Exergen

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Exergen is a Melbourne headquartered company which claims to have "developed a breakthrough clean coal technology that, teamed with modern coal-fired power station technology, will deliver up to 40 percent emissions reductions." The company is an unlisted public company but is well advanced in a reverse takeover of Cape Range Limited, a listed company which is currently suspended from trading on the Australian Stock Exchange.

Exergen refers to the technology as Continuous Hydrothermal De-watering (CHTD) which is used with "brown coal (lignites) and high moisture subbituminous coal." Due to high moisture content, brown coal from the Latrobe Valley cannot be exported due to the risk of spontaneous combustion. On its website the company claims that its technology "offers scope to bring high moisture stranded lignites to a product that can be exported for the thermal coal market."

Background

Exergen is a lead member of the Latrobe Valley Next Generation (LV-NG) which also includes the Indian coal mining and power generation company Tata Power, the contracting company Theiss, the Japanese trading company Itochu and the engineering firm Sedgman. In an October 2011 media release Tata Power stated that it had invested $10 million in Exergen as it had "developed a cost-effective moisture removal process for high moisture brown coal which will emit only 800kg of CO2 per MWh as compared to the normal level of 1,500kg. The initial test is on a demonstration scale for dry ash removal process which intends to reduce ash in Indian coals from 40 to 30 per cent in a cost-effective manner."

The consortium is proposing to build the LV-NG Project which it claims would be a "$1bn plus coal export business" in the Latrobe Valley based on the use of a brown coal de-watering process.

The company claims that the project could export 12 million tonnes of coal per annum "to be completed by 2014 through an investment of AU$1billion". The CEO of Exergen, Jack Hamilton declined to provide an estimate of the greenhouse gas emissions from the project. However, Environment Victoria estimated that "it would produce about 11 million tonnes of greenhouse gases in Indian coal-fired power plants annually."

Bid for a new coal allocation

In December 2011 it was reported that Exergen was lobbying the state government for a coal allocation. Exergen's chief executive Jack Hamilton told the Latrobe Valley Express that the company, with support from Tata Power, could proceed with a demonstration plant but only if it gained secure access to a coal resource. "When we talk coal access, we’re talking commercial quantities that would support a project over a 30 year life span, through plant expansions and upgrades ... we need a billion tonnes of coal," Mr Hamilton said.

Environment Victoria’s Mark Wakeham said Exergen's bid should be rejected. "Exergen has been spruiking this project for years; there’s been nothing to stop them from doing an agreement with someone commercial to get their project off the ground," Mr Wakeman said. "If they’ve got this product which they think is fantastic, then why aren’t they commercially developing it privately already? This would suggest it is economically unviable." Hamilton acknowledged that Loy Yang Power would have sufficient reserves but that negotiations had stalled. “We’ve been in discussions on and off with Loy Yang, but haven’t been able to find a way to move forward; that doesn’t close the door as things progress,” he said.

Finances

In an October 2012 briefing note on the company, RFC Cambrian stated that over ten years the "founders and cornerstone investors have contributed more than $40 m to develop, refine and test the CTHD technology." The note -- which stated that the "cornerstone" investors were Tata Power, Theiss, Itochu and Sedgman -- had invested "a total of $20.5 m to earn a combined total of ~10% in the Company".

The briefing note stated that Exergen "is now seeking to raise up to $100 million in funding to construct a scale up 50tph [tonnes per hour] Pre-Commercial Demonstration plant in order to proceed to an investment decision on its first commercial production plant with the aim of exporting first CTHD products in 2018. Fundraising is expected to be made up primarily of equity investors along with potential funding (up to $40m) from Government initiatives."

In the briefing note, RFC Cambrian include a "pathway to commercialisation" chart which identified one key activity as being "Latrobe Valley Coal Allocation" by the middle of 2013. In December 2012 the Energy and Resources Minister, Michael O’Brien, stated that an announcement would be made in mid-2013 on the next stage in a coal allocation process.

Another key target for Exergen is securing funding under the joint state and federal governments $90 million Advanced Lignite Demonstration Program. In August 2012, just after the program was announced, Exergen chief executive Trevor Bourne told the Latrobe Valley Express that "the ALDP gives our shareholders much more confidence there is the right support (from government) to develop something in the Valley; as a direct result of the announcement we have had a lot more positive discussion from our shareholders." However, he said it was unclear whether a pre-criteria for funding under the ADLP was having a coal allocation from the state government or from an existing licence holder.

The RFC Cambrian briefing note also identified undertaking a capital raising in the last quarter of 2012 and the first quarter of 2013 as a key milestone. Other priorities for 2013 were commence the demonstration plant design and permitting and undertaking a scoping study on the development of the Bacchus Marsh project. With Exergen hoping to begin construction of the Bacchus Marsh project in early 2016, the company has flagged launching an Initial Public Offering and listing itself on the sharemarket in the last quarter of 2015.

Personnel

Staff

As of August 2013 key staff were listed on the Exergen website as:

• Trevor Bourne, CEO and Director
• Mike Smith, Resource & Commercial Manager
• Slade Wormington, Principal Process Engineer

Former CEO

• Jack Hamilton, CEO

Board of Directors

On its website Exergen, as of August 2013, lists the broad of directors as comprising

• Martin Albrecht, Chairman
• Trevor Bourne, CEO and Director
• Peter J. Jones
• Peter Tait
• John Sibly
• Dale Elphinstone
• Dr. David Brockway, Non-Executive Director from July 2011,

Lobbyists

• Simpson Paterson is registered in Victoria as the firm's lobbyist. The firm is owned and run by Alister Paterson and John Simpson. As of July 10, 2013 the firm also listed Sinclair Brook, H V McKay, SecondBite and Coles (Property Group) as clients.

As of August 1, 2013 Exergen is not listed as having a federal lobbyist.

Former lobbyists

• Until approximately mid-2013 ECG Advisory Solutions was registered in Victoria as the firm's lobbyist. The firm has two registered lobbyists, Jonathan Epstein and David Gazard. It is not clear whether one of these alone worked on the Exergen account or they both did. At the time ECG Advisory Solutions also represented Mantle Mining, which Exergen is in a joint venture partnership with on the Bacchus Marsh project.

• Manallack Pty Limited.

Shareholders

On its website, as of February 2013, Exergen lists its shareholders as being:

• Tata Power
• Thiess
• Itochu Corporation, a major Japanese general trading company, which an Exergen media release states has "extensive experience in the development of coalmines and the marketing and sale of coal globally and has investments in coalmines in Australia, Indonesia and Canada.
• Sedgman

Affiliations

As of December 2010, Exergen's then CEO, Jack Hamilton, was listed as an affiliate member of the Australia India Business Council.

Timeline

• 2002: Exergen founded
• 2004-2012: Exergen operated a 4 tonne per hour test plant at Beaconsfield in Tasmania.
• May 2008: Sedgman announces that it has invested in Exergen but no amount is mentioned in the media release.
• May 2009: ITOCHU Corporation announced as a new investor in Exergen.
• October 2011: Tata Power stated that it had invested $10 million in Exergen.
• July 2012: Exergen announce a 50:50% joint venture and and Technology Licence Deed with Mantle Mining for the proposed development of Mantle's EL5294 brown coal exploration licence near Bacchus Marsh in Victoria.
• Late 2012: In a media release Exergen stated that it was "currently finalising a location and plans for the construction of a $50 million demonstration plant intended to confirm viability of the patented Continuous Hydro-Thermal Dewatering (CHTD) technology at commercial scale." The proposed plant would be capable of processing 50 tonnes per hour. The 4 tonnes per hour pilot plant at Beaconsfield in Tasmania was closed in late 2012.

Contact details

Ground Floor, 164 Flinders Lane
Melbourne Victoria 3000
Phone: +61 3 9654 9953
Fax: +61 3 9654 5574
Website: http://www.exergen.com.au/home.html

Articles and resources

Related GEM.wiki articles

• Exergen merger with Cape Range Ltd
• Researching coal in Victoria
• Victoria and coal

• Australia and coal
• Carbon Capture and Storage
• Carbon Capture and Storage in Australia
• New South Wales and coal
• Queensland and coal

External resources

• Jack Hamilton, CEO Exergen, "Submission by Exergen: Inquiry into Greenfield Mining Exploration and Project Development in Victoria", Parliament of Victoria Economic Development and Infrastructure Committee, August 2011.
• RFC Cambrian, "Exergen: Investment Opportunity", RFC Cambrian, October 2012.
• Exergen, "Exergen seeks ASX listing via merger with Cape Range", Media Release, May 16, 2013.
• Cape Range Ltd, "Notice of General Meeting", Announcement to the Australian Stock Exchange, July 12, 2013.
• RSM Bird Cameron Corporate, "Cape Range Limited Financial Services Guide and Independent Experts Report", July 2013.

External articles

• Royce Millar, "Coal firm paid to see Labor", The Age, November 2, 2009.
• "Bacchus Marsh open cut coal mining: fears and facts to be addressed at public meeting", August 22, 2012.