ARW - Australian Renewable Fuels

[Rasman]

IMHO a $2.5 stock by the end of the year.

Set to post good news about a second plant opening

Set to post good news about expansion

Will need extra finance at some stage for 3 new plants.

Has moved international and holds patent rights for the best biodiesel technology in the industry. (From personal research I believe the energea technology IS the best in the industry)

- Do your own research, anything I write may be incorrect.

 

[pch]

I have had a look into this one and followed some forum threads on it elsewhere.

Capital costs for each plant is some $15-25mil. They entered into a 5 year contract to sell all of the product from their first plant at $250mil ($50 mil pa I assume).

I've seen discussions speculating annual profit of $10-17mil for this first plant. I haven't looked closely on how this was derived but it seems to me that they are going to repay their capital investment back pretty quickly and the plant appears profitable from initial production.

If they can repeat this formula (and the recent accouncement of an accelleration and expansion and the building of a much larger plant) then they could indeed offer good value.

Questions I have seen raised include access to the right raw materials to process and its price, how fast the technology changes and how much ongoing capital it takes to manage and maintain each plant..

 

[FXST01]

I wouldn't be surprised if it passed $3 by the end of the year

 

[pch]

but its not a resource stock! No-one will be interested in it!

 

[dr00]

what are peoples thoughts on this since the legislative changes? the market certainly didnt like it but is that more because of the nature of the announcement they made or because of the real effect?

they just opened their WA plant but it seems to me like the move the US market would make anything they do here pretty much chicken feed in comparison... as i said, the market obviously doesnt agree...

 

[FXST01]

I revise my comments to be lucky to reach 50 cents, thanks to changes in legislation.

 

[pacer]

Renewable stuff means less oil/plastics/coal....lets kill our planet then worry about it!

It sucks but you can't change human nature or kill politicians .......

Bigest river in china just got downgraded to DEAD....that's what happens when you s-h-i-t in your own back yard.....a classic saying that rings true.

Do you brew your own and re-use the bottles....do you save your cans...do you crap in your back yard!.....think about the decisions you make in the supermarket, and your own backyard........be GREEN!

 

[billhill]

Anyone know why this stock has run up over 30% on heavy volume the last couple of days. Seems their must be something going on within the company.

 

[26 Broadway]

Price is climbing quite nicely too. Seems very odd, looks like someone is in the know and it's not me.

 

[3 veiws of a secret]

Price is climbing quite nicely too. Seems very odd, looks like someone is in the know and it's not me.

Yes '26 Broadway' have been keen to jump onto this one ,since its huge drop,watched it stutter @ 47~48 cents,but gradually this share has picked up momentum. It was hitting 74 cents and I entered in @ 65 cents after fridays jolt backwards. It has a cosy feel including major shareholders being The Myer Family .
I had guests over from the UK ,and we were talking about different oil prices from Uk to Oz ,and the comment that made me sit up was some company in North England is converting cooking fat from fish and chip shops into fuel . BP, Shell,and Exxon( if it still exists ) must hate these biofuels ,the oil refineries and total infra-structure have to be modified , but H will be the next thing if Oil gets to say US$95...........enough banter .

 

[billhill]

Finally some good news concerning this company. After a long slide due to unfavourable legislative changes last year it seems the company has refocused its attention to the US where conditions are much more favourable. A 75mgallon biodeisel facility in New mexico was announced. I can't see the stock going much lower so hopefully there are changes in the wind for both the company and its share price.

 

[Boyou]

Some positive news for holders and watchers.

July 24, 2007
Australian Renewable Fuels Secures 2007 Growth With New Contracts

By Chris Cann

Biodiesel producer Australian Renewable Fuels has signed off yet another supply agreement, this time to provide biodiesel for a merchant of the world's dirtiest fossil fuel – coal. ARF has agreed to supply Wesfarmers Premier Coal's mine in Collie, Western Australia, with 1.5 million litres of biodiesel per year from its Picton plant, also in WA. The open cut Premier mine will use a 10 per cent biodiesel blend in its operation.

The deal provides an insight into the future of energy as environmentally abrasive fossil fuels are combined with green fuels such as biodiesel to reduce greenhouse gas emissions.

It is an inevitable partnership. Only those with their heads in the sand believe that the world's energy needs, which are predicted to grow by 60 per cent by the year 2030, can be met largely with renewable energy. Equally naïve is anyone who thinks fossil fuel generators will be allowed to continue operating without significant cuts to their emissions. Green fuels, including uranium, are predicted to grow just enough over the next 20 years to maintain their current share of the supply at about 15 per cent.

Wesfarmers realised this trend years ago and has reduced unit emissions at Premier by 50 per cent since 1994 through adaptations including energy audits, changes in mining practices and equipment, reduced haulage distances, higher efficiency motors, and lighting control systems. The contract with ARF is its most recent initiative.

The growing expectation for business to be green is the catalyst for biodiesel demand and the basis for ARF’s strategy. The Wesfarmers agreement is the third of its kind signed by ARF in the past few months to supply businesses with biofuel to blend with traditional petroleum.

The other two contracts were significantly larger than the latest. The biggest is a contract to supply Bunbury (WA) based mining and earth moving contractor Piacentini & Son with 8 million litres of biodiesel over 12 months from the Picton plant. The other is a 5 million litre per annum deal with major oil and gas producer Caltex based on delivery of biodiesel from both Picton and the company's other plant in Largs Bay, Adelaide.

The three contracts together have taken the annual supply from the two plants up to 34.5 million litres and moved ARF ever closer to profitability, according to newly appointed chief executive John Lillywhite. Lillywhite replaced former managing director and ARF founder Daryl Butcher in mid-June.“All our sales are structured to earn a positive gross margin, even at today's high feedstock prices, and contribute to fixed costs,” Lillywhite said. “When feedstock pricing returns to historical trend, both contracts will generate a highly acceptable net profit.”

Feedstock for biodiesel accounts for between 60 per cent and 70 per cent of production costs and its price can vary greatly. ARF feedstock is made up entirely of tallow, which has experienced a price hike in recent months. Tallow was up more than 60 per cent on its April price of A$516 per tonne at A$840/t. Lillywhite expected prices to ease toward the end of this quarter but for now, ARF had reviewed its cost structure in order to compensate for the feedstock premium and had identified an annual saving of A$1 million.

The total capacity of ARF's two plants is 90 million litres – a far cry from its contracted demand at this point. However, Lillywhite is confident of both plants fulfilling their potential by next year.“We're negotiating sales contracts that will take us close to the capacity of both plants,” he said. “While we expect these to be signed during the September quarter, production and sales may not rise to near capacity levels until the first half of calendar 2008 due to the need for our customers to re-engineer their terminals for biodiesel storage and blending.”

ARF's further growth into next year at this stage looks likely to continue to get help from the Federal Government, as the John Howard-led administration attempts to seduce the green vote in the lead up to elections this year. ARF recently received A$5.4 million from the Government, which the company says helped it to secure recent contracts by allowing the demonstration of the “excellence of our production and quality capabilities”.

For now though, Lillywhite is fixed firmly on the company's requirements for the remainder of 2007, which focus around achieving cash flow. “We're focused on closing the outstanding contract negotiations, assisting customers with engineering their logistics solutions, storage and blending requirements and moving the company to positive cash flow. The key driver of cash flow will be future feedstock prices. We'll complete and implement our review of corporate overheads and opeating expenses.”

 

[sdr]

is anyone still in on this? i have been looking at since i heard about it off brr.com and iam thinking of place money into it... any thoughts?

 

[SevenFX]

is anyone still in on this? i have been looking at since i heard about it off brr.com and iam thinking of place money into it... any thoughts?

Quickly skimming over the last few posts over the last 12mths suggests it doesn't have very many happy followers...

Don't know much on the fundermentals, but the chart says it all, and todays another confirmation of of where it's heading...

This is an incrediable Fall from $2.30 high to a low of 5c today...

Only reason this share caught my eye, is because of the 80% sp loss in value...

ARW seems to have been in trouble since June06, and perhaps earleir signs may have been shown...???

SevenFX

 

[numbercruncher]

Absolutely hammered .....

I lost loads on this donkey but cant say how happy I am that i sold ages ago, about the best win ive ever had in that context


Maybe a new Government one day will give em renewed hope ?

 

[Bushman]

Interesting juncture for this company.

Operation is unsustainable in Australia at the moment due to:
- high tallow prices due to Chinese demand;
- no requirement for large petroleum companies to purchase bio diesel when ARW was forced to sell through this channel;
- delay in an Australian carbon trading scheme where bio diesel will obviously allow a purchaser to accumulate carbon credits.

Benefit of a move to the US is tallow prices are protected by export quotas to China. Thus tallow price is much reduced.

Future upside to company -
1. US operation is likely to be more profitable;
2. Carbon trading will occur in Australia at which point sales volume could well increase to provide economies of scale and support higher prices - ie margin could become economic.
3. Energea technology. Bit unclear on this as I believe the company has regional rights to the technology; and
4. They have built two plants in Australia so should be able to build processign plant in US;
5. Much larger market for a product with high customer satisfaction.

Short term hurdles:
1. Do they have to repay $15m AUD government grant?
2. How will they finance US plant - if equity then expect another capital raising? Who will take this up given the last capital raising was at 50c and these shares have lost 80% of their value since then.
3. Competitor analysis in the US. No idea?

At 8c per share it might be worth a punt esp as share price lost 70% in value the day before last. Will be keeping an eye on it. From the sounds of it, finances will be reviewed in Jan08 which might be the prudent time to get on board. There is a real risk of administration here and I would assume not many would be putting their hand up to buy the existing Aussie assets until the regulatory environment changes to support bio fuels.

Crazy story this at a time when global warming is becoming a 'hot' topic. A loser from the boom in China it would seem.

 

[SevenFX]

At 8c per share it might be worth a punt esp as share price lost 70% in value the day before last. Will be keeping an eye on it. From the sounds of it, finances will be reviewed in Jan08 which might be the prudent time to get on board..

Hi Bushman.

This can still keep dropping in value 70% till it's delisted... even at 2c per share, dropping another 1c is still a loss of 50% capital if that makes sense...

Perhaps entry should be based on trend change as opposed to sp value...????

SevenFX

 

[padd]

Found something on HC thought it would be of intrest!!!!!


American Rewewable Fuels is 65% owned by Australian Renewable Fuels

http://www.lubbockonline.com/stories/110307/reg_110307066.shtml


Despite official's opposition, company gets tax exemption


CLOVIS, N.M. (AP) - The Clovis City Commission has approved an agreement allowing a 15-year tax exemption and 25 acres of land at its industrial park for an Australian company that plans to build a biodiesel plant near the eastern New Mexico community.

The agreement, approved 7-1 this week, means American Renewable Fuels can move ahead with the $80 million plant. The company expects to begin construction in March on the facility in the park south of Clovis, said Clovis Industrial Development Corp. executive director Chase Gentry.

The plant will use animal fat to produce 75 million gallons of biodiesel a year, company officials have said.

Mayor Pro Tem Randy Crowder voted against the agreement because of the plant's water use.

The facility will use about 40,000 gallons of water a day, said CIDC business recruiter Gene Hendricks.

The plant will create about 40 jobs, and Mayor David Lansford called it a good compromise to losing the water to farms that don't create jobs.

 

[Bushman]

Hi Bushman.

This can still keep dropping in value 70% till it's delisted... even at 2c per share, dropping another 1c is still a loss of 50% capital if that makes sense...

Perhaps entry should be based on trend change as opposed to sp value...????

SevenFX

TM - off course you are right. My main concern with ARW at the moment is does it remain a going concern. If it has to repay the $15m gov't subsidy then it is toast as it is unlikely a fire sale of its Australian assets will realise anything at the moment given the production of bio fuels is uneconomic at a tallow price of $900 USD.

However if it can clarify its position re the $15m and gets the finances sorted to build the $80m USD facility, then it could be a proposition as the product is good and has good consumer sentiment.

Pivotal piece of news but off course the shares wont be trading at 6 cps once finances are resolved.

I do NOT like going concern issues as it is obviously a show stopper and no-one will be able to get their capital back given that the company owns specialised capital which can only be used in an uneconomic venture. Hence why it is on my watchlist only awaiting a change in sentiment based on news of potential solvency. That would represented by a change in trend in the sp. Even then the opportunity cost might be to great given the lag to production.

 

[blehgg]

Nice little 100% jump today off positive Term Sheet announcement.

Looking to renewable sources of energy seems to be the push everywhere now, especially in government, with the whole Green Energy push.

But how much money is there really in biodiesel??? =="

But looks like theres some bad history in the company??