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Algae.Tec Goes To The World

Australia | Feb 22 2011

– Algae.Tec to list in Frankfurt, giving it access to the NYSE
– Demonstration plant now under construction


By Greg Peel

Algae.Tec ((AEB)) is the first company in the world to move towards commercialisation of algae-driven carbon capture and alternative energy production and is also first to market in employing patented technology in a modular system. Shares in Algae.Tec listed on the ASX on January 21 and are currently fetching 42c compared to the 20c IPO price.

For extensive reviews of the company, its technology and its progress towards commercialisation see "An Opportunity To Enter The Biofuel Revolution At The Base Level" and "Algae.Tec Off And Running".

Algae.Tec today announced it had been accepted to list on the Frankfurt Wortpapierboerse (FWB), ie the Frankfurt Stock Exchange. A listing on the FWB is significant for two reasons.

Firstly, Germany is a major world force in the “cleantech” sector by virtue of its heavy industry dependence, Europe's longstanding (and now Phase II) carbon reduction and trading scheme, Germany's lack of its own natural resources, and the sheer size of the German economy. Germany is a world leader in, for example, geothermal energy, given what dwells beneath. Already 16% of Germany's energy needs is met by renewable sources and the government is targeting 30% by 2020.

On that basis, the FWB has become a global centre for sustainable energy investment and as such the nature of Algae.Tec's business is a natural fit, from both a commercial opportunity and an investor breadth basis.

Secondly, a merger has recently been approved between FWB operator Deutsche Boerse and the New York Stock Exchange which will create the world's largest exchange with access to the world's largest investor base.

Since the last FNArena report, Algae.Tec has begun the process of fitting out modular containers in the US ready for shipment to Nowra in NSW where a demonstration plant will be built at a starch factory operated by the Manildra Group. Algae.Tec chief operating officer Earl McConchie arrived in Australia recently to supervise construction of the plant.

FNArena was introduced to Mr McConchie by Algae.Tec executive chairman Roger Stroud a fortnight ago.

Mr McConchie is from Atlanta, Georgia, where it can get quite hot, while Mr Stroud is from Perth which also has its moments. But nothing prepared any of us for the 45 degree Sydney Saturday set as the lunch date coming, as Sydneysiders well know, at the end of a record week of what were once known as 100 degree-plus days. What better day to chat about alternative energy and climate change?

Mr McConchie knows Australia well having lived here for many years during his 25 year tenure with Dow Chemical, and has had 10 years experience in biofuels. Without giving away what I call the “colonel's secret eleven herbs and spices” of Algae.Tec's intellectual property, Earl spoke at length of the versatility of algae, its extensive variation and the delicate tweaking of the Algae.Tec system which can be adapted to suit a wide range of conditions and produce a wide range of product outcomes, all within one or more converted shipping containers.

Here's a little factoid which surprised me: most shipping containers never “go back”. In a country such as Australia which exports mostly bulk goods in specific carriers and imports mostly manufactured goods in shipping containers, the added fuel cost of sending a boat-load of empty containers back to, say, China, rather than an empty ship is greater than the cost of making new containers. So most of them pile up here instead, and the same is true in the US. They are thus not expensive, worth only their scrap value. The steel shipping container has become the plastic milk crate of the twenty-first century on a “101 things to do with” basis.

But I digress.

Having struggled, as is often the case with micro-cap IPOs, to satisfy the mandatory shareholder spread required by the ASX late last year (despite having satisfied net funds) Algae.Tec is now on the move. Partnerships are progressing in China and the company is in discussion with “polluters” locally to step up from that which is under construction in Nowra.

Noting that the commercial application of algae technology is a first for the world at this juncture, readers are reminded that Algae.Tec represents a risk investment for potentially high, but not guaranteed, reward. Note also that funds raised from the IPO are sufficient only to cover the cost of the demonstration plant and further capital will be required to move the company to a fully commercial level, which may include further capital raising.

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