Found that story a bit interesting so had a further look
Looks like a plant will be built in QLD and use Sorgum not sure where the $80 mill is comming from but it looks like the technology works
______________________________________________
Company Announcement
To acquire 50% of Dalby Bio-Refinery Limited
INDCOR LIMITED 2003-02-11 ASX-SIGNAL-G
HOMEX - Perth
+++++++++++++++++++++++++
Indcor Limited ("ICO") through the company's planned ethanol development company, Australian Biofuels Pty Ltd (ABF) has reachedagreement to purchase a 50% stake in the Dalby Ethanol Project.
The Dalby Ethanol Project is a development to produce 80 million litres per year of high quality ethanol for the Australian petrol industry and in excess of 60,000 tonne per year of Dried Distillers Grain for
the animal feed industry. Ethanol offtake is underwritten with over75% of the production contracted for sale.
The Dalby Project isprojected to cost around $75 to $80 million and located near Dalby,225 kilometres west of Brisbane in the Darling Downs agriculturalregion of Queensland. Feedstock for the development is locally grown sorghum.
Indcor and ABF have been in discussion on Dalby for over two months and have completed a full due diligence on the project.
To date theDalby Ethanol Project has been developed by a private group headed up by local fuel company entrepreneurs Chris and Ross Harrison.
Fulldocumentation is scheduled for signing within the next two weeks.
Mr Peter Anderton, Chairman and CEO of Indcor, said that the deal was extremely important to the company's medium term vision of becoming Australia's principle ethanol production and distribution group
following the announcement to purchase Australian Biofuels Pty Ltd
(ABF), the ethanol business of Multiplex, late last year. Indcor has
agreements with Multiplex to manage and finance the operations of ABF
from 1st January 2003. The purchase of ABF is, amongst other things,
conditional upon approval by the Indcor shareholders and a capital
raising to fund the acquisition and the required capital for the
first stage of ethanol production. As a result of the Dalby
commitment the planned capital raising timing has been deferred 6 to
8 weeks and the quantum revised in order that the Dalby Project is
included in the fund raising prospectus. The capital raising is now
planned for the second quarter of 2003.
Mr Anderton said that Indcor were in discussion with a substantial
broking group and expect to appoint and mandate a broker for the
capital raising shortly. The capital raising and final structure is
subject to shareholders approval.
Indcor and ABF have undertaken to meet the conditions needed to
complete financial closure of the Dalby Project. The commitments
include finalizing a suitable engineering and construction contract
with Multiplex, Indcor's major shareholder, and completing a capital
raising for the Indcor share of the equity. The capital raising is
subject to shareholder approval.
The ethanol fuel off-take contracts are with a number of independent
fuel companies and priced to a formula reflecting fuel terminal gate
pricing that can fluctuate with oil price and exchange rate. At the
long range crude oil (WTI) price projection of US$22 per barrel and
$0.60 exchange rate the Dalby Project exhibits attractive and robust
equity returns. At today's crude oil price of around US$34.00 a
barrel and the current exchange rate of around US$0.59, equity
investment returns are significantly enhanced. Dalby Bio-Refinery is
currently offering sorghum supply contracts to local growers and
suppliers.
Mr Anderton said that the deal combines the local and regional
knowledge and fuel business expertise of the Harrison brothers with
the construction, financing and capital raising ability of Indcor,
together with its major shareholder Multiplex. "This is a great
combination for the development of Dalby and the company's long term
plans to create a substantial ethanol business. Based on the ethanol
industry in the US the possibility for Dalby and future projects in
Australia is enormous. The development is an important springboard
for the Indcor strategy."
Discussions with financial institutions have indicated project equity
of 40% will be required for the first ethanol facility to be
constructed by Indcor. Consideration for the acquisition of 50% of
Dalby Bio-Refinery Pty Limited is:
* An unconditional commitment to contribute $1.5 million into Dalby
Bio-Refinery Limited (DBR) to be spent on the Dalby Ethanol Project
to take the project to financial closure.
* An equity injection into DBR at financial close of $2.25 million in
cash.
* Provision to DBR an unsecured interest free loan of $2.25 million
(to be repaid from cash flow) to support the equity required for
project finance.
* A commitment to raise 50% of the required project equity.
* To put in place up to $3 million as an equity contingency facility
to the project in case of a equity shortfall once all banking
documents are finalized. Take up of the facility would result in
Indcor taking up an increased equity in the Dalby Project.
The initial $1.5 million commitment required for Dalby will be funded
from proceeds from the SPP offer to shareholders which now closes on
14 February 2003. Indcor has achieved the initial target of $750,000
under the SPP offer. Multiplex and the Directors have put in
placement funds approved at the 30 January 2003 meeting of
shareholders to take the current raising to $1.1 million.
Mr Anderton added, "We would welcome the support of more shareholders
under the SPP offer prior to the closing date of 14 February 2003."
Indcor intend that any further requirements to make up the initial
$1.5 million commitment to the Dalby development (plus corporate and
other ABF expenditure) will be raised by placement to environmental
funds and investor groups who have indicated a strong appetite for a
robust renewable energy project which can be developed and generate
cash flow quickly.
Indcor's target through the acquisition of ABF is to build one
project a year for the next six years and generate over 300 million
litres capacity by 2010. Projects are planned to be in association
with local groups and provide significant regional support to the
depressed Australian rural community. Such support is expected to
generate Government funding to these regional projects.
In addition to the Dalby Project Indcor has a plan to develop the
Mossman Ethanol Project in North Queensland, which is an asset of
ABF. The Mossman Ethanol Project received development approval from
the Douglas Shire last week, Mr Anderton noted, "There remains a lot
of work to do at Mossman because of the current state of the sugar
industry and the weakened financial position of Australian Biofuels
partner Mossman Central Mill (MCM). This is a result of the drought
and the poor sugar prices against a rising Australian Dollar." Indcor
and ABF have been advised by MCM of restrictions imposed on MCM under
their banking arrangements which affect their ability to meet its
joint venture commitments. MCM advise that these restrictions have
resulted in MCM giving notice to ABF of their intention to terminate
joint venture arrangements put in place in mid 2002.
ABF has arranged to meet directly with MCM to pursue an acceptable
resolution by both joint venture parties with respect to the
agreements relating to the Mossman Ethanol Project.
Indcor is very much committed to an ethanol business in Northern Queensland at Mossman or if required at another site.
The molasses feed is a competitive supply for ethanol feedstock and there is a strong local appetite for ethanol to support the fuel industry in the region.
However the project will now have to come in after the Dalby development as part of the overall Indcor strategy. Indcor through
Australian Biofuels also have plans to develop ethanol facilities at
Coleambally and Forbes in NSW. Both facilities use locally sourced
grain as the feedstock and are based on an output of 80 million
litres per year into the Sydney and Melbourne fuel market.
Mr Anderton commented that the current round of anti-ethanol lobbying
in the media and the Australian community is a re-run of the US
industry of the 1990's. The sentiment and the misinformation continue
to be fuelled by the major oil companies and fuel industry. Under an
ethanol industry development in Australia the major fuel companies
would be likely to lose market share. The biggest threat comes from
the communities that are most affected by high fuel prices - the
regional and rural communities. Indcor's position is that at 10%
ethanol blend in petrol there is 1,800 million litres capacity in
Australia and no one can put forward any credible argument why an
excise free, local supply scenario similar to the LPG gas industry
can not be put in place.
An excise free position for locally produced ethanol is Government
Policy and Indcor are confident that the Federal Cabinet will honour
their 2001 election platform on renewable energy. Indcor has
reiterated the biofuel industry position by suggesting that on
current projections the US ethanol industry will be bigger than the
total Australian motor spirit (petrol) industry by 2010. As a major
rural economy importing substantial crude oil, with the associated
greenhouse gas issues to address, there is every reason to develop
sustainable solutions with extensive environmental benefits, reducing
cost and reliance on the unstable fossil fuel supply into the
Australian energy market.
P Anderton
CEO & CHAIRMAN
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