Transcript of an interview with the Wall Street Ledger March 20 th 2013 Geopower Energy Limited (Proposed ASX code: GPX)

Transcription

1 WSL: How large is the overall market you are targeting and elaborate on the potential growth? Ben Mead: Geopower is unique among renewable energy companies in that we are not tied to any specific technology, ideology or geographical region. We have a global approach to the development, ownership and operation of a diverse portfolio of low-risk projects that will generate returns from commercially proven renewable technologies. The growth opportunities are immense, and we are currently undertaking our IPO on the ASX to fund our JV participation in the company s first operating project the Circle Four Biogas Project - and provide working capital for pipeline opportunities. We are initially focused on two types of renewable projects biogas and waste heat recovery - because they meet our investment criteria of producing base-load (24/7) power, mature and reliable technologies and quick to commercialize often less than 12 months. Biogas is capturing methane from decomposing organic waste, and using this as a fuel to produce electricity, carbon credits and renewable energy certificates. Waste heat recovery is capturing wasted heat from industry and using US-built systems to transfer the energy in this heat into new electricity for consumption. Biogas potential is immense; Geopower s first project is the world s largest pig-waste biogas project on a farm owned by Smithfield Foods, the world s largest producer of pork. This is the only Smithfield farm where biogas is harnessed to produce energy, and there are expected to be significant growth opportunities. Phase one is expected to produce enough gas to generate 6.4 MW of electricity or enough to power 6,000 average sized homes. There is a duplicate project scheduled to be developed on this farm in due course, and beyond this other large-scale biogas opportunities using the Circle Four Project as a showpiece. Waste heat recovery opportunities are abundant, with potential projects at most industrial plants where there are large volumes of heat; smelters, cement plants, glass plants, canning facilities. Large remote diesel power stations are of particular interest as the heat in exhaust gasses can be captured to generate approximately 10% additional energy output. Geopower is advancing a number of opportunities in jurisdictions that are attractive either because of power prices plus environmental credits and government incentives, or because of naturally high power prices. WSL: Tell us a little about your product offerings including its applications and market potential. Ben Mead: Geopower is not a technology company, in fact we are technology agnostic. Geopower s focus is to invest in projects that meet our criteria for development; projects that marry guaranteed fuel supply and energy sales with fully 1

2 proven and commercialized technologies, for base-load power production. By considering a range of opportunities we can truly maximize the return on investment for our shareholders. Geopower is not a company that was formed to chase governmental rebates and incentives, rather we pursue the highest yielding and lowest risk opportunities out there by either matching energy sales with carbon credits and other environmental incentives, or by pursuing projects in jurisdictions that have naturally high power prices. We are not constrained by technology, ideology or geography, what we are driven by are strict investment criteria and a requirement for a high return on investment. Given that there really aren t any other groups that have taken the approach that we have, there are literally thousands of opportunities for us to explore. WSL: Give us an example of an existing customer and their value proposition in choosing your Company? Ben Mead: Geopower s model is to identify opportunities to secure long-term fuel supply organic waste in the case of biogas or waste heat in the case of heat recovery. We approach the provider and negotiate to secure the fuel over a long term agreement. We pay the provider for the waste over the term of the contract; we don t require them to invest any capital in the project, take any risk or utilize any of their resources. All we want is their waste for fuel and they make money from that. We then develop and fund the project and produce electricity. We then can either sell that power on the grid or sell it back on site if the waste provider requires it. This approach allows the fuel provider the customer in this case to focus on their core business, focus on what they do best, to make extra revenue and in some cases secure consistent and reliable electricity from our process. WSL: What is so unique about your Company that gives you competitive advantages within your market space? Ben Mead: There are very few developers who have the approach that we do; we want to own and operate projects, we have the expertise and the capital to invest in projects. Geopower isn t looking to get paid to develop projects for other people and walk away there are countless developers who do, but that s not our model. We can maximize our return for shareholders by identifying low risk, high yielding opportunities that we own and operate over the long term. We view investment in these opportunities like financial instruments; annuity-generating investments with high yielding returns. WSL: Can you tell us about your strategic partnerships and the underlying strategy behind them? Ben Mead: Geopower has a strategic partnership agreement with Alpental Energy Partners, a US private equity backed renewable developer. Geopower and Alpental 2

3 have highly complementary business models and look to co-invest across opportunities to further diversify and mitigate risk. We mitigate the risk as far as possible at the project level and then mitigate risk further at the corporate level by co-investing across a larger number of opportunities. Just as an investor with $10m to invest doesn t buy just one stock, we d rather invest $10m for 50% of 2 projects than 100% of one project. WSL: What are some of the major trends you see effecting your core business? Ben Mead: Without question there is an increasing trend towards reliance on renewable energy to supplement and replace fossil-fuel based generation. In 2011, US$257B was invested in new renewable capacity. This is projected to rise to US$395B by 2020 and $460B by In 2011, 44% of new energy generation was from renewable sources, almost on par with new fossil fuel based generation. The reasons for this are global governments incentivizing renewable development but also as renewable technologies become more mature they are able to compete on a head to head basis with fossil-fuel generation. Don t forget that renewables often have no fuel costs, and whilst the capex can be considerably higher than fossil-fuel generation as these technologies mature that comes down. Again, Geopower is not a company that was formed to chase governmental rebates and incentives, rather we pursue the highest yielding and lowest risk opportunities out there by either matching energy sales with carbon credits and other environmental incentives, or by pursuing projects in jurisdictions that have naturally high power prices. WSL: How do you believe your Company can capitalize on these trends? Ben Mead: Geopower brings together industry professionals with a proven track record of delivery and the ability to finance, own and operate projects. When you partner this with a diversified approach that only uses fully proven, mature and guaranteed technologies the company expects to develop some immensely low risk and high yielding opportunities. I am confident that our model of not requiring the fuel provider (farm of industrial processor) to apply resources or capital will pave the wave for rapid expansion of the company. WSL: We have been operating in a very difficult economy. What are some of the positive highlights we can extract from your recent quarter? Ben Mead: As an unlisted company, Geopower is not required to file quarterly returns however I can advise that in the most recent quarter the company has made significant progress towards the finalization of our IPO in Australia. We expect to open the IPO to the public during April and commence trading in late May WSL: Do you believe these synergies will continue through out the year? 3

4 Ben Mead: The Company expects to see significant news flow for the remainder of 2013 with the completion of our IPO, assumption of ownership of the Circle Four Biogas Project and aggressive development of a number of our pipeline opportunities. We are hopeful to be in a position to announce a number of these new projects by the end of WSL: What key goals and strategies are you focusing on to ensure future success and improve long term shareholder value? Ben Mead: Implementation of the company s diversified and risk mitigated strategy is central, and we are out rapidly advancing a number of opportunities that meet this criteria. WSL: Based on your vision and accomplishments, how would you categorize the next 2-3 years as a period for your Company? Ben Mead: We expect a period of intense growth as we add to the portfolio of projects. We expect to move from an aggressive growth phase to the payment of dividends to shareholders. The timing of this depends on a number of factors including the potential for projects to be developed and sold yielding the opportunity for accelerated payment of dividends. WSL: Are there any misnomers or misconceptions investors have about your Company that you would like to put to rest or do you think the investment community fully understands the potential your Company has to offer? Ben Mead: The crucial point of Geopower is that we approach these projects to provide annuity type returns. When you enter into long term supply and offtake agreements, and work with proven technologies that produce base-load power these opportunities very much become financial instruments. We always looks to utilize debt to lever the returns. One of the reasons we only employ proven technologies is because that enables us to use debt, and to enter long term offtake contracts. Financiers and energy offtakers simply aren t interested in taking the risk with an unproven technology, with a science experiment. Our geographical, technological and ideological diversification leaves us best suited to capitalize on the most appealing opportunities and we expect to develop, own and operate a number of low risk and high yielding projects. The relationship with Smithfield also adds immense value as this is the only Smithfield owned farm where biogas is captured to generate energy and as such there is a huge relationship to grow this relationship. Again, there are plenty of developers out there who would love to have developed this project for Smithfield but our core point of difference is that we have the in-house expertise and capital to develop projects like this. It leaves a company like Smithfield in a position to focus on their core business and realize the financial and environmental benefits that out project brings. 4

5 WSL: What best reason would you give to a potential investor about getting involved in the company? Ben Mead: Again, the diversified and risk mitigated approach to the sector is crucial. We are not a technology company and will only use third party guaranteed, mature technologies. The path to proving out new technologies is long and winding and by focusing on these advanced technologies we can significantly reduce project risk, accelerate project commercialization and provide a certain path to income generation. 5