23/05/2006 - 10:56

ARFuels secures $200m WA sales agreement

23/05/2006 - 10:56

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Shares in South Perth-based biodiesel producer Australian Renewable Fuels Ltd have shot up almost 3 per cent in morning trade following the company's announcement of a $200 million sale agreement with Western Australian-based fuel distributor, Westfuel.

ARFuels secures $200m WA sales agreement

Shares in South Perth-based biodiesel producer Australian Renewable Fuels Ltd closed up almost 2 per cent following the company's announcement of a $200 million sale agreement with Western Australian-based fuel distributor, Westfuel.

At market close, shares in ARFuels were up 4 cents to $2.10.

The agreement, which is for a four year term, is for up to 45 million litres-the entire production capacity of ARFuels' forthcoming Picton plant-with a guaranteed minimum volume component.

At current spot price this contract has a value of up to $200 million in revenue terms for the period of the contract.

In March, the company signed an agreement with Dermody Petroleum for up to 45 million litres of biodiesel per annum with a guaranteed minimum volume component with a value of up to $250 million in revenue terms for the period of the contract.

Last month, the company announced it had signed a heads of agreement with Queensland-based Transpacific Industries Group Ltd to form a joint venture to confirm feasibility of and develop a biodiesel production facility in Brisbane.

The facility, the third of five plants to be rolled out by the company by 2007, would replicate its Adelaide and Picton facilities and would be designed to produce 45 mega litres of biodiesel annually.

Perth-based oil and gas company Amadeus Energy Ltd has a 27.6 per cent per cent stake in ARFuels.

Below is the edited announcement:


Biodiesel producer Australian Renewable Fuels Limited ("ARFuels") today announced a sale agreement with Western Australian based fuel distributor, Westfuel.

The agreement, which is for a four year term, is for up to 45 million litres--the entire production capacity of ARFuels' forthcoming Picton plant--with a guaranteed minimum volume component.

At current spot price this contract has a value of up to $200 million in revenue terms for the period of the contract and is the second major sales agreement announced by ARFuels in as many months. On 23 March ARFuels announced a 5-year, $250 million sale agreement with South Australian fuel distributor Dermody Petroleum.

Commenting, the Managing Director of ARFuels, Mr Darryl Butcher, said:

"We are delighted to have locked in over $450 million in contracted sales within Australia. This is a testament to the high quality of our product and confirms our view of the rapidly growing appeal of biodiesel as a renewable option for fuel.

"ARFuels is well advanced in its strategy to roll out a series of five plants in Australia with our second plant at Picton in Western Australia at advanced commissioning stage and the entire production from both plants already locked in to local sales" he said.

The sales agreement follows the recent announcement of the company's expansion into the US following an agreement to purchase Energea's biodiesel technology patents for the NAFTA Zone, encompassing the United States of America, Canada and Mexico.

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