Australian Renewable Fuels has reached a $2 million agreement with GlobalBiofuels Trading to produce 30 million litres of biodiesel for at least three years at Picton in the state's south in a "take or pay" arrangement.
Australian Renewable Fuels has reached a $2 million agreement with GlobalBiofuels Trading to produce 30 million litres of biodiesel for at least three years at Picton in the state's south in a "take or pay" arrangement.
Work is expected to start soon to put in place the infrastructure and logistics needed for the project.
GlobalBiofuels is a Moore Stephen managed company, which trades internationally in fuels and feedstock.
The agreement provides for the importation and supply by GlobalBiofuels of waste non-food grade vegetable oil feedstock to Australian Renewable Energy.
The converted biodiesel would then be sold to GlobalBiofuels and exported under the "take or pay" arrangement.
"This is an important step for the company, since there will be a clear obligation with regard to not only the production, but also the pricing of both the feed stock as well as the end product," said Tom Engelsman, managing director of ARF.
"This substantial commitment for the Picton based capacity could be further expanded in future, perhaps even to the Adelaide plant. In order to permit this to occur, a pre-treatment plant will need to be constructed.
"The basic plant design is such that only minimal modifications have to be made to the overall systems in order to meet the contract requirements.
"GBT will be making a capital investment of AUD $2 Million in the Company for the same, including an amount to go towards funding the first shipment of feedstock," he said.
See company statement below:
The Board of Australian Renewable Fuels (ASX:ARW) is pleased to announce that an agreement has been concluded for the production by the Company of at least 30 million litres of biodiesel per annum under a minimum three year "take or pay" arrangement. The production is planned for the Picton (WA) facility, and work will begin in the near future with regard to the infrastructure and logistics involved with the project. The Agreement is subject to certain conditions being met, including shareholder approval.
The agreement is with GlobalBiofuels Trading (GBT), a Moore Stephens managed company trading internationally in fuels and feedstocks, with the agreement providing for the importation and supply by GBT of waste non-food grade vegetable oil feedstock to the Company under defined and fixed prices. The converted biodiesel product would then be sold to GBT and exported by them under a firm "take or pay" arrangement.
"This is an important step for the company, since there will be a clear obligation with regard to not only the production, but also the pricing of both the feed stock as well as the end product," said Tom Engelsman, Managing Director of ARF. "This substantial commitment for the Picton based capacity could be further expanded in future, perhaps even to the Adelaide plant. In order to permit this to occur, a pre-treatment plant will need to be constructed. The basic plant design is such that only minimal modifications have to be made to the overall systems in order to meet the contract requirements. GBT will be making a capital investment of AUD $2 Million in the Company for the same, including an amount to go towards funding the first shipment of feedstock."
GBT's investment in the pre-treatment plant would initially be treated as a loan (to be advanced progressively) secured by a charge over that equipment, which on commissioning of the pre-treatment plant would convert to 200 Million shares in the Company at a price of AUD $0.01 per share, with one option to be issued to GBT for each share issued (exercisable on the same terms and conditions as the options to be issued under the Company's Non-renounceable Rights Issue announced on the Australian Stock Exchange on 5 October 2010).
Australian Renewable Fuels Pty Ltd (ARF) is an Australian based manufacturer of Australian Diesel Standard compliant biodiesel, with a total installed capacity in excess of 90 million litres per annum. The main plants are located at Largs Bay (SA) and Picton (WA) with all product based on non-food grade renewable feed stock.
