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Algae.Tec signs Two MOU 12

Algae.tec Limited, which has secured the exclusive global rights to a pioneering highly-efficient algae growth and harvesting system (the McConchie-Stroud System) that produces algal products (such as algal oil and biomass) that can be used to generate sustainable bio-fuels, today announced two MOU's for non-binding commitments to deploy the technology in China and Australia.

Algae.Tec is currently undertaking an Initial Public Offering by way of a prospectus dated 16 July 2010 with the intention to list on the ASX by the end of September 2010. The Company?s ASX code will be AEB.

What sets Algae Tec's technology apart is that it exploits a patented system of algae growth not within ponds but within converted shipping containers. Scalability thus becomes modular, and land requirement is reduced by the ability to stack those modules. The closed modules are not exposed to the same problems as open ponds. And, most importantly, the modules are readily transportable.

In the pond system, the CO2 must come to the pond. To improve yields and accelerate algal growth, captured CO2 can be introduced but (a) it must be transported to the site from an emitter and (b) a lot of the introduced CO2 will simply bubble out of the pond again. In Algae.Tec?s system, the ?pond? comes to the CO2.

Closed modules can be stacked adjacent to an emitter (eg a power station) and everybody wins. The emitter has a direct and measurable carbon offset and the introduced CO2 exponentially accelerates algae biomass production for conversion into commercial products which are themselves a source of renewable alternative energy (which in theory can also be used as an energy source by said emitter).

Partnership with Shoalhaven Starches Pty Ltd.
Algae.Tec has now signed a memorandum of understanding with Shoalhaven Starches Pty Ltd, a subsidiary of the Manildra Group. Manildra is primarily a producer of wheat flour and secondarily a producer of differentiated by-products such as gluten, glucose and starch. Nowra-based Shoalhaven Starches converts starch into ethanol, making the Manildra Group Australia?s largest ethanol producer.

Manildra's ethanol production plant operates using a CO2-emitting power plant. Therein lies a potential source of CO2 for exploitation by Algae.Tec technology, but CO2 is actually also emitted from the conversion of starch into ethanol. For Algae.Tec, its a double-whammy.

Algae.Tec has thus found the site for its demonstration plant. At the time its IPO prospectus was published, it had not. This means a supplementary prospectus has now been published and the close of application date for the IPO has been extended to September 17. Algae.Tec hopes to have the demonstration plant in operation by the June quarter, 2011.

The demonstration plant will consist of two or three container modules but if it proves successful the MOU extends to the construction of Algae.Tec's first commercial plant at the site consisting of some 200-300 containers. Requisite council and environmental applications for such a plant will be filed immediately rather than waiting until after the demonstration proves viable.

The Nowra-based plant would then be the world's first commercial algae operation. At this point, Algae.Tec is not yet planning to produce its own ethanol from the resultant biomass given there are a number of options to be explored, including directing the algae to the production of nutrient-rich stock feed for sale in the region.

Another MOU
Algae.Tec has also signed another new MOU which becomes part of the supplementary prospectus. The MOU involves Algae.Tec in a partnership with Bioenergy Investment Ltd ? an alternative energy investment vehicle incorporated in Hong Kong. Bioenergy Investment is itself a joint venture between Hong Kong company Pacific Minerals and Australian company RKD International.

The purpose of the joint venture is to first seek intellectual property protection for Algae.Tec?s technology in China.

Clearly Algae.Tecs two new MOUs, to add to existing the MOU with logistics and plant construction and management specialist Leighton Holdings, are of a material nature. Hence the supplementary prospectus and extended closing date for the $7.5m IPO.

Prospective investors must take note that while all of the above sounds very promising, algae technology is yet to be proven on a commercial scale anywhere in the world. While demonstration plants are intended to provide proof, there are no guarantees. This is a speculative investment. There will be no cashflow ahead of commercialisation. And the commerialisation phase will require the issuing of significantly more capital.

Fri August 27 2010 04:53:55 AM by Sumukhi investment  |  Biofuel  |  algae  |  Algae Fuel Companies 2293 views

Comments - 8

  • Shankar wrote:
    Fri August 27 2010 05:30:40 AM

    The Algae.tec IPO will only provide for the construction of the demonstration plant.

    Thereafter, Algae.Tec aims to develop strategic partnerships with power plant equipment providers and operators, manufacturing and construction companies and other users of its end products.

    However, the jump from demonstration plant to commercial operation will require a great deal more capital, and thus further capital raising.

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  • Shankar wrote:
    Fri August 27 2010 05:42:29 AM

    If I remember right, even Petroalgae had a few such MOUs which are non commital.

    The other similarity that i notice is that, both have offices in usa and australia.

    The difference is Petroalgae is getting listed in usa and Algae.tec in Australia.

    Let me get some more info about the issue to comment more on this interesting issue.

    Although the size of the issue is small, my worry is they dont have a proven model.

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  • Shankar wrote:
    Sun August 29 2010 06:15:06 AM

    You can hear Roger Stroud talk to Sky News about Algae Tec here

    Their website doesnt give enough confidence in me.
    My money remains in my pocket.

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  • Shankar wrote:
    Tue August 31 2010 01:04:30 AM

    The Algae.Tec IPO is not underwritten by any third party.

    Lead manager in the issue is Minc Stockbroking [thinkminc.com.au] and stock analysis has been undertaken by research house Wise Owl [wise-owl.com].

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  • Shankar wrote:
    Thu September 02 2010 11:16:37 AM

    Algae Tec says it is poised to list on the Australian Securities Exchange and has inked two non-binding deals to deploy technology that can be used to generate biofuels from algae here and in China.

    The company is currently in the midst of an initial public offer of 37.5 million shares at a price of 20 cents each to raise $7.5 million, which is slated to close on September 17 and is expected to be followed by an ASX listing at the end of this month.

    Perth-based Algae Tec holds the exclusive global rights to the McConchie-Stroud algae growth and harvesting system, which produces products such as algal oil and biomass that can be used to generate biofuels.

    "The Algae Tec system is designed to deliver the highest yield of algae per hectare and solves the problem of food-producing land being turned over for biofuel production," Algae Tec said in a statement.

    Algae Tec said it had signed a memorandum of understanding with Hong Kong-based Pacific Minerals and Australian company RKD International to establish a joint venture to establish commercial production facilities in China.

    "We look forward to negotiating definitive binding agreements for this joint venture in the coming months," Algae Tec chairman Roger Stroud said.

    Algae Tec has also penned an MoU with Australian ethanol producer Manildra Group with a view to installing several photobioreactors at Manildra's starch and ethanol production facility at Nowra, New South Wales.

    Algae Tec said these could be operational in the second quarter of 2011.

    source http://www.wabusinessnews.com.au/en-story/1/83234/Biofuels-from-algae-firm-to-list-soon

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  • Shankar wrote:
    Thu September 02 2010 11:17:26 AM

    Both Petroalgae and algae tec issues will do more harm to the algae to oil industry than good, in my opinion.

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  • Shankar wrote:
    Thu September 09 2010 11:48:24 PM

    The company is currently in the midst of an initial public offer of 37.5 million shares at a price of 20 cents each to raise $7.5 million, which is slated to close on September 17 and is expected to be followed by an ASX listing at the end of this month.


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  • Wed September 15 2010 01:08:14 PM

    some more news about the IPO

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