Eco Investor Update

A Weekly News Update for Environmental Investors

24 September 2012 - No 99

____ Core Securities ____

ASX 100

APA Group
APA Group's issue of subordinated notes was popular, raising $515 million. APA has issued 5,150,000 notes at $100 each. APA initially sought to raise $350 million.

The notes have begun their trading at a small premium - $100.50.

The interest rate for the first period ending 31 December is 8.01 per cent per annum. This is based on the bank bill rate plus a margin of 3.51 per cent. (ASX: APA)

Sims Metal Management
Sims Metal Management has been nominated as part of the Dow Jones Sustainability World Index. Sims has in previous years been recognized under the Australian/New Zealand index, but this is the first time it has been nominated among its global peers.

Participation in The Dow Jones Sustainability Index is voluntary, and is a basis for evaluating companies on a range of sustainability criteria.

"We are pleased to once again have our continuing sustainability efforts recognized, for the first time joining the world club of sustainability leaders as part of the Dow Jones Sustainability World Index," said Daniel W. Dienst, Group Chief Executive Officer.

"Dow Jones recognized, in particular, our leadership on risk and crisis management, innovation, climate strategy and eco efficiency, as well as health and safety leadership and talent attraction and retention, among several others."

"Having clean and safe facilities with strong ties to the community, together with smarter operations and people, is our strongest and most enduring foundation. Joining the Dow Jones World Index Sustainability Index is a tribute to the dedication and hard work of our employees around the globe, and a testament to our shareholders' commitment towards building a more sustainable future." (ASX: SGM)

ASX 200

GWA Group
Shares in GWA Group dipped to a three year low of $1.765 on 19 September. (ASX: GWA)

Emerging Companies

Tassal Group
Shares in Tassal touched a five year low of $1.115 on 14 September, but quickly recovered to around $1.25. A week earlier it was announced the company would be removed from the S&P/ ASX 300 Index. (ASX: TGR)

____ Satellite Securities____

Emerging Companies

Clean TeQ Holdings
Clean TeQ Holdings has won a $2.75 million contract for an Odour Control Facility (OCF) by Baulderstone Pty Ltd & United Group Infrastructure Pty Ltd and on the behalf of Melbourne Water.

Clean TeQ said the contract is significant and is divided into two parts: the first covering design and the second procurement and construction of the OCF.

The OCF will be on the Hobson's Bay Sewer Line below the Westgate Bridge in Melbourne. The design is due for completion by the end of November with part two expected to be completed in December 2013. The facility will utilize Clean TeQ's OdourTeQ biological air treatment technology.

Chief executive Peter Voigt said "Our association with Melbourne Water has been a long one since we first supplied an earlier version of the biotechnology at the South Drop Structure located in the grounds of Scienceworks back in 2000/ 2001.

"The securing of this contract, along with others in the pipeline, will underpin our Air Divisions budget in 2012-13.

"This project further reinforces our position as the leader in the biological odour control marketplace within Australia." (ASX: CLQ)

ERM Power
ERM Power chairman Trevor St Baker has seen his interest in ERM Power rise from 84.99 million to 85.76 million shares but his stake fall from 51.8 to 49.8 per cent. The number of shares rose through on market purchases but the percentage fell through dilution. (ASX: EPW)

____ Pre-Profit Securities ____

ASX 300

Ceramic Fuel Cells
Ceramic Fuel Cells' rights issue and overseas offer raised $11.6 million, giving the company total cash of $17 million.

The company received $4.2 million in the rights issue and $1.4 million under the overseas offer. It also received $6 million from a strategic partner, Chaozhou Three Circle (Group) Co., Ltd (CCTC), which has received all regulatory approvals for the subscription. .

About 30 per cent of shares were taken up under the rights issue, and about 48 per cent under the overseas offer. (ASX: CFU)

Micro Cap Companies

Pacific Environment
Shares in Pacific Environment fell to an all time low of 2.5 cents on 5 September and since then liquidity appears to have dried up.

Pacific Environment has appointed Adam Gallagher as a director. Mr Gallagher's background is in finance, capital raising and corporate governance. He is executive director of Scintilla Strategic Investments Ltd, a microcap focused investment company where he is involved in strategy, market communications, and corporate transactions with his investee companies.
His private business, DG Capital Partners, assists businesses in many industries through listings, mergers, growth management and corporate governance development.

He holds a Bachelor of Economics, Masters in Commerce and Graduate Diploma in Information Systems, as well as a Graduate Diploma in Applied Corporate Governance. (ASX: PEH)

Phoslock Water Solutions
Phoslock Water Solutions chairman Laurence Freedman has indirectly acquired another 100,000 shares at 4.3 cents each. (ASX: PHK)

Commercializing RedFlow's battery technology has been difficult and mistakes were made, says chairman, Howard Stack, in the company's annual report.

"The markets reacted savagely to your Board's re appraisal of where we are, and to an extent which we believe seriously undervalues our technology, and the opportunities in front of us," he writes.

"The battery, and the way it is made, is unique. We underestimated the difficulty and the need to redesign and refine some manufacturing processes before moving to commercial manufacture. In reality, we were still in a product development phase as we tried to ramp up production, which was a mistake.

"We have now engaged internationally experienced manufacturing advisers who are assisting in getting our product ready for commercial manufacture. We have put our agreement with Jabil on hold, but notwithstanding this, Jabil remains very supportive of RedFlow and our growth plans.

"We now know we need third party help to take our battery to the world, and the parties we are in discussion with have the capital and name necessary to commercialize our technology globally. We have tried to do too much on our own."

But he remains positive. "We firmly believe we are in the right space at the right time, and with the successful capital raising we do have the funding to advance our demonstration projects over the next 12 months to a point where the value we see in your company is clear."

Chief executive, Chris Winter, writes "RedFlow's product development team is now primarily focused on our core ZBM flow battery technology, in order to maintain our global leadership position and deliver excellent product to our customers. We have ceased developing our own commercial energy storage systems and are putting these resources into supporting our System Integrator partners."

The company is targeting to outsource the complete manufacturing of ZBMs by the end of next year.

RedFlow is planning to manage its cash flows so that it will probably not need to return to the capital markets in 2012-13, said Mr Winter.

Mr Slack has backed his confidence by indirectly acquiring 5.78 million shares worth $346,824 in the recent entitlement offer. Other directors also participated: Bruce Brown for 787,000 shares, Patrick Mackay 6.3 million shares, Richard Aird 75,200 shares, and Chris Winter 2.1 million shares. (ASX: RFX)

____ Pre-Revenue Securities ____

ASX 100

Lynas Corporation
Lynas Corporation has significantly upgraded its ore reserves at the Central Lanthanide Deposit at Mt Weld n WA.

The ore reserve has been increased by 362 per cent to 9.7 million tonnes at an average grade of 11.7 per cent rare earth oxide (REO). The total contained REO has increased 260 per cent to 1.14 million tonnes.

The ore reserves represent more than 25 years of mine life based on production plans of 22,000 tonnes per annum of REO, it said, and will allow for expanded operations.

Executive chairman, Nicholas Curtis, said "The upgraded Ore Reserves confirm Mount Weld's status as one of the richest rare earths deposits in the world."

Lynas has stockpiled 0.7 million tonnes of ore and the concentration plant is creating REO concentrate. With the Temporary Operating License now obtained, the LAMP in Malaysia is planned to start operating in October. (ASX: LYC)

ASX 300

Dart Energy
Dart Energy's subsidiary, Dart International, is to list on London's Alternative Investment Market (AIM) in November.

Dart will retain its Australian assets and strategy, and majority ownership of Dart International. Robbert de Weijer will be appointed chief executive of Dart Energy.

As it lists, Dart International will seek to raise new capital, ensuring it is fully funded through the next phase of its development.

Chairman Nick Davies said "The proposed listing on AIM of Dart International is about unlocking the embedded value of DTE's international assets. The listing will also provide greater transparency of the value of both Dart's Australian assets and our international portfolio.

Dart Energy believes it is trading at a material discount to both its Australian and international peers and that its highly diversified portfolio is not well understood by Australian equity markets.

Following the listing, Dart Energy will maintain its existing strategy in Australia and focus on maximizing the value of its NSW assets, build scale and diversify geographically or into other unconventional gases.

CEO Australia, Robbert de Weijer, said "The Australian side of the business is well prepared for this listing. Together with the NSW Government's green light for the industry, the next phase of activity and growth for the company promises to be an exciting time for DTE's shareholders."

Alleron Investment Management is no longer a substantial shareholder, having sold 712,567 shares. (ASX: DTE)

Galaxy Resources
Lithium producer Galaxy Resources has submitted its Environmental and Social Impact Statement (EIS) for its Sal de Vida Lithium and Potash Brine Project in Argentina.

The project involves constructing evaporation ponds over a 20 square kilometre in the northern basin of the salt pan. The core project includes a lithium carbonate precipitation and purification plant producing battery grade lithium carbonate. A separate potash plant is planned to produce fertilizer grade potash (potassium chloride).

Galaxy has a 70 per cent stake in Sal de Vida following the merger with Lithium One Inc. The company said it is a highly prospective brine project which may become its next flagship asset.

The environmental and social impact of the Project is expected to be very low due to minimal local populations and minimal flora and fauna.

The EIS went to the Provincial Environmental Agencies of both Salta and Catamarca as the project is in provinces. If it is approved it will then be reviewed by the Provincial Committee of Experts for submission to the Governors of Salta and Catamarca for final construction approval.

Galaxy's managing director, Iggy Tan, said "The decision to proceed with the Project will be made by Galaxy in early 2013, when the Jiangsu operation is expected to be cash flow positive."

General Mining Corporation is no longer a substantial shareholder in Galaxy. (ASX: GXY)

Shares in Orocobre reached a new one year high of $2.34 on 21 September. The company was recently admitted to the S&P/ ASX 300 Index. (ASX: ORE)

Micro Cap Companies

Algae.Tec and Lufthansa have signed a Collaboration Agreement to construct a large scale algae to aviation biofuels production facility in Europe. The site will be adjacent to an industrial CO2 source.

Lufthansa will arrange all funding for the project and has commited to a long term offtake agreement for at least 50 per cent of the crude oil produced at an agreed price. Algae.Tec will manage the project and receive licence fees and profits.

The agreement is the base for long term cooperation to produce industrial scale crude algae suitable for conversion into aviation kerosene and conventional diesel fuels. The oil will fulfill the EU Renewable Energy Directive and be certified according to the relevant ISCC - Standard.

The agreement builds on the January 2012 agreement between the companies and is subject to board approval of both parties and final sign off for the algae oil conversion into aviation kerosene. A final feasibility report will be completed when the first site has been selected. (ASX: AEB)

Blue Energy
Blue Energy's shares continue to slide and on 20 September reached a five year low of 4.9 cents. (ASX: BUL)

Carnegie Wave Energy
The design of Carnegie Wave Energy's new CETO 5 unit for the Perth Wave Energy Project is larger and has significantly improved performance, power capacity and installability compared with the CETO 3 unit.

Carnegie said the diameter of the buoyant actuator, which is the most significant influence on power output, has been increased from 7 to 11 metres.

Optimization of the design and tuning of the hydraulics also help to increase its rated capacity to approximately 240 kW. This is three times that of the CETO 3 unit and higher than the 10 metre CETO 4 unit now deployed by EDF and DCNS off Reunion Island.

Performance in lower wave energy conditions has also been improved so that power is produced at high wave energy sites such as those along the southern Australian coastline for more than 97 per cent of the time.

Critical performance variables will be validated during the Perth Wave Energy Project through in ocean measurement with over 200 sensors and communications equipment.

The data will validate hydrodynamic, kinematic and hydraulic computational models which are part of Carnegie's core intellectual property and are used to forecast output for current and future designs at potential project sites.

CETO 5 utilizes standard oil and gas industry quick connect technology that will reduce unit installation time by 80 per cent over earlier CETO generations.

On 18 September Carnegie issued 5,147,059 shares at 3.4 cents each to the Australian Special Opportunity Fund under their funding agreement. The Fund is free to sell the shares on market. (ASX: CWE)

Dyesol has made available a TV news video of its Dye Solar Cell technology on prototype steel roofing material at Tata Steel Europe's Sustainable Building Envelope Centre in the UK. The video was on iTV News' Wales Tonight program on 24 June, and can be seen on Dyesol's website under News/Events.

Eco Quest is branching into biotechnology. It has invested $250,000 to take an 11 per cent interest in Cynata Incorporated, an early stage US specialist in multipurpose stem cell technology for regenerative medicine. (ASX: ECQ)

Geodynamics and Panax Geothermal are part of a consortium of industry, government and research organizations that has been awarded a $1.25 million grant under the Federal Government's Emerging Renewables Program.

The University of Adelaide's South Australian Centre for Geothermal Energy Research (SACGER) will use the funding from the Australian Renewable Energy Agency (ARENA) to study "Reservoir Quality In Sedimentary Geothermal Resources". The two year study will cost over $3.5 million and is supported by personnel from Panax, Geodynamics, CSIRO and the South Australian Government Department for Manufacturing, Innovation, Trade, Resources and Energy (DMITRE).

The minister for Resources and Energy, Martin Ferguson, said the project will assist the industry to a better understand and predict the permeability of geothermal drilling wells.

"Understanding permeability, or the ability of a rock to allow fluids to pass through it, is essential to predict the potential for geothermal energy generation from hot water that is circulating deep underground, known as hot sedimentary aquifers," he said.

"If we can predict well permeability more accurately companies can better determine exploration and production sites, leading to lower costs and risk in the geothermal industry.

"The two geothermal wells drilled in hot sedimentary aquifers reservoirs in Australia have achieved fluid flow rates, and hence permeability, that was significantly lower than expected.

"This project will help address two important technical challenges confronting the geothermal energy industry in Australia: well drilling practices to assess potential damage to the rock during drilling and evaluation of the anticipated fluid flow rates."

The University of Adelaide will study Australia's two existing geothermal wells drilled in hot sedimentary aquifers the Cooper Eromanga Basin in north east of South Australia and south west Queensland and the Otway Basin in southern Victoria and South Australia. Outcomes will include remediation strategies for the wells and recommendations for drilling practices or other mitigation strategies to help avoid damage to geothermal wells.

The study is expected to be completed in September 2014.

The minister also congratulated ARENA on making its inaugural funding decision and for maintaining momentum in the renewables sector since it commenced on 1 July.

See also Panax Geothermal story. (ASX: GDY)

Hot Rock
Hot Rock director Peter Barnett acquired 2.7 million shares in the company's one for two rights offer.

The WF Asian Reconnaissance Fund has ceased to be a substantial shareholder due to dilution from the rights offer. (ASX: HRL)

KUTh Energy
KUTh Energy says it had identified several matters that if resolved would give it commercial comfort to commit funds for the commencement of exploration drilling at its Vanuatu geothermal project. While not all of these matters have been finalized, the groundwork has been laid for progress when the next parliament sits after the October election, said managing director David McDonald.

The key areas are formation of the Geothermal Task Force and Changes to the Utilities Regulatory Act.

The Minister for Lands and Energy appointed a Task Force "to ensure the urgent development of the geothermal project by providing policy and strategic guidance and to coordinate full consultation with land owners, Government Departments, including statutory bodies, and the general public", he said.

The Task Force has focused on clearing bottlenecks that threatened to further delay the project. "The Task Force managed to achieve alignment of interest from KUTh, UNELCO, the State Law Office and the Council of Ministers for changes to the Utilities Regulatory Act that were seen as necessary to progress the project.

"The proposed changes to the Act include formalizing an existing authority recognized by the URA by which the Minister of Energy can approve a base geothermal tariff. A minimum geothermal tariff would give commercial certainty to KUTh and allow the project to get started. Future tariff setting would continue to be subject to regulation by the URA."

UNELCO also agreed that a Power Purchase Agreement will be finalized with KUTh when the key Utilities Regulatory Act changes are passed by parliament.

Procedural matters prevented parliament from voting on the changes on the last sitting day prior to October's general election, said Mr McDonald.

We welcome the efforts of the newly appointed Geothermal Task Force. It remains keen to push this forward as soon at the elections are held, he said. (ASX: KEN)

Shares in MediVac touched a new all time low of 0.3 cents on 17 September. (ASX: MDV)

Panax Geothermal
Panax Geothermal will gain key insights into the drilling, completion and potential next steps for its hot sedimentary aquifer well Salamander 1 in the Penola Trough thanks to a study backed by Panax, Geodynamics, CSIRO and the South Australian Government Department for Manufacturing, Innovation, Trade, Resources and Energy (DMITRE).

The University of Adelaide's South Australian Centre for Geothermal Energy Research (SACGER) has been awarded a $1.25 million grant under the Australian Renewable Energy Agency's (ARENA) Emerging Renewables Program to study "Reservoir Quality In Sedimentary Geothermal Resources".

The two year $3.5 million study will give a better understanding of geothermal drilling wells and predicting their permeability. The two Australian geothermal wells so far drilled in hot sedimentary aquifers reservoirs - in the Cooper Eromanga Basin and the Otway Basin - achieved fluid flow rates and permeability significantly lower than expected.

The University of Adelaide will study these with expected outcomes to include remediation strategies for the wells and recommendations for drilling practices or other mitigation strategies that will help avoid damage to geothermal wells. The study is expected to be completed in September 2014.

In 2010 Panax drilled Salamander 1 to a depth of 4,025 metres. It was the first deep geothermal well in the Otway Basin and the first well of its type to demonstrate conventional geothermal technology in Australia.

Panax is making available all data, samples and test results from Salamander 1, and providing access to the well and use of its personnel.

Panax managing director Kerry Parker said the research by the consortium will provide insight into the complications found during drilling and testing Salamander and would help progress this project. It will provide Panax with a much clearer idea of how to improve drilling outcomes and the success rate of geothermal wells in Australia.

"The geothermal industry in Australia has come to realize that hot water reservoirs are likely to be different to hydrocarbon reservoirs, and it is this kind of issue that this project will address," he said.

The minister for Resources and Energy, Martin Ferguson, said "Understanding permeability, or the ability of a rock to allow fluids to pass through it, is essential to predict the potential for geothermal energy generation from hot water that is circulating deep underground. If we can predict well permeability more accurately companies can better determine exploration and production sites, leading to lower costs and risk in the geothermal industry." (ASX: PAX)

Petratherm is undertaking a one for three prorata non renounceable rights issue at 3 cents per share to raise up to $1.48 million. Each new share will come with one free listed option with exercise price of 3 cents and expiring after two years.

The rights issue is not offer underwritten. It opens on 4 October and closes on 18 October.

The capital will be for potential project acquisition and working capital. (ASX: PTR)

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