Eco Investor Update
A Weekly News Update for Environmental Investors
2012 - No 86
Hydromet will shortly be delisted, ending Eco Investor's coverage. (ASX: HMC)
Ceasing coverage of DoloMatrix
DoloMatrix recently sold its waste management business and it remains to be seen in what direction the listed entity will move. (ASX: DMX)
APA has issued C$300 million ($289.5 million) of seven year fixed-rate Medium Term Notes (MTNs) from its European MTN program. The funds will be used to repay existing loans drawn under APA's revolving bank facilities. Additional headroom that has been created will support investment in its infrastructure assets, the acquisition of Hastings Diversified Utilities Fund, and for general corporate purposes.
The MTNs have a coupon of 4.245 per cent per annum, paid semi-annually, and will mature on 24 July 2019. The principal and interest obligations have been hedged into A$ obligations under cross-currency interest rate swap transactions, with coupons payable semi-annually in A$ at a fixed-rate of 6.75 per cent per annum.
Chief financial officer Peter Fredricson said "This MTN issue is consistent with our capital management strategy - we've further diversified our sources of funding, extended the average length of our debt maturity profile and have additional longer term debt cost certainty.
"This MTN issue is APA's first in the Canadian market following strong interest from Canadian debt investors, and it further demonstrates the attraction of APA's energy infrastructure business and strategy to debt investors in general." (ASX: APA)
Sims Metal Management
The Australian Bureau of Statistics said no state or territory experienced an increase in dwelling unit commencements in the March quarter compared to the December quarter. The largest decreases were in the ACT of minus 50.9 per cent, the key state of NSW with minus 46.7 per cent, the NT minus 27.8 per cent and Tasmania minus 24 per cent.
The news appears to have been factored into GWA's share price, which has remained relatively steady so far. (ASX: GWA)
Hastings Diversified Utilities
Allan Gray Australia, formerly Orbis Investment Management, appears to have been taking advantage of the high price and since February has been selling down: from 8.57 to 7.53 per cent.
The fund is paying a March quarter distribution of 2.5 cents per security. The ex-distribution day is today. (ASX: HDF)
Tox Free Solutions
Unlisted Share Funds
Climate Advocacy Fund
Support for the 10 motions ranged between 32.5 and 42 per cent of the votes.
Chairman Andre Morony told the meeting he hoped the distraction can now end.
Australian Ethical Investment manages the Climate Advocacy Fund, the Australian Ethical Smaller Companies Trust, and the Australian Ethical International Equities Trust.
Chief executive, Stone Wang, said the 49 per cent owned joint venture company will utilize the skills of AFT subsidiary Artemis Building Systems. (ASX: AFT)
Harvey Norman Commercial, which sold 830 MW of solar equipment last year, has put in an order for 5 MW, enough for around 3,300 homes at an average 1.5 kw each.
The equipment is made by US based Westinghouse Solar, which will merge with CBD in the third quarter of 2012. The order is more than double Westinghouse Solar's total sales for the previous year.
The Westinghouse Solar panels have built-in inverters, so that they individually convert direct current power to alternating current and are ready to plug in and begin generating. They also look smart.
Shipping to Australia will begin after the equipment has received certification here, which is expected to take three months. Shipping will then commence in the December quarter. (ASX: CBD)
Unlisted Balanced Funds
Managing director Damien Lynch said "At the Australian Ethical shareholder meeting last night the dissident shareholders were unsuccessful in replacing the existing board of the company. We have grave concerns about the ongoing viability of the company based on the current marketing policy and sales practices. We are also seeing high expenses and declining income.
"We have sold our few remaining shares in this company.
"We acknowledge that the ethical investment practices inherited from August Investments continue to be applied to their investment and superannuation funds. We wish the ongoing management every success and good luck."
Elsewhere in the portfolio, August Investments has topped up its investment in Carbon Conscious at 17 cents per share. "We consider them excellent value at current prices, especially as they have projected an exceptional profit results for 2011-12," said Mr Lynch.
August Investments has also purchased shares in M2 Telecommunications, a provider of internet and data services, which are environmentally neutral. "This company is similar to our existing investment in TPG Telecom but, if anything, even greater value," said Mr Lynch.
Unlisted Share Funds
Australian Ethical Smaller
International Share Funds
Australian Ethical International
Ceramic Fuel Cells
Among other issues, the survey asks potential buyers their preferences about finance arrangements, carbon offsets, and a retailer potentially buying the energy.
Ceramic Fuel Cells said responses will be used to determine the most attractive contract arrangements for residential consumers to purchase BlueGen. The company is planning to initially offer the market introduction scheme to its shareholders in Australia.
In The Netherlands the plan is to install BlueGens with customers across the country and "create a new community of distributed energy producers, connected through the internet and operated as a Virtual Power Plant".
Ceramic Fuel Cells' distribution partner BlueGeneration is working on the project with Liander and IBM. They are now at the design phase.
Liander is a Dutch regional network operator with 3 million electricity customers and 2.3 million gas customers. IBM will provide system integration to control the BlueGen units remotely.
The first phase of the project saw three BlueGen units installed with energy consultants' KIWA Gastec for testing at their facilities in Apeldoorn. During this one year test phase, the influence of extreme modulation cycles and the impact for the grid operator will also be examined. The tests at Kiwa began in April 2012.
The partners intend to scale up the project in the second half of this calendar year and 2013.
Ceramic Fuel Cells said a Virtual Power Plant is a cluster of distributed electricity generation units controlled and operated by a central entity using integrated software. It allows power generation to be modulated up or down to meet peak loads and balance intermittent power from wind or solar, with higher efficiency and more flexibility than large centralized power stations.
The end customers will benefit from lower energy costs.
Matthijs Guichelaar of BlueGeneration said "This project is the example of how future flows of energy and IT can provide a solid base for renewable and distributed generation. The flexibility of the BlueGen and its high efficient electricity production makes it a very suitable component for the new Smart Grid. When the usage of biogas becomes available, the system will also be carbon neutral. This enables the agricultural sector to efficiently convert their biogas into electricity."
Last year a report by US analyst firm Pike Research said virtual power plant capacity will increase by 65 per cent between 2011 and 2017, rising from 55.6 gigawatts (GW) to 91.7 GW worldwide. (ASX: CFU)
Micro Cap Companies
The Tropicana Gold Project is 330 kilometres east-northeast of Kalgoorlie. The Tropicana Joint Venture comprises AngloGold Ashanti Australia with 70 per cent and Independence Group NL with 30 per cent.
Other recent new contracts include the 12 MW Garden Well power station for Regis Resources Ltd; the 20 MW DeGrussa power station for Sandfire Resources Ltd; and the 9 MW Nullagine power station for Millenium Minerals Ltd.
Managing director, Adam Boyd said the Tropicana Gold Project is the most significant gold mine development in the WA Goldfields in recent years.
"This is also an important milestone for Pacific Energy, marking the largest single contract win, in both size and term, since Pacific Energy acquired KPS in May 2009."
It follows a period of strong recent growth and positions Pacific Energy within reach of its goal of achieving 250 MW of contracted capacity by the end of this year. KPS now has contracted capacity of over 235 MW across 19 mine sites in Australia.
"The successful conclusion of these arrangements with the Tropicana Joint Venture validates the KPS strategy to maximize the fuel flexibility and efficiency of its power supply solutions," he said. (ASX: PEA)
Po Valley Energy
The company said the appointment of Kevin Eley is in line with its succession planning, following the recent retirement of David McEvoy. Mr Eley is based in Sydney and was the chief executive of HGL Ltd for 25 years until his retirement in 2011. He has management and investment experience in a range of industries including, manufacturing, mining, retail and financial services. He also has extensive experience in the direction of early stage companies and public company governance.
He is a chartered accountant and will join the Audit & Risk Committee. Kevin is currently a non executive director of HGL, Kresta Holdings, Milton Corporation and Equity Trustees.
Giovanni Catalano has been the company's CEO since late 2010 and has been a director of the Italian subsidiary NorthSun Italia since that time. He has over 30 years experience in exploration and development in the oil and gas Industry. He holds a masters Degree in Geology from the University of Ferrara, Italy.
Director Michael Masterman has acquired 740,000 shares at 11 and 12 cents each. (ASX: PVE)
Mr Tan will hold 10.4 per cent of the company.
As part of the Agreement, Refresh will also seek shareholder approval to issue options at increasing prices to Mr Tan over a three year period. If fully exercised, additional capital of up to another $1.1 million will be raised and will give Mr Tan 29.8 per cent of the company.
Refresh will use the funds to grow the business and for working capital. "With the funding plan in place, the company could focus on growth and create value for shareholders," it said.
Mr Tan is a company director and investor and entrepreneur. On completion of the share issue, he will become an Advisor to management in its business processes and strategic planning. (ASX: RGP)
The report of the Parliamentary Select Committee (PSC) established in relation to the LAMP was debated in the Malaysian Parliament on 19 June. The report recommends that the temporary operating licence be issued, and notes that Lynas has complied with the standards and laws in Malaysia, which are in line with international standards.
The PSC said it has taken into consideration the range of issues raised by concerned citizens, special interest groups and NGOs about public health and environmental safety, and subjected the LAMP to intense independent, expert scrutiny.
On 19 June Lynas lodged with the Atomic Energy Licensing Board its plans to satisfy the two new conditions for the temporary operating licence that were announced by the Minister of Innovation, Science and Technology. These conditions are to immobilize radioactive elements in any stored residue, and an emergency response plan if dust is released from the storage of the residue.
Lynas said it looks forward to the finalization of the Atomic Energy Licensing Board's requirements about the conditions, and the issue of the temporary operating licence as soon as possible.
"We are committed to operating in a safe and sustainable manner and to making a significant ongoing contribution to Malaysia," said Lynas executive chairman Nicholas Curtis. (ASX: LYC)
Micro Cap Companies
Algae.Tec executive chairman Roger Stroud said the commissioning is currently underway and the official opening will mark the production of algae oil for biofuels. (ASX: AEB)
The facility will be funded by and built on land owned by LKIM at Pagoh. Work is to commence immediately and should be completed in six months.
"After many years of door knocking, submission of proposals and the completion of a successful loading trial for the Department of Fisheries in February last year, CAQ has eventually convinced the decision makers that the CAQ system works," said executive chairman, Perry Leach.
"This is the first of hopefully many other projects for Federal Fisheries and it is obviously a great chance to not only show the company's total concept to Malaysia, but also to the whole of Asia." (ASX: CAQ)
Greenearth Energy has negotiated a change to the arrangements with Erdi Fuels Pty Ltd to realize an early cash flow from their CO2 to Fuel conversion technology joint venture project, New CO2Fuels Ltd.
Greenearth Energy and Erdi Fuels have now agreed to a discounted payment of $2 million from Erdi Fuels over the next 21 months, Under the previous arrangement Greenearth Energy entered into an option agreement with Erdi Fuels, which agreed to a placement of US$1 million in Greenearth Energy and to provide US$4.5 million in funding required by NEWCO2Fuels Ltd.
In return for the funding, all parties granted Erdi Fuels an option to acquire all of the shares in New CO2Fuels Ltd. The option was originally exercisable in two years' time.
Greenearth said it sees the amendment as strategically important as it exchanges a possible future payment for a fixed, advanced, funding stream for use by the company while at the same time maintaining the significant upside opportunity from the project by retaining Greenearth's royalty income share on future product sales if the technology is commercialized.
Greenearth Energy has an indirect interest of 42.5 per cent in NEWCO2Fuels Ltd. (ASX: GER)
ISC holds the intellectual property rights to develop and market the air-to-water machines. The purchase price is $1,154,929. The deal is subject to shareholder approval.
However the deal does not introduce new investors or capital. Nor is it simple.
The purchaser will pay a deposit of $100,000 within two weeks of shareholders approving the deal. Island Sky will loan the balance, $1,054,929, to the purchaser for up to two years interest free. The purchaser will use its best endeavours to repay this amount within that period by either issuing stock in ISC or obtaining a loan.
If, prior to payment of the purchase price, ISC issues shares or convertible securities or the purchaser sells any of the shares acquired under the deal at a higher price than what the purchaser is paying for the shares, 50 per cent of the increase will be paid to Island Sky.
Island Sky will be entitled to a royalty from ISC on all model 300 machines sold anywhere in the world by ISC to resource companies carrying on mineral, oil or gas exploration or development where the purchaser was referred by Island Sky.
Until payment of the balance, Island Sky will be entitled to a royalty of 10 per cent of the gross sales price of each model 300 machine. Half of each royalty will be credited against the balance of the purchase price.
After payment of the balance, Island Sky will be entitled to a royalty of 5 per cent of the gross sales price of each model 300 machine.
Island Sky said it has been working over a number of years to commercialize the air-to-water machines, but difficult global economic conditions have inhibited success. Sales have been lower than expected and ISC has been making losses.
Island Sky said "The proposed transaction provides the company with the potential for a cash injection going forward and also enables it to retain a 25 per cent interest in ISC. The non-conflicted Directors of Island Sky believe the proposed transaction will allow the company to remove the burden of financially supporting the operations of ISC and enable it to explore other investment opportunities."
The board also said it is considering a number of new investment opportunities.
On 19 June, a day after the announcement, Island Sky's shares fell to an all time low of 0.1 cent. (ASX: ISK)
Executive chairman Paul McPherson said the proposed transaction would vend in income producing assets, would provide for a payout of the La Jolla funding facility and provide an immediate injection of cash and future funding for the merged businesses.
Delays in achieving critical regulatory decisions across the MetaMizer and SunnyWipes businesses has resulted in a significant drain in cash resources, and at the same time seen low share market liquidity and led to some uncertainty regarding the ability to rely on the La Jolla funding facility, he said.
The proposed transaction would provide an immediate injection of $154,572 at 0.6 cents per share, plus a loan of around $300,000 to fund the business until the transaction receives shareholder approval.
The company will also undertake a strategic review to reduce its cost base.
Republica Capital is described as a specialist high yield investment manager that makes strategic investments in businesses with the aim of adding value for all parties.
The company is also looking at ways for existing shareholders to participate. (ASX: MDV)
The newspaper reported that the plant cannot process "produced water" from coal seam gas operations, which is salty.
"The authority has formally cautioned Richmond Valley Council for accepting the waste water, but Metgasco's chief executive, Peter Henderson, said he could not see the problem," wrote the Sydney Morning Herald.
"The use of the sewage treatment plant is an appropriate disposal mechanism for what is essentially just salty water," it quotes Mr Mr Henderson as saying.
"However, the authority said the practice must stop and suggested that attempts should be made to clean and recycle the water for agricultural use."(ASX: MEL)
The company said it is not aware of any information that could have affected its share price, except the announcement on 31 saying it has made significant progress on its lithium and potash project in Argentina.
It said it is making progress on finalizing the structure of the company's relationship with Jujuy Energia y Mineria Sociedad del Estado; that it continues to engage with the Jujuy government about a limited number of matters required for final project approvals; and it believes that the final approvals required to begin project construction will be received in the near term. (ASX: ORE)
Two days later the shares bounced back to 1 cent. The company announced that it expects Power Purchase Agreements for its Sokoria Geothermal Project and Dairi Prima Geothermal Project, both in Indonesia, to be executed shortly.
The agreements are a significant milestone for the company and will enable Panax to progress to finalizing required project financing for the two projects, it said. (ASX: PAX)
Work by independent wind consultants GL Garrad Hassan indicates that capacity factors for wind power generation are expected to range between 33.2 per cent, which is good, and 42.8 per cent, which is excellent.
The Clean Energy Precinct project is being developed as the key enabler for the delivery of large scale geothermal energy from Paralana geothermal energy project to the SA power grid, says Petratherm's managing director, Terry Kallis. (ASX: PTR)
International; Pre-Revenue Securities
Ocean Power Technologies
The PTO has been shipped from OPT's facility in Pennington, New Jersey to Oregon Iron Works, where it is being integrated into the spar of the buoy in preparation for deployment off the coast at Reedsport.
The testing subjected the PTO to simulated wave conditions to measure functioning and reliability, and it performed as expected. The new direct drive system is a much larger version of what was recently utilized in the PowerBuoy deployed off Oahu, Hawaii, for two years in a project with the US Navy. It is expected to provide increased efficiency and reliability compared with the previous hydraulic-based design.
Charles F. Dunleavy, chief executive officer of OPT, said "We expect the PowerBuoy to be ready for deployment off the coast of Reedsport, Oregon late this summer and look forward to an ocean demonstration that can pave the way for additional units in the region - with the eventual goal of a wave power station serving thousands of local residents and businesses." (Nasdaq: OPTT)
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