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Proactive Investors is a market leader in the investment news space, providing ASX “Small and Mid-cap” company news, research reports, StockTube videos and One2One Investor Forums.

Proactive Investors is a market leader in the investment news space, providing ASX “Small and Mid-cap” company news, research reports, StockTube videos and One2One Investor Forums.

Proactive Investors is a market leader in the investment news space, providing ASX “Small and Mid-cap” company news, research reports, StockTube videos and One2One Investor Forums.

IPSA Group (LON:IPSA) told investors that Lezayre still intends to buy its two turbines by the end of June and said its KwaZulu Natal plant has performed consistently over the past year.

Lezayre Holdings still intends to complete the purchase of the two remaining Siemens Westinghouse 701 DU gas turbines by the end of June, IPSA said this morning. It is expected that the environmental study for the project for which the turbines are needed with be completed by that date.

Back in January, IPSA sold two turbines for US$31 million to Bright Day and needs to sell the other two turbines to clear all amounts outstanding to its creditors.

The sale to Lezayre, which is part of private equity group Bridgehouse, is expected to raise a further US$31 million and will leave the group free of debt.

Meanwhile, IPSA’s wholly owned operation in South Africa, Newcastle Cogeneration, has traded consistently over the past 12 months, selling 46,000 MWh of electricity and 57,000 tonnes of steam.

The plant is cash generative even though output is still below capacity.

IPSA is currently developing a number of enhancement programmes to add additional capacity by mid-2012 to maximise revenues from the existing Medium Term Power Purchase Programme (MTPPP) contract.

The group also told investors that its working capital position remains “extremely tight” as its creditors Standard Bank and TurboCare continue to withhold their approval of an extension of the turbine sale and purchase contract with Lezayre.

In the fiscal year to end March, IPSA repaid US$37 million to Standard Bank and TurboCare. The payment was made with proceeds with the sale of two turbines and a US$2 million deposit received from Lezayre.

“However, without the continued support of all its creditors, additional working capital would be required by the company in order to settle overdue indebtedness prior to completion of the sale of the remaining two turbines,” said IPSA.

Additionally it confirmed that the final hearing is scheduled for April 2013 at the arbitration court in The Hague, unless a settlement is reached in the meantime.

"I am pleased to report that the US $142.2 million independent valuation of our total claims vindicates our efforts to seek full compensation for the loss of Guaracachi,” said chief executive Peter Earl.

“We hope that Bolivia will now pay the compensation that it owes Rurelec for the nationalization of Guaracachi to enable the Rurelec group to reinvest in replacement power generation assets in Latin America.”

Earl adds: “In the event of a settlement, we are committed to using part of any proceeds to a significant buy-back of Rurelec shares in order to reverse some of the equity dilution suffered by shareholders since the nationalisation of our Bolivian assets on 1st May 2010.   

“We now look forward to a time when Rurelec can focus on paying dividends from operating power plants rather than seeking redress for wrongs suffered."

Rurelec’s interest in independent power firm Empresa Guaracachi SA was expropriated in 2010 following its nationalisation by the Bolivian government.

Since then Rurelec has engaged in international arbitration over compensation due to the company under bilateral investment treaties – UK/Bolivia and US/Bolivia.

The company today submitted its Statement of Claim to the Permanent Court of Arbitration (PCA) in The Hague.

The Bolivian government has agreed to full transparency in relation to the documents filed in the arbitration process and the hearings. The hearings will be held in public.

Both parties are bound by the decision of the arbitration tribunal. And it will not be appealable. 

“Events are gathering speed at last in this drawn out saga,” XCap Securities analyst Tim Freeborn said in a note to clients.

“The Bolivians agreed full public disclosure by both sides, which Rurelec interprets as a sign they will settle so long as the deal is seen to be cheaper than the valuation.”

XCap reckons Rurelec shares are worth around 19.5p each, after factoring in the US$142 million valuation for the arbitration.

As such the shares remain a resounding buy, Freeborn added. 

IPSA Group (LON:IPSA) shares gained around 9 per cent today as it confirmed the completion of one of its turbine sales.

At midday the independent power firm announced that the sale of two Siemens Westinghouse 701 DU gas turbines to Bright Day Pte Ltd completed yesterday. The deal was agreed in July and a US$4 million deposit was paid shortly after.

Now the remaining US$31 million has been transferred into a trust account operated by IPSA’s two key creditors, Standard Bank PLC and Turbocare SpA.

The firm is set for a further US$31 million payment from a separate deal for two more turbines. It said that it will pay its creditors in full once that deal is completed.

IPSA expects that it will be left with approximately £15.5 million. But until then the firm said that working capital will continue to remain extremely tight. 

"I am pleased to have achieved this important milestone and whilst the completion has not resulted in the release of working capital for the company, it is an important step on the path to recovery and has paved the way for a strong start to 2012,” said chairman Richard Linnell.

Latin American-based power group Rurelec (LON: RUR) could see a transformation in its fortunes over the next few months, according to Xcap.

The house broker has put a target price of 18.8p on the shares, but says that if everything goes the firm’s way its target rises to 27.5p.

Key to that target is possible compensation from the Bolivian government. Rurelec had its core asset in the country, the Guaracachi generator, seized by the government in May of last year.

The generator had a book value of US$75 million when it was nationalised, but with the compensation case now going to binding arbitration in The Hague the broker suggests the company could be awarded more than that.

Rurelec has indicated it would accept US$75 million, but XCAP suggests with the low cost of capacity added during its stewardship of the plant, the arbitrator’s award could go as high as US$100 million.

Rurelec also owns half of Energia del Sur (EdS), which has a plant in Patagonia, Argentina. EdS makes all its profits from capacity payments for its combined cycle plant.

After being constrained by price controls, the new president recently scrapped some of the power subsidies in Argentina, which may signal a return to market economics, suggests Xcap.

This would allow EdS to make a return on assets beyond the fixed payments capacity payments.

Rurelec is starting to talk of careful expansion with and money it expects to get from Bolivia, and today announced an investment, alongside Peruvian and other international partners, of a 50 per cent interest in Cascade Hydro a newly formed hydroelectric power development company.

The group has also secured an option over a 32 megawatt pipeline of prospective developments, which it will inject into Cascade.

It includes Canchayllo, a four megawatt project in the Junín Province to the east of Lima, which was awarded a power purchase agreement in the latest round of renewable energy tenders in Peru.

The project will take around 18 months to build and will require US$8 million to finance construction.

Cascade will have a wide shareholder base because it is capital intensive and it will look to institutional investors both in the region and elsewhere, with a possible float in London in due course, Xcap suggests.

While today’s investment was in Peru, broker Xcap says Rurelec is also keen on Chile and wants to develop power generation there because of the friendlier business climate in the country and the sharply rising demand for power, especially from the burgeoning mining sector.

The group will look to consultancy agreements to manage plants and/or train local staff in developing economies. These may also involve equity stakes.

Its target price of 18.8p is based on a sum of the parts valuation that assumes 11.4p for the Bolivian compensation at US$75 million and 7.4p for the remainder of the group.

Shares today rose by 2% to 7.55p.

Rurelec (LON:RUR) has become the anchor investor in a newly formed hydro-electric power development company focused on Peru.

It has done so by taking a 50 per cent stake Cascade Hydro. The group has also secured an option over a 32 megawatt pipeline of prospective developments, which it will inject into Cascade. 

It includes Canchayllo, a four megawatt project in the Junín Province to the east of Lima, which was awarded a power purchase agreement in the latest round of renewable energy tenders in Peru.

The project will take around 18 months to build and will require US$8 million to finance construction.

Rurelec has approved initial funding of US$600,000 to cover operating expenses and development costs.

This should bring the Canchayllo project to financial close as well as substantially fund the development of the other run of river hydro projects now under option in Peru, the company said.

Chief executive Peter Earl added: "I am delighted to announce our expansion into Peru, which has been a long term strategy for the company.

"Our investment in Cascade is the first small step in the process of replacing Rurelec's 538 megawatt of installed capacity at Guaracachi, which was lost as a result of the Bolivian Government's nationalisation of the electricity generation sector on May 1, 2010.  

“After three years of retrenchment, we are finally moving ahead again in Latin America with excellent new partners and with only limited exposure for Rurelec's hard won cash resources."

Last week, IPSA said that the deadline for the completion of the sale had been extended until the 31 January. 

The £42.3 million proceeds will enable IPSA to pay off all its creditors, including an £18.5 million loan and accrued interest to Standard Bank and £15.1 million of trade debtors.

Revenues in the six months to 30 September rose to £1.9 million from £675,000 as the group sold 20.7 million kWh of electricity to South African power group Eskom after operations recommenced in March. Steam sales also started again in August. 

Net losses in the six months rose to £2.6 million, up from £0.4 million, which IPSA said was broadly in line with its expectations. Operating losses fell to £800,000 from £1 million.

Richard Linnell, chairman, said: "Following the significant delays before recommencing production of electricity in March 2011, which was due to the protracted negotiations in finalising the MTPPP contract, it is pleasing to report that the plant in South Africa is now fully operational and, although output is still below full capacity, the plant is cash generative.“

“We expect to add additional capacity by mid-2012 which we believe will make the plant profitable, covering both operating costs and depreciation,” he added.

Margins on electricity sales were affected by an 8.1 per cent increase in the gas price following an increase in the Brent oil price and IPSA is now considering hedging against Brent crude, which is a component in the setting of the gas price.

Linnell added that the group's working capital position will remain “extremely tight” until it completes the sales of the turbines.

IPSA struck two separate deals to sell the turbines for total of US$66 million in mid July. The deals were initially expected to close within 120 days.

That has now been extended so that the deals close on or before January 31 2012.

Additionally IPSA confirmed today that it has executed a deed of trust whereby all proceeds from these two deals will be paid into a trust account to be operated by the company's two key creditors, Standard Bank PLC and Turbocare SpA.

It also said that one of the buyers has agreed to pay a further US$2 million deposit. The deposits have been transferred into the trust account and a US$60 million is due to be received on closing.

The company said that its working capital position will remain extremely tight until both sales have completed. Additional working capital will be required in the meantime to repay the Loan Notes due on 31 July 2011 unless their repayment period is extended, IPSA added.

In this morning’s interim results statement chairman Andrew Morris said that Rurelec is now developing a growth strategy for ‘a time in the foreseeable future’ when it will have sufficient cash to invest in new power generation projects, with an emphasis on Chile and Peru. 

Last December Rurelec served its international arbitration claim to the Bolivian president Evo Morales, following the nationalisation of the group’s stake in Bolivian power company Empresa Guaracachi. Today the company confirmed that the arbitration panel has now been assembled.

Furthermore Rurelec said that it has been active in finalising an independent valuation report, to be presented before the end of the year, which will inform the panel’s decision on the amount of compensation due to Rurelec.

“The directors of Rurelec expect that this independent valuation will show an open market value for Rurelec's Guaracachi share stake well in excess of the US$75 million book value as derived from audited net assets of Guaracachi,” the company said.

The company is also seeking to leverage its expertise in the installation of new projects, by working with other operators and earning consultancy fees. Indeed on Monday, it confirmed that talks have been held with potential partners with regards to a new project in Bangladesh.

Meanwhile, as it awaits the outcome of the Bolivian arbitration and sizes up new opportunities, Rurelec’s Argentine operation is reported to be ‘performing well and trading profitably’. However unfavourable foreign exchange and Argentine inflation has capped this progress somewhat.

In Argentina the Energia del Sur (EdS) business, which is 50 per cent owned by Rurelec, has benefited from ‘record level’ demand and the August 2010 signing of a ‘Resolution 220 Contract’ - which allowed EdS to sell its output at a premium tariff.

Consequently, in the six months ended June 30 2011, turnover increased by 53 per cent to over £7.2 million and gross profit increased by 140 per cent to £3.3 million. Rurelec added that its borrowings have been substantially narrowed and they now stand at £1.4 million.

After deducting administrative expenses, a foreign exchange loss and tax, Rurelec reported a £600,000 loss after tax for the period, compared to a £17.4 million profit in the preceding year. 

The company also emphasised that it is owed US$45.7 million by EdS and these funds are currently being remitted to Rurelec at a rate of US$2 million a quarter. Rurelec said it’s intention is to continue ‘recycling’ this money for its other projects and dividends, as soon as it has sufficient distributable cash reserves.

Meanwhile Rurelec is also exploring ways of refinancing EdS in the local Argentine market, as liquidity increases in the national banking system. 

"I am delighted to present to our shareholders clear evidence that the tide has finally turned for Rurelec,” said chief executive Peter Earl.

“We are now looking to reap the benefits of the pain which we have gone through in recent years to bring our Energia del Sur plant to maximum output and strong generation of cash flow and profits. 

“The board is focused on generating maximum shareholder value from EdS and evaluating growth opportunities, however we will not lose sight of the need to obtain maximum compensation for our assets in Bolivia.”  

The confirmation came in response to reports in August that linked Rurelec to the 108 MW heavy fuel oil power plant that is being planned in Chittagong, Bangladesh.

“Rurelec's primary focus of attention remains Latin America but it is the policy of the board to earn development and operations fees from power plants owned by third parties in order to derive revenues from the considerable knowledge base and operational capability built up over the last seven years,” Rurelec said in a stock exchange statement.

Rurelec said that it has been in active talks with potential local partners in Bangladesh for some time.

Although no firm agreement has been reached at this stage Rurelec said that the Bangladesh Power Development Board (BPDB), which put the project out to an open tender, has indicated publicly that it has chosen a Rurelec led group as a preferred developer.  

The company has also highlighted that it was previously pre-qualified by BPDB as a technical services provider and sponsor for the construction of a 400 MW combined cycle plant in Bangladesh, based on the company's two successful combined cycle projects in Latin America.

Rurelex said it make a further announcement about the Chittagong if necessary, and at an appropriate time.

Eneabba said that the newly appointed directors of the board, along with Koo Sing Kuang, have agreed to fund the working capital requirements of the company, by way of a director loan, if required.

Earlier in the month Eneabba shareholders elected Thomas Lik Cheng Goh and Kar Chan Wan to the board following the company's general meeting.

Koo Sing Kuang was then elected chairman.

Goh co-founded the company in 2003 and built up the seed capital before the company listed on the ASX in 2006.

He also contributed in advancing the Centauri 1 power generation project to the point where licenses and other regulatory approvals were obtained.

Kar Chan Wan is one of the seed capitalists of the company and is a private medical consultant.

Eneabba also said in the response to the ASX that since the lodging the March quarterly, $82,000 of gas revenue has been received, and no exploration expenditure will occur until the capital requirements of the company have been improved.

Eneabba's primary focus is on the development of the gas-fired 168MW Centauri 1 Power Station project, located in a very power hungry area near Dongara in the mid-west region of Western Australia.

The appointment of Koo Sing Kuang was announced last night, after shareholders earlier in the day elected Thomas Lik Cheng Goh and Kar Chan Wan to the board, following the company's general meeting.

Lik Cheng Goh co-founded the company in 2003 and built up the seed capital before the company listed on the ASX in 2006.

He also contributed in advancing the Centauri 1 power generation project to the point where licenses and other regulatory approvals were obtained.

Kar Chan Wan is one of the seed capitalists of the company and is a private medical consultant.

Eneabba's primary focus is on the development of the gas-fired 168MW Centauri 1 Power Station project, located in a very power hungry area near Dongara in the mid-west region of Western Australia.

Babidge had been a director since December 2003.

During his time as managing director of Eneabba, Babidge ticked off major milestones including the company's listing on the Australian Securities Exchange in April 2006.

During his tenure:

- In July 2006 the company signed a conditional contract with GE Aero Energy for the supply of the gas turbines for Centauri 1.
- In May 2007 the company was granted Environmental Approval for the construction of Centauri 1 power station. In October 2009 the upgraded EPA Approval was granted to meet the new legislative requirements. The Works Approval (commencement of construction) is presently conditional on an Expiry Date of 20 December 2012.
- In 2009-2010 the Company conducted a detailed exploration programme of its Sargon coal tenements which resulted in a discovery of a JORC coal resource in the North Perth Basin.
 
Eneabba's primary focus is on the development of the gas-fired 168MW Centauri 1 Power Station project, located in a very power hungry area near Dongara in the mid-west region of Western Australia.

The company's shares are currently suspended from quotation on the ASX.

Bennett is very well experienced in the operations at Eneabba, as he has held a non-executive director position since 2006.

Eneabba has a primary company focus on the development of the gas-fired 168MW Centauri 1 Power Station project, located in a very power hungry area near Dongara in the mid-west region of Western Australia.

Eneabba said this power station would be capable of meeting the power needs of the majority of the larger mining projects in the region.

Development of this station continues to move forward as all necessary regulatory approvals have been received.