which manages the Climate Advocacy Fund, is undergoing significant employee dissatisfaction with management and its strategy, according to a report in the Sydney Morning Herald.

The disagreement appears to be between the board and some of the founders of the investment manager, who have lodged resolutions to remove the board.

____ Satellite Securities____

ASX 200

Transpacific Industries Group
Transpacific Industries Group has appointed Terry Sinclair as a non-executive director. Mr Sinclair is a corporate advisor to a number of private and ASX listed companies on post acquisition integration, business model development, digital communications and other issues.

He has worked in the resources, industrial, logistics and communications sectors with BHP and Australia Post. He was previously chairman of AUX Investments, which is jointly owned by Qantas and Australia Post and is the parent company of Star Track Express and Australian Air Express, and was head of Corporate Development at Australia Post. (ASX: TPI)

Emerging Companies

Clean TeQ Holdings
The recent issue of shares to Nippon Gas has diluted the interest in Clean TeQ held by Wasabi and Aqua Guardian Group from 26 to 22.7 per cent. (ASX: CLQ)

CMA Corporation
CMA Corporation is to hold a shareholder meeting to approve the buyback and cancellation of 1,630,760 shares owned by a CMA subsidiary for nil consideration. The shares represent 0.75 per cent of CMA's share capital.

The buy-back shares were acquired by CMA in December 2010 as part of the settlement of litigation commenced by CMA against former managing director Douglas Rowe and his company WMR Investments Pty Ltd. (ASX: CMV)

DoloMatrix International
When DoloMatrix International receives the final payment from Toxfree Solutions for the sale of its assets, it will make a further distribution comprising a capital return and a fully franked dividend. This is expected to be about 3.6 cents, with half as the dividend.

The announcement follows the resolution, subject to final documentation, of a short dispute with Tox Free Solutions over completion adjustments to their agreement for the sale of DoloMatrix’s operating subsidiaries to Toxfree.

CVC Ltd has increased its holding in DoloMatrix from 10.09 to 11.37 per cent. The shares were acquired at an average price of 4.52 cents each. (ASX: DMX)

Unlisted Share Funds

Australian Ethical Smaller Companies Fund
Australian Ethical Investment, which manages the Australian Ethical Smaller Companies Fund, is undergoing significant employee dissatisfaction with management and its strategy, according to a report in the Sydney Morning Herald.

The disagreement appears to be between the board and some of the founders of the investment manager, who have lodged resolutions to remove the board.

CVC Sustainable Investments
CVC Sustainable Investments made a profit after tax of $825,272 for the six months to 31 December 2011. The corresponding 2010 loss was $2,313,563.

The company is considering a strategy of realizing its investments and returning funds to shareholders.

During the period it sold its investment in Pro-Pac Packaging at a price of 45 cents per share and generated a pre-tax profit of $528,648.

Net assets were $6.09 million, of which cash was $3.6 million. Shares in unlisted companies available for sale are valued at $1.86 million. The Fund’s 34.4 per cent in the listed Environmental Group Ltd is valued at another $1.36 million.

____ Pre-Profit Securities ____

Micro Cap Companies

Electrometals Technologies
Electrometals Technologies had a difficult year in 2011. “Sales declined from $3.9 million to $1.1 million. There were no significant plant sales. Net loss from continuing operations increased by $0.9 million to $2.9 million,” says chairman Gregory Melgaard in the 2011 annual report.

“Since 1991 the business of Electrometals has been the commercialization of its patented electrowinning technology, which we call EMEW (ElectroMetals ElectroWinning). Over the years management has attempted a number of strategies to achieve this with varying degrees of success: selling plants outright, selling supplies, selling maintenance packages, selling systems using EMEW and related technologies, selling laboratory and engineering services, charging royalties, and selling metal from EMEW cells we own and operate ourselves," he said.

"We continue in our search to find the right business model to commercialize this technology.”

Directors said of perhaps even more concern is cash consumption. “During the year we raised $3.9 million. However, $2.7 million of this has already been consumed. Our year-end cash balance is $2.0 million, an increase of $1.1 million over the previous year.”

A major strategic and operational review was undertaken during the year, and management is taking initiatives to address the problems, said Mr Melgaard.

“This will necessarily result in an increase in short term cash costs and will take time to implement. Your board is doing everything we can to avoid another equity capital raising. However this may prove unavoidable.”

Director Michael Nugent has indirectly acquired 50,000 shares at 1.4 cents each. (ASX: EMM)

The non-renounceable rights issue by Intermoco will be at 0.1 cent per share and aim to raise up to $1.208 million. The offer is partly underwritten to $400,000 by the Copulos Group. Participation is on a 4 for 11 basis. All directors said they will take up their full entitlements.

Meanwhile another 33,333,333 shares have been issued under a convertible note facility at 0.09 cents per share. Although the shareholder is not stated, it could be La Jolla Cove Investors. (ASX: INT)

Vmoto says it will establish its own dealer distribution network in Europe, and evaluate a European electric scooter battery rental business.

The company is conducting a feasibility study for its dealer distribution network in some European countries where it does not have a relationship with an importer for its electric scooters.

Such a network should increase revenue and profit through additional sales directly with
dealers and end users rather than via an importer/distributor. The direct sales model will also enable a lower retail price for end users.

When Vmoto completes EC compliance registration, it will be in a position to trial and launch its first own dealer distribution network in a targeted country. Once the best structure and strategy are determined, it will roll-out the model to other countries.

Vmoto says the main considerations by consumers when purchasing electric scooters are the cost and the inconvenience and time required to recharge batteries.

The ability to rent batteries woud significantly reduce initial purchase costs, and the ongoing running costs of an electric scooter would be significantly lower than for a petrol scooter, even after the battery’s rental cost. It would enable users to quickly exchange batteries while on the road without needing to wait to recharge the batteries. The network would serve as a ‘petrol station’ for electric vehicles.

The business model will be trialed in Spain, where Vmoto has its European head office. If successful, other revenue streams may derive from renting batteries.

Meanwhile, 32 electric scooter samples have been delivered to TAO in Denmark for trial. TAO is one of the largest newspaper delivery companies in the country and has a 500 unit petrol scooter fleet.

Denmark Post has ordered 5 electric units for trial and these are being prepared to meet its requirements. Denmark Post has 1,000 petrol scooters in its fleet.

Belgium Post has ordered 50 scooters for trial, and these are now being manufactured. Belgium Post has a 5,000 unit petrol fleet.

Vmoto is also in discussion with two electric bicycle/scooter companies in China about cooperation in electric scooters.

The development of two electric scooter models for China is on plan. The models are a redevelopment of the E-Max 80L electric scooter with a lithium battery where costs will be reduced by about 50 per cent; and a new electric scooter known as the Green which is a retro styled scooter powered by a silicone battery.

The strategy is to offer a competitive price for consumers who want an electric scooters for transport but are currently deterred by the generally higher prices of electric scooters over petrol scooters. (ASX: VMT)

____ Pre-Revenue Securities ____

ASX 200

Dart Energy
Dart Energy’s shares hit an all time low of 29 cents on 27 March. The company received an inquiry from the ASX about the price but had no explanation.

Meanwhile, Dart and its partner Maria’s Farm Veggies Pty Ltd (MFV) have won the FutureGAS Innovation Award for 2012. The award is for the MFV combined heat and power glasshouse project that will produce vegetables and generate electricity.

Dart said the project is a model of sustainability that demonstrates that coal seam gas (CSG) production can bring significant benefits to communities and the economy. The project will produce food and electricity yet have a much lower impact on the environment than conventional food and power production techniques.

Project benefits include ten times the food production compared to conventional techniques, near zero CO2 emissions for power exported to the grid, and beneficial re-use of CSG water.

Dart Energy will start work on its coal seam gas production pilot near Maria’s Farm Veggies once formal approvals have been received, it said.

FutureGAS is the annual gas conference organized by Gas Today magazine. (ASX: DTE)

ASX 300

Galaxy Resources
Galaxy Resources said its Mt Cattlin plant and mine in WA have exceeded design capacity and had above-design throughout during the second half of March.

Ramp-up is progressing in line with expectations and the next spodumene consignment to China is in April. The 27,000 tonne consignment will represent the first sizeable revenue flow for Galaxy since start-up at Mt Cattlin.

Manwhile, shares in Galaxy Resources are in a trading halt pending an announcement. No further details were given. (ASX: GXY)

Micro Cap Companies

Algae.Tec has issued 318,878 shares at 31.35 cents each to La Jolla Cove Investors for the conversion of $100,000 of a convertible note. (ASX: AEB)

Dyesol raised $5 million - $3.9 million through its share purchase plan and $1.1 million through a supplementary placement to sophisticated investors who were mostly existing
sophisticated investor shareholders.

The raising was at 18 cents per share and partly underwritten by Octa Phillip Securities for $3 million.

“The Company is deeply gratified by the strong financial support from Dyesol shareholders and looks forward to reporting exciting developments in our world-class partner projects in the coming weeks and months.” said chairman Richard Caldwell.

In line with mooted management changes, Dyesol has ended the engagement of Dr Gavin Tulloch who has been a consultant in the role of Director of Technology since October 2010. He remains a non-executive director. (ASX: DYE)

Eco Quest is offering a pro-rata non-renounceable offer to shareholders to raise $675,372 and has completed the placement of 115 million shares at 0.5 cents per share to raise $575,000.

The pro-rata non-renounceable offer is 1 for 2 at 0.5 cents per share, and like the placement shares come with a 1:1 free option with an exercise price of 1 cent exercisable by 31 December 2012.

The placement was to sophisticated investor clients of Forrest Capital Pty Ltd. The offer is underwritten by Forrest Capital Pty Ltd.

EcoQuest has issued 11,194,029 shares to Mariner Corporation at 0.67 ecnts per share for the services of Darren Olney-Fraser's as acting managing director.

Denlin Nominees Pty Ltd has become a substantial shareholder with 7.77 per cent. (ASX: ECQ)

Eden Energy
Shares in Eden Energy hit an all time low of 2.6 cents on 27 March. The company has a funding agreement with La Jolla Cove Investors, which is known to convert and dump shares on market.

On 29 March Eden’s shareholders voted to approve this funding. (ASX: EDE)

Enerji has appointed equipment finance broker Ledge Equipment Finance as part of its objective to move to the debt financing of major capital expenses for future orders of its waste heat to power Systems.

Ledge Equipment Finance will endeavour to secure a debt facility to give Enerji an alternative funding source to the issuing of shares. This would minimize shareholder dilution.

Enerji believes the Opcon Powerbox systems are suitable for debt financing as they give predictable revenues from generated electricity that is sold back to the customer under long term power purchase agreements. (ASX: ERJ)

North America-based project management consultancy Faithful+Gould has been selected by EnviroMission to join its Solar Tower power station project in Arizona.

Faithful+Gould's Phoenix office will provide consultant services from the conceptual design phase through to construction and operation.

“Faithful+Gould has provided technical expertise and support to diverse projects in the energy sector over many years, however the EnviroMission La Paz Solar Tower represents a new level of renewable energy innovation in the energy sector,” said Faithful+Gould Technical Director Adrian Smith. (ASX: EVM)

Intelligent Solar
Intelligent Solar is to look at other business activities following a decision that it is too difficult to commercialize the company’s ISET solar technology.

“It has become evident to the Board in its discussions that there are a number of competing technologies in the market and it accordingly has not been able to reach commercial agreements with potential customers. In addition, the Federal Government`s decision to cease the solar water hot water rebate scheme has significantly reduced the market potential for the ISET technology,” said managing director, Kevin Chin.

“The Board has decided that it would not be in the best interests of shareholders to continue to pursue commercialization of ISET, given the additional investment that would be required to improve the technology and the high probability of limited to no returns being yielded.”

The board will now investigate new business opportunities, and any proposal is expected to “significantly change the nature of the Company’s activities”. (ASX: ISL)

La Jolla Cove Investors has been issued another 5,263,158 shares in MediVac on exercise of $50,000 of its convertible securities. The issue price was 0.949 cents each. (ASX: MDV)

Shares in Petratherm fell to a one year low of 7.9 cents on 28 March.

Petratherm has begun the first phase of a large magnetotelluric (MT) survey on the Island of Tenerife, Spain. The survey is to extend the mapping of a subsurface, hydrothermally altered clay cap that is typically indicative of an upflow of geothermal fluid.

The survey is to determine if the system has an expression at shallow depth on the lower flanks of the volcano in areas that are suited for drilling and potential development. It could determine if there is a better drilling target than previously identified.

The MT is funded by the previously announced Spanish Federal Government Grant of over $1 million to characterize the geothermal resources of the Canary Islands. Petratherm España leads the consortia that won the grant. Its collaborators are the Institute of Technology and Renewable Energy, the University of Barcelona, the University of Laguna, and the Canaries Institute of Volcanology.

It is anticipated the first phase of survey work will be completed by early April. (ASX: PTR)

Torrens Energy
Torrens Energy executive chairman Anthony Wooles has indirectly acquired another 500,000 shares at 8.03 cents each. (ASX: TEY)

Water Resources Group
Water Resources Group says its seawater reverse osmosis demonstration system (dASWRO) in El Dorado Hills, California, has passed 7,500 hours of failure-free operation. The milestone was reached without any out–of-specification performance or operator intervention.

With a satellite monitoring system, operations continue unattended 24 hour per day, seven day per week.

The system gives over 45 per cent savings in actual power consumption compared to conventional desalination systems, said WRG. Unanticipated improvement in water quality have resulted from system upgrades.

Chief executive Brian Harcourt said “This is a significant step in the history of the Company. The proven operating performance of our proprietary ASWRO desalination system reinforces our competitive advantage over traditional desalination systems globally. The system is continually proving to be the most competitive low cost, chemical free, community based desalination system in the world.” (ASX: WRG)

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