Eco Investor Update

A Weekly News Update for Environmental Investors

30 July 2012 - No 91

____ Core Securities ____

ASX 100

APA Group
Subject to due diligence, APA Group intends to increase its takeover offer for Hastings Diversified Utilities Fund to a value of at least $2.50 per stapled security. This would have a cash component of at least 60censt and the balance in APA securities.

Together with the distribution from HDF of 2.5 cents per security due in early August, this represents a combined value of at least $2.525 per stapled security, it said.

If APA gains at least 70 per cent of all HDF securities, it will waive its 90 per cent minimum condition.

Managing director Mick McCormack said "Following last week's announcement that the ACCC would not oppose APA's acquisition of HDF, we are now keen to progress our takeover offer. APA's revised proposal is clearly superior to the PPA offer – our offer will be at least 7.5 per cent higher, and following due diligence we anticipate waiving a number of conditions so that our offer will be significantly less conditional than the PPA offer."

HDF's securities have reached a new three year high of $2.55.

Fund manager Allan Gray Australia is no longer a substantial security holder in HDF, having sold 11.3 million securities for $27.7 million in mid July.

APA Group director Muri Muhammad has resigned with effect from 24 October. He was appointed in 2000 by Petronas when it held 10 per cent or more of APA Group. Petronas sold its holding in APA Group on 2 May. (ASX: APA And HDF)

Sims Metal Management
Shares in Sims Metal Management touched a six year low of $7.84 on 25 July. Sims will release its 2011-12 full year results to the ASX on 23 August 2012. (ASX: SGM)

ASX 200

Hastings Diversified Utilities Fund
See APA Group story above.

Emerging Companies

Gale Pacific
On 3 July Gale Pacific issued 8,250,000 shares to its senior executives. This diluted Thorney Holding's investment from 28.54 to 26.98 per cent. (ASX: GAP)

____ Satellite Securities____

Emerging Companies

CBD Energy
Shares in CBD Energy fell to a three year low of 3.8 cents on 16 July. (ASX: CBD)

ERM Power
ERM Power and its EP 389 Joint Venture partners have been granted Pipeline Licence PL96 by the WA Department of Mines and Petroleum for the Red Gully Gas and Condensate Processing Facility near Gingin.

The next stage is commencing earthworks and the construction of the Red Gully Gas and Condensate Processing Facility. (ASX: EPW)

Unlisted Balanced Funds

August Investments
August Investments director Victor Dolmark has retired after 28 years with the company. He joined in March, 1983, two years after August Investments was formed. Managing director Damien Lynch said Victor's contribution to the governance of the company over these years, some of them in difficult times, is greatly appreciated.

In the latest August Investments newsletter, Mr Lynch says the current investment environment remains depressed, "despite the large number of companies which represent excellent value at current price levels. This applies in particular to the renewable energy sectors. Partly this is due to fear about the possible action of any future coalition government, although the consensus among professional investors is that in some form or another they will continue to support renewable energy projects and will retain the Carbon Tax."

Mr Lynch describes Australia's listed geothermal energy explorers as "a sorry lot!"

Green Rock Energy is now primarily an oil and gas explorer, Geothermal Resources has been taken over by oil explorer Havilah Resources, and Torrens has deferred major expenditures and is investigating non-geothermal opportunities.

Greenearth Energy has diversified into other sustainable energy projects, and of the five remaining companies, "Geodynamics is the only one with any significant amount of capital, with cash in bank of $35 million. The company could see electricity being produced within 18 months to supply the town of Innamincka. However, Geodynamics' long term partner, Origin Energy, has shown signs of wanting to move away from the renewable sector, which could cause a problem."

"The only other companies to have drilled significant wells are Panax Geothermal and Petrotherm. However, Panax seems to have abandoned Australia for greener (or hotter) fields in Indonesia, India and South America; Petrotherm has projects in Spain and Tenerife as well as a planned Clean Energy Precinct."

Mr Lynch says there is hope for KUTh Energy, which has projects in Vanuatu and the Marshall Islands that are substantially funded by the World Bank and the US Government respectively.

Earth Heat Resources has projects in South America and has secured funding and partners "but it is difficult to assess the projects and the sovereign risks (for example, their most advanced project is in Argentina where the government has just nationalized a successful oil exploration project)."

Mr Lynch said that over the last four years the share prices of the geothermal companies are down a massive 95 per cent or more, and they will all need to raise additional capital which will keep their share prices down.

August has sold its shares in Carbon Conscious due to the terms of Carbon Conscious' recent convertible notes issue.

Unlisted Share Funds

Australian Ethical Smaller Companies Trust
Australian Ethical Investment has revised its monthly report for May for the Smaller Companies Trust where it said it had divested Carnegie Wave Energy due to a downgrade in its earnings guidance. It was Coffey International that downgraded its guidance.

The report now reads: "During the month we divested from Carnegie Wave and introduced consultant business Coffey International into the portfolio after it downgraded earnings guidance."

No reason was given for divesting the Carnegie stake.

____ Pre-Profit Securities ____

ASX 300

Ceramic Fuel Cells
Ceramic Fuel Cells is undertaking a rights issue to raise up to $13.8 million for working capital and to help increase volume production. An overseas offer will raise up to £2 million at 4 pence per share. The non-renounceable 1 for 4 offer is at 6 cents per share and is not underwritten.

The company's shares fell to a three year low of 5.1 cents on 27 July.

Revenue for 2011-12 is expected to be $6.7 million, up 82 per cent on 2010-11. However June quarter revenue fell markedly to only $609,000, but the company expects this to bounce back. In June it shipped 42 units, the most to date in a single month, and payment for these is expected in the September quarter.

BlueGen says it will to benefit from the increase in the UK Feed in Tariff for Micro Combined Heat and Power systems. The UK Government is increasing the m-CHP feed in tariff from 14.2 pence to 17 pence per per kilowatt hour. This comprises a generation tariff rise from 11 to 12.5 pence for every kilowatt hour of electricity generated on-site; plus an export tariff rise from 3.2 to 4.5 pence for every kilowatt hour of electricity exported to the grid.

Customers installing BlueGen with a commissioning date of 1 December or later will be eligible for the new m-CHP tariffs. BlueGen is so far the only fuel cell m-CHP product to receive certification under the Microgeneration Certification Scheme and to be eligible for the feed in tariff.

Managing director Brendan Dow said "The increase in the feed in tariff demonstrates that the UK government recognizes the environmental and financial benefits m-CHP can provide. The government previously stated that it welcomes the m-CHP industry's desire to see one million m-CHP units installed by 2020. Working with all our manufacturing and retail partners in the UK we look forward to leading the industry towards reaching this target and to playing an important role in the country's energy needs and meeting its environmental targets." (ASX: CFU)

Micro Cap Companies

Intermoco has issued 5,882,353 shares at 0.085 cents per share as part of its convertible note arrangement.

June quarter revenue was $812,000, bringing full year revenue to $2,935,000.

Customer receipts rose from the embedded networks business unit as two new sites became live during the quarter. The prior quarter also has some timing differences.

Net financing cashflows were down 17 per cent to $941,000 mainly due to ceasing drawdowns during the quarter from the La Jolla Convertible note. The rights issue undertaken during the quarter raised a net $963,000. (ASX: INT)

Nanosonics director Richard England indirectly acquired 28,301 shares through the share purchase plan. (ASX: NAN)

Phoslock Water Solutions
The Sydney Morning Herald has given an entertaining account of how Phoslock was able to win some business and help the Olympics in London thanks to its observant chairman.

Under the heading "Golden pond" it says:

"Australia has notched up some early London Olympic success thanks to a morning jog taken by the Equitilink co-founder Laurence Freedman around the Serpentine lake, in London's Hyde Park, several months ago.

"''It bugged me that this thing was full of algae and junk and had ducks pooing in the water,'' explained Freedman to CBD yesterday.

"The former Network Ten director took a photo of the muck on his iPhone and sent it straight to the managing director of the company he chairs Phoslock Water Solutions. The company has a technology that cleans up algal outbreaks.

"Freedman's exercise session eventually led to Phoslock winning a contract with the Royal Parks of London to clean up the Serpentine and the Round Pond, in Kensington Gardens.

"''[Phoslock] cleaned up the entire Serpentine. It's now pristine even though the ducks are still poohing in it,'' Freedman said.

"Olympic patrons will be able to view Phoslock's handiwork when the swimming part of the men's and women's triathlon is staged around London's Hyde Park early next month.

'"'I'm not a huge sports fan but the one thing I'm going to watch is the triathlon,'' Freedman said." (ASX: PHK)

Po Valley Energy
Po Valley Energy has been awarded a preliminary exploration permit for a new offshore licence, Torre del Moro, by the Italian Ministry for Economic Development. The permit covers 111 square kilometers and is adjacent to Po Valley's Terra del Sole exploration permit about 55 kilometres south east of Bologna.

Po Valley will submit an environmental impact study that if accepted will lead to the final awarding of the permit.

Po Valley said the area "contains large structures with similarities to the Western Po Valley Villafortuna-Trecate oil field (circa 220 mmbbls of oil produced to date plus associated gas production) and to nearby Pliocene gas fields." (ASX: PVE)

Shares in RedFlow fell to a new all time low of 5.6 cents on 25 July.

Richard Aird is no longer an executive director but remains as a non-executive director. The change in role is part of the company's review of operations. (ASX: RFX)

The administrator of Style said the company has executed its Deed of Company Arrangement. (ASX: SYP)

____ Pre-Revenue Securities ____

ASX 300

Dart Energy
Dart Energy has commenced production and the sale of electricity using natural gas from coal seams at its Airth project (PEDL 133) in the Forth Valley, Scotland. The Airth project is 50 kilometres west of Edinburgh and is part of Dart's aim to deliver Europe's first large scale commercial CBM project.

The gas is from two pilot wells and the gas turbine generator has a restriction of 100,000 standard cubic feet per day (scf/d) to match the electricity transport capacity.

Significantly higher flow rates have been recorded and peak production rates in excess of 1 million scf/d per well are anticipated. The electricity will be exported to the local grid where it is expected to provide enough power for over 500 homes. The output can be substantially upgraded over time.

The second phase of the project will see production from additional wells and this will be sold under the previously announced Gas Sales Agreement (GSA) with Scottish and Southern Energy (SSE). The agreement allows for up to 11 Bcf/a over a period of up to eight years. The gas price is linked to the prevailing spot market price, which is currently US$9 to US$10 per Mscf).

Infrastructure for the second phase will be completed in 2013.

The first and second phases of the Airth project encompass less than 20 per cent of the 2C resource, giving considerable scope to increase the project over time. (ASX: DTE)

Galaxy Resources
Shares in Galaxy Resource fell to a new low of 37 cents on 26 July.

A day later the company said the lithium carbonate product from its Jiangsu Lithium Carbonate Plant in China achieved battery grade quality across all specifications, meeting the plant's design.

As well as the 99.5 per cent purity criteria, the production also meets the tolerances for impurities required by the company's cathode producing customers. Battery grade lithium carbonate must meet stringent specifications, with allowances for only certain levels of impurities such as calcium, magnesium, iron, sulphate and sodium, it said.

Samples will now be tested by Galaxy's existing clients under offtake framework agreements.

In the meantime, the company continues to sell final product to technical grade customers at what it says are strong prices. Battery grade lithium carbonate sells at a significant premium to more common technical and industrial grade material. (ASX: GXY)

Micro Cap Companies

Actinogen said it has discovered a series of actinomycetes (bacteria) that can produce Shikimic acid, the main component in the production of Tamiflu. Tamiflu is an oral antiviral treatment that can significantly reduce an influenza virus from spreading inside the body if taken within 48 hours of the onset of symptoms.

Actinogen said Tamiflu is in demand globally and on occasion been in short supply. But its production is complex and one of the most expensive components is Shikimic acid.

"Currently, Shikimic acid is mainly produced from the star anise fruit and from a fermentation process using an Escherichia-coli bacterium," said Actinogen's scientific director, Dr David Keast. "The star anise tree only grows under certain climate conditions (humid, hot weather and high altitude) and takes six years to mature. The Shikimic acid is then extracted from the pods of the star anise. Thirty kilograms of star anise is required to produce approximately one kilogram of Shikimic acid.

"Actinogen is producing Shikimic acid from actinomycetes grown at room temperature in aerobic conditions."

Actinogen is focusing on developing the process to produce Shikimic acid in commercial quantities. It is looking for partners to help develop the process. (ASX: ACW)

Algae.Tec's first algae to biofuels facility, Shoalhaven One, will be opened this week by the NSW minister for Resources and Energy, Chris Hartcher. (ASX: AEB)

BluGlass is to acquire SPTS Technologies' 49 per cent interest in the EpiBlu joint venture. Consideration will be 15,973,678 shares in BluGlass, increasing SPTS' shareholding from 19.9 to 24.9 per cent.

If implemented, the capital restructure will further align the interests of SPTS and other BluGlass shareholders and give BluGlass the freedom to pursue the full range of commercialization avenues.

It will bring ownership of 100 per cent of the RPCVD technology developed by the EpiBlu Joint Venture and the future benefits from its commercialization. BluGlass will retain a licence to the SPTS background intellectual property, and SPTS will continue to support commercialization.

SPTS president and chief executive officer, William Johnson, will remain on the BluGlass board.

BluGlass chief executive, Giles Bourne said "SPTS' plasma expertise and engineering has been invaluable in progressing our technology towards commercialization. I am delighted that SPTS will remain involved with BluGlass, not only as a collaborator, but also as a major shareholder. We see this as a tremendous endorsement of BluGlass and its technology."

Mr Johnson said "We are excited about what we and BluGlass have achieved together through the EpiBlu Joint Venture. BluGlass' technology has the potential to offer significant competitive advantages for customers in the rapidly expanding high brightness LED industry. We look forward to continuing our collaboration with BluGlass and to the commercialization of its potentially disruptive technology."

The capital restructure needs shareholder approval.

Meanwhile success at producing high quality crystalline gallium nitride (GaN) at low temperature and the further reduction of impurities through hardware and process improvements have resulted in provisional patent applications.

"These patents protect a breakthrough that demonstrates to the industry and future customers the potential of our technology. This new intellectual property brings BluGlass much closer to achieving its milestones," said Mr Bourne.

BluGlass expects its consolidated operating loss for 2011-12 to be in line with the 2010-11 loss of $6.015 million.

As the EpiBlu Joint Venture was owned 51 per cent by BluGlass, the loss attributable to the parent entity, BluGlass Ltd, is expected to be in the range of $3-3.3 million compared to $4.17 million in 2011-12. (ASX: BLG)

Carnegie Wave Energy
On 25 July Carnegie Wave Energy issued 14 million shares 2.5 cents each to the Australian Special Opportunity Fund. (ASX: CWE)

Dyesol has won the inaugural Innovation category at the 2012 Clean Energy Council Industry Awards. The award is for Dyesol's ground breaking developments in dye solar cell technology. (ASX: DYE)

Earth Heat Resources
The securities of Earth Heat Resources have been suspended pending an announcement about a material share placement. (ASX: EHR)

Enerji has raised $285,576 through a placement at 1.1 cent per share. It also issued 3,173,077 listed options with an exercise price of 3 cents and which expire on 30 June 2015. (ASX: ERJ)

European Gas
European Gas has completed its selective share buy-back, cancelling 221,615,657 shares. It now has 75,656,848 shares on issue. In a few weeks its shares almost doubled from a year low of 13 cents to 25 cents. (ASX: EPG)

KUTh Energy
KUTh Energy has appointed emeritus professor Mary O'Kane to its board as non-executive director. Chairman, Bruce McKay, welcomed the many skills that Ms O'Kane will bring to the board and said her appointment is timely given the progress being made on the company's international project portfolio.

Mr McKay said "Mary has a history and passion for geothermal and comes to the board well aware of the challenges confronting the Australian industry and the opportunities that are available in some of the developing markets we are progressing."

Professor O'Kane is a computer engineer undertaking pioneering research in artificial intelligence, a former university vice-chancellor, a member or chair of many Government and private sector boards and committees, a consultant and public speaker, and is currently part-time Chief Scientist and Engineer for the NSW. (ASX: KEN)

MediVac had net operating outflows of $423,952 and cash of only $151,079 at the end of the June quarter. Receipts were $44,468, bringing 2011-12 receipts to $370,098. The company has loan facilities of 8,050,000, of which $1,899,075 is drawn. (ASX: MDV)

Orocobre has had the development of its Olaroz lithium project in Argentina approved by the Jujuy Government. The mining leases for the project have also been granted.

This clears the way for Orocobre to finalize the proposed project financing with Mizuho Bank, the associated loan guarantees with JOGMEC, and the definitive agreements with the Company's Olaroz project partner, Toyota Tsusho Corporation.

The company anticipates completing these arrangements before the end of September, with project construction to then commence immediately. (ASX: ORE)

Panax Geothermal
Panax Geothermal says it will experience a significant increase in economic returns thanks to the Indonesian government increasing the feed-in-tariff for geothermal projects by over 20 per cent.

The increase is from US$97/MWh to US$120/MWh for geothermal projects in Java, and to US$150/MWh for projects on the island of Flores.

Panax also said that following discussions in Jakarta with PT Dairi Prima Minerals, it anticipates that the electricity pricing for its Dairi Prima Geothermal Project will be increased from the current US$150/MWh to an expected US$170/MWh.

Panax is targeting production at Dairi Prima by late 2013 with its production share increasing to 86 MW when all three of its projects are in full production. (ASX: PAX)

Torrens Energy
Torrens Energy Limited has issued AGL Enegsy with 1,172,084 shares at 5 cents each to raise $58,604.

The issue maintains AGL's equity at 9.99 per cent following a capital raising. (ASX: TEY)

Water Resources Group
Water Resources Group has appointed non-executive director, Robert Bylin, to the position of chief executive officer of Water Resources International (WRI) and Campbell Applied Physics (CAP). Mr Bylin will report directly to Brian Harcourt, the chief executive of Water Resources Group.

Mr Bylin and Mr Malcolm Richmond were appointed to the board as part of a management re-organization. Prior to his appointment, Mr Bylin had invested $1,075,000 into WRG as a long term shareholder. He increased his investment via the current rights issue with a further $370,000.

Mr Richmond will also support the rights issue, taking up his entitlements with a $100,000 investment.

Mr Bylin said "I am pleased to be joining the Water Resources Group management team just as the company is about to embark on an exciting path toward commercialization. I look forward to working with the directors of WRG and CAP's senior management to deliver the company's first commercial projects."

Meanwhile, CAP, Water Resources Group's Research and Development division, is among the winners of R&D Magazine's 50th Annual R&D 100 Awards that recognize the 100 most technologically significant products introduced into the US marketplace over the past year. This is the second consecutive year CAP has been among the R&D 100 winners. (ASXL WRG)

Eco Investor Update






Search Eco Investor