Algae.Tec forms Chinese JV, raises capital 1Algae.Tec forms Chinese JV, raises capital The Australian publicly listed company with a manufacturing plant in Atlanta, USA, forms a 50/50 joint venture with Kerui Group Holding Ltd., and its capital-raising efforts with Patersons Securities Ltd. By Ron Kotrba | January 18, 2012
Algae.Tec Ltd. announced this week it signed a binding memorandum of understanding for a 50/50 equity joint venture in China with Chinese company the Shandong Kerui Group Holding Ltd. The first project under the JV, according to Algae.Tec, will be the construction of a 250-module algae biofuels facility in China to be funded equally by both parties.
Algae.Tec Executive Chairman Roger Stroud said in a press release that the facility will be the first of its size and type in the world, being purely focused on algae for the production of transport fuels.
“The equally funded 250-module biofuels facility to be built in Dongying, in Shandong Province, will produce approximately 33 million liters (approximately 8.7 million gallons) of algae-derived transport oil,” Stroud said, “and approximately 33,000 tons of biomass per annum at a combined value of over $40 million, and capture 137,000 tons of waste carbon dioxide. And this should be the first of many.”
The JV will accelerate the Algae.Tec project expansion and roll-out throughout China, the company said, targeting corporations and environmental administration authorities.
“China is a country truly focused on a ‘blue skies’ policy,” Stroud said. “This JV has been formed to help China move towards this important goal. The Algae.Tec technology will reduce unwanted emissions and will convert them into locally produced transport fuels, which will add to fuel independence. [The company is] well positioned for massive expansion in the fastest growing economy in the world and will be raising capital shortly to fund this expansion.”
Algae.Tec (ASX:AEB, FWB:GZA:GR, ALGXY:US) is an advanced algae-to-biofuels company with a high-yield enclosed algae growth and harvesting technology, the McConchie-Stroud system. The Kerui Group, based in Shandong Province, in the second largest oil province in China, has extensive business interests in the People’s Republic of China primarily in the manufacturing of oilfield and petroleum industry equipment, and power generation and building facilities. The Group has offices in 18 countries outside China.
Algae.Tec will provide the technology—the McConchie-Stroud biofuels production system—and the Kerui Group will provide knowledge and expertise to accelerate business development and the identification of viable project sites. The Kerui Group will also advise on dealing with relevant authorities to secure the required approvals.
The JV will also look to securing funding, following completion of the 250-module plant to build new projects exceeding 1,000 modules, and to engage with CO2 emitters in the Greater China region.
The company also announced this week that it has mandated Patersons Securities Ltd. to raise $$5 million Australian via the issue of 12.5 million (placement) shares at an issue price of 40 cents per placement share to sophisticated and professional investors. This raising should be completed within three days and the company will seek a trading halt while this is being finalized. In conjunction with the shares, the company will also issue attaching (placement) options on the basis of 1 option for every 2 placement shares subscribed. The options will be American options with an exercise price of 75 cents and a maturity date Jan. 31, 2014. The Company will endeavor to have the placement options listed on the Australian Securities Exchange should the minimum requirements be met.
This raising of $5 million via a placement will marginally increase the company's shareholder base by 4.7 percent, Algae.Tec said, and will be utilized to fund the fast-tracking of the commercial projects recently announced.
Last week Algae.Tec announced the four-fold expansion of its Atlanta-based Algae Development & Manufacturing Centre to 70,000 square-feet to scale-up production line capability for existing and upcoming commercial projects. Last month, Algae.Tec signed a biofuels MOU with the European airline Lufthansa, and announced a biofuels production and carbon capture deal with the Sri Lanka subsidiary of industrial giant Holcim, the world’s largest cement and building materials company.
Algae.Tec, was founded in 2007 and is a publicly-listed advanced renewable oil from algae company that has developed a high-yield enclosed algae growth and harvesting system, the McConchie-Stroud System. The company has offices in Atlanta, Ga., USA; and Perth, Western Australia.