Transcript of an interview with the Wall Street Ledger March 20th 2013 Geopower Energy Limited (Proposed ASX code: GPX)
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Transcript of an interview with the
Wall Street Ledger March 20th 2013
Geopower Energy Limited (Proposed ASX code: GPX)
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
Transcript of an interview with the
Wall Street Ledger March 20th 2013
Geopower Energy Limited (Proposed ASX code: GPX)
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
Transcript of an interview with the
Wall Street Ledger March 20th 2013
Geopower Energy Limited (Proposed ASX code: GPX)
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 2030. 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 2013.
WSL: Do you believe these synergies will continue through out the year?
3
Transcript of an interview with the
Wall Street Ledger March 20th 2013
Geopower Energy Limited (Proposed ASX code: GPX)
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 2013.
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
Transcript of an interview with the
Wall Street Ledger March 20th 2013
Geopower Energy Limited (Proposed ASX code: GPX)
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.
5You can also read
