Wasabi New Energy Asia to be established for Kalina Cycle

Transcription

1 ASX Announcement 13 November 2012 Wasabi New Energy Asia to be established for Kalina Cycle Wasabi Energy Limited (ASX:WAS, AIM: WAS, OTCQX: WSBLY) ( Wasabi ), an emerging power producer, is pleased to announce that it has entered into a conditional agreement to establish a new subsidiary, Wasabi New Energy Asia ( WNEA ), to accelerate the implementation of its proprietary Kalina Cycle Power Technology throughout the Asian region. Wasabi s wholly owned Kalina Cycle power technology converts waste heat into electric power production with increased efficiency over competing technologies. Following its establishment, Wasabi will hold 50% of WNEA and will have the right to appoint a majority of the Board. The Directors of Wasabi believe that, following the pace of adoption of the Kalina Cycle technology throughout the Asian region to date, there is significant opportunity to accelerate this development programme through the establishment of a specialist focused subsidiary. WNEA will have a dedicated management team based in Asia that will leverage its existing large network of industrial partnerships and contacts alongside those of Wasabi in the Asian region. Wasabi intends to list WNEA on both the Canadian TSX and an appropriate Asian stock exchange. Wasabi has also entered into an agreement to facilitate the acquisition by WNEA of Newmont Asset Limited ( Newmont ) for a total cash consideration of US$16.5m and 50% of the enlarged initial share capital in WNEA. Newmont has entered into a contract to purchase 50.5% of SSNE concurrently with WNEA s acquisition of Newmont. Further details of the transactions are included below. Once established, WNEA will own: % of Shanghai Shenghe New Energy Resources Science & Technology Co Ltd ( SSNE ), the current Kalina Cycle licensee for Mainland China, Taiwan, Hong Kong and Macau; % of the royalty income stream from SSNE currently attributable to Wasabi; and 3. A new Kalina Cycle licence covering Japan, South Korea, Indonesia, Philippines, Thailand, Vietnam, Malaysia, Singapore, Myanmar, Cambodia, Laos, Brunei, North Korea and Mongolia. The WNEA Kalina Cycle license will complement Wasabi s existing license in China and cover all applications other than the cement and lime industries (in relation to the new licence areas). Wasabi Energy ASX Announcement Page 1

2 Wasabi Energy will receive a royalty payment from WNEA for each Kalina Cycle power plant built based on the installed megawatt (MW) capacity. The Transactions Wasabi has entered into an agreement to facilitate the acquisition by WNEA of 100% of Newmont Assets Limited ( Newmont ). The cash consideration of US$16.5m is payable in instalments. WNEA will pay the first instalment of US$5.5m for the initial settlement before 14 th December 2012 with the balance payable subject to certain completion conditions, within three months from the registration of the transfer of the 50.5% interest in SSNE. WNEA will issue 50% of its initial enlarged share capital to the vendors of Newmont. Wasabi has granted the vendors of Newmont an option to exchange up to 31.25% of their shares in WNEA for new shares in Wasabi at A1.8c per share. On a proforma basis, following the acquisition of SSNE, Newmont generated a loss of A$3,300 in the year ended 31 December Wasabi will contribute its royalty stream from the Kalina licence granted to SSNE and will issue a new Kalina Cycle licence to WNEA covering Japan, South Korea, Indonesia, Philippines, Thailand, Vietnam, Malaysia, Singapore, Myanmar, Cambodia, Laos, Brunei, North Korea and Mongolia in exchange for 50% of the enlarged initial share capital in WNEA. Wasabi will also be entitled to receive a royalty per installed MW from WNEA as projects are developed in the future. Wasabi will have the right to appoint four directors to the board of WNEA and the Newmont vendors will have the right to appoint three directors. Once the above transactions have completed, WNEA plans to apply for trading of its issued capital both on the TSX main board and Singapore (or another appropriate Asian stock exchange). Preliminary discussions have been held with brokers interested in raising the funds required through the issue of new shares in WNEA. Independent experts have also been engaged to prepare the necessary documentation. Wasabi has identified a suitable listed vehicle on the TSX V, which subject to regulatory approvals, will be transformed into WNEA. The transactions are subject to certain completion conditions including the receipt of regulatory approvals both in China and from the TSX V Exchange. Wasabi Energy Structure This transaction provides a framework for the way in which the Wasabi Board has resolved to expand the Company in key regions of the world. It is intended that Wasabi will retain significant shareholdings in listed offshoots with Kalina Cycle licenses that will in turn raise equity capital. These entities will have dedicated and focussed management teams concentrating on growth in their defined license area. At the Wasabi level, this mechanism for growth will reduce the need for capital raisings and underline the value of the core Kalina Cycle technology while enabling control over the rapid deployment of Kalina Cycle applications. Wasabi management is working on the formation of two similar entities for Sub Saharan Africa and the Americas (North and South America). Wasabi will continue to be an operating company developing projects in which it retains a direct equity interest. Wasabi Energy ASX Announcement Page 2

3 John Byrne, Executive Chairman of Wasabi Commented on the establishment of WNEA: Wasabi Energy has a unique opportunity to participate in the Asian market through a new dedicated focused subsidiary, WNEA. WNEA will benefit from an experienced management team who are based in Asia, as well as the resources of our established licensee, SSNE. The Asian market offers significant market potential and strong Government support for energy efficiency, growth in geothermal power and emission reductions. SSNE has already made significant inroads into the Chinese market through various applications of both our Kalina Cycle technology, and their often complementary power technologies, including a recent design and technical contract with Sinopec, China s largest petrochemical producer for a 4MW Kalina Cycle power plant at its Hainan Refinery. The Chinese authorities have also expressed interest in the development of their onshore oilfields as potential sources for geothermal power. With an estimated resource of over 1,000 MW and over 10,000 oil wells and associated infrastructure in just one operating onshore oilfield this offers a leading edge opportunity to develop new sources of geothermal power using Kalina Cycle technology. While we need to progress through the final stages for the transaction, we are optimistic that the outcome could be significant to our stakeholders. The Market The Asian region is well positioned for heat to power plants utilising the Kalina Cycle in both the industrial and renewable heat markets with strong heavy industry presence in China, Taiwan, Japan and South Korea and existing geothermal markets in Indonesia, Philippines and Japan. China has identified a number of targets around energy efficiency, emission reduction and increased renewable power generation through its 12 th Five Year Plan. The drive of the Chinese authorities at all levels to meet these targets together with the massive size of the Chinese market leads to enormous potential for the Kalina Cycle in this region. To put this into context, China is: the world s largest producer of cement, over 58% of global cement production in the world s largest steel producer with 45.8% of total crude steel production in In 2010 it became the largest producer of chemicals by value (USD 816 billion) compared to the US (USD 734 billion) and the second largest global consumer behind the US 3 50% of global flat glass demand in increase geothermal power from 28.1 MW in 2009 to MW in In Japan, the Government has also identified its support for alternative energy solutions with the recent establishment of feed in tariffs for renewable technologies, effective from 1 July For geothermal power, the rates were confirmed at yen or US$0.339 per kilowatt hour for plants with a capacity of 15,000 kilowatts or more and 42 yen or US$0.522 for smaller plants on a 15 year term. 1 USGS Cement Minerals Handbook 2012, archive/2011 steel production.html 3 KPMG (2011) China s Chemical Industry: The new forces driving change news mobile/item/5023 china boosts 2015 renewable energy targets Wasabi Energy ASX Announcement Page 3

4 Japan has led the world with the implementation of the Kalina Cycle technology with three operational Kalina Cycle power plants, including a 50kW geothermal plant. About WNEA and Newmont WNEA is being established to leverage off the large network of industrial partnerships and contacts of Newmont and its management team alongside those of Wasabi in the Asian region. WNEA will be positioned to provide both engineering and procurement contracts as well as Build Own Operate projects throughout the Asian region. The principal shareholder of Newmont, Yu Jianmeng, has a long career in the Chinese Government as well as in the corporate sector, including acting as President and Executive Director of Shanghai Information Technology Investment Development Company Limited, of which Jiang Mianheng, the son of ex President Jiang Zemin, was the Chairman. He was subsequently the President for China of Star Cruise, the third largest cruise operator in the world. He also sat on the board of various companies, including Pearl Oriental Oil Limited, a Hong Kong listed oil and gas company. He is also Senior Advisor of Johnson Electric Industrial Limited, the Hong Kong listed leading global supplier of micro motors and other precision devices. The other shareholder of Newmont, Vision Worldwide Holdings Limited, is a member of the Sancus Group of companies, which is engaged among other things in various new energy businesses in China and other parts of Asia and Africa, and has extensive relationships in those territories. About SSNE SSNE is a developer of waste heat, geothermal and solar thermal power plants, specifically focused on delivering thermal power plant efficiency improvements. SSNE is experienced in a diverse range of energy intensive industries in China, and has assembled a team capable of delivering Kalina Cycle and other power technology projects. SSNE has an exclusive license to use Kalina Cycle Technology in Mainland China, Hong Kong, Macau and Taiwan. Based on Kalina Cycle technology and SSNE s own technology to convert heat into electricity, SSNE has successfully undertaken and completed various power generation projects such as a 50kW geothermal power generation project in Shigatse, Tibet; a 2 MW Yaohua Pilkington CS3 float glass production waste heat utilization project in Jiangsu; a 50 kw Solar thermal Kalina Cycle demonstration power plant in Shanghai 2010 EXPO; a 50 kw geothermal power generation test project in Yilan, Taiwan; and a 50kw geothermal power generation project in Japan. It is currently undertaking a 7.5MW cement production waste heat utilization project in Guizhou. SSNE have also been working with the Chinese authorities and major petrochemical producers on the feasibility of utilising hot water from onshore oilfields as a potential source for geothermal heat. There is an enormous untapped geothermal energy resource associated with co produced hot water from oil and gas operations. Large quantities of water are produced with the extraction of oil and gas, either because water was present in the reservoir or because water was injected into the formation to force oil and gas to the surface. Wasabi Energy ASX Announcement Page 4

5 This later practice is called water flooding, and it is not uncommon for mature oilfields to produce up to 98% water 6. On average 25 million barrels of hot water are produced annually from oil and gas wells 7. This water has historically been a waste product and has required costly disposal. Co produced geothermal resources can be used to produce electricty, reduce greenhouse emissions and extend the life of the oil and gas fields, and potentially profitably utilise abandoned oil and gas fields and their infrastructure. SSNE also has a number of cooperation agreements with key institutions, industry partners and service providers in China. These relationships provide a cooperative framework for research and development as well as project design and implementation. These include: Shanghai Institute of Process Automation Instrumentation (SIPAI) East China Electrical Power Design Institute (ECEPDI) Shanghai Power Equipment Research Institute (SPERI) Wuhan Iron & Steel Design & Research Institute (WISDRI) Sinopec Engineering Institute (SEI) Shanghai Dayu Power Construction Co. (SDPC) Shanghai Baosteel For further information, please contact: Wasabi Energy Limited John Byrne, Executive Chairman +61 (0) Diane Bettess, COO Cenkos Securities London Financial Advisor, Broker & NOMAD Ivonne Cantu +44 (0) Newgate Threadneedle UK Media Enquiries Josh Royston +44 (0) Hilary Millar About Wasabi Energy Wasabi Energy Limited is listed on both the Australian Securities Exchange (ASX: WAS) and the AIM market in London (AIM: WAS) as well as American Depository Receipts trading on OTCQX Market (OTCQX: WSBLY). Wasabi Energy is an emerging power producer that also invests in sustainable technologies. Its power business is based on the proprietary Kalina Cycle power generation technology which utilises low grade, waste heat from industrial facilities or geothermal sources to produce electricity. In a typical industrial application of the Kalina Cycle technology can increase energy efficiency in an industrial plant by up to 20%. Through its strategic investments Wasabi Energy owns a 79.2% interest in Aqua Guardian Group, the developer of the AquaArmour TM a water management, conservation and algal control product. Aqua Guardian Group also has a 22.7% interest in the air, water and minerals ASX listed company CleanTeq (ASX: CLQ). Wasabi Energy also owns a 19.2% interest in Lignol Energy Corporation (TSXV: LEC) an advanced bio refinery group who recently purchased an 11% interest in Australian Renewable Fuels, a separately ASX listed company (ASX: ARW) which produces liquid biofuels from a variety of non food grade feedstocks, from Wasabi Energy. Additional information: 6 Bennett, K, 2012 Power Generation Potential from Coproduced Fluids in the Los Angeles Basin, Stanford University 7 US Department of Energy, 2010 Geothermal Energy Production with Co produced and Geopressured Resources. DOE/GO July 2010 Wasabi Energy ASX Announcement Page 5