agm summary

I attended the EVM AGM on Friday morning. RD was his upbeat self. He started with the Chairman's Address which I won't repeat. It was interesting to hear of serious interest in EVM solar tower technology coming from Mexico, the Middle East, India and North Africa (We already knew about China.) KF said they often get Australian inquiries as well. (But not from the federal government, I assume.) Re: North Africa – maybe EVM solar towers could be serious contenders for the Desertec proposal?

The other formal part of the meeting was to vote on all the resolutions. As you can imagine, it took a long time as there were 29 separate resolutions (mostly share issues)!

You may be interested to know that the AGM was delayed due to ASIC intervention. Some of RD's attaching options were not double the purchase price of the heads like all the other share issues. (They were 2.5c for the heads, 7c for the options.) I asked about this discrepancy and the reason given was that RD was seen as being an insider by ASIC and they ordered a change to the exercise price of the options (from 5c to 7c I assume). It was then that KF made the comment that the AGM had been delayed by ASIC so the two events must be related. I have no idea how these things are done but it is nice to know ASIC are paying attention. As we know a lot of shares have been issued, although they have not breached the 15% annual limit that would require shareholder approval.

Some other comments RD and KF made, in no particular order:

o On the co-ordinates of the first site - site number 2 is adjacent to site number 1. (SCPPA has an option on the power from Tower 2.) The two sites are separated by a road. The location is confidential due to the practice of land banking. (Buying up leases and/or options on land, for whatever reason, some nefarious it seems, some quite reasonable.) They are trying to avoid land banking in Arizona in anticipation of the ‘solar rush’.

o The 2015 date for the La Paz Solar Tower Project to be on line and producing power was commercial in confidence but this information was released by EVM after it appeared online in the media (Parker Pioneer?). They sought and received permission from SCPPA to release the information.

o The local government is investing in a rail spur to service the La Paz Solar Tower and some nearby mines. This is good news as any rail investment is always a significant investment.

o The Arizona site has 35% greater solar radiation than the site that was originally proposed in Australia.

o China are dragging their feet and may lose the agreement for their project if they don’t get a hurry on.

o There were also informal discussions between KF and a few shareholders after the end of the meeting, talking about the situation in Australia and the CEFC and so on. The CEFC won't be up and running until 2014 at the earliest, from what I have read. The way I see it, Arizona is the focus and projects elsewhere, including Australia, will naturally occur if success can be demonstrated in the US.

The specific questions that I asked during the meeting:

1. Has any progress been made on financing the La Paz project? Have any parties indicated serious interest in financing the project at this stage (even if conditional on final design or other criteria)? (I prefaced this by saying I knew it was mentioned in the chairman's address but I asked it anyway.)

RD said it was covered in the Chairman's Address. He reiterated that discussions were advanced and implied anything else was commercial in confidence.

Related info: RD said the "Guaranteed Maximum Price" will be delivered by Henzell Phelps. (They have an estimate but they cannot disclose it.) He said it will be under $800 million. He also said later that an equivalent coal fired power station would cost $600 million and that does not include the water or the feed stock ongoing costs. Water is now being factored in to environmental costs for projects in this region of the US (obviously a big plus for EVM). The way the contractor engagement is structured there is no debt to EVM if project finance falls through. (My comment - this also means that it is in the interests of the third parties for project financing to occur, otherwise they don't get paid for development costs. I really do think they have done a top job to engage this level of professional services for payment at the financing stage.)


2. What sort of milestones can we expect in 2012?

FEED, finance, environmental permits, site lease, breaking ground Q4 2012/Q1 2013.


3. With such an innovative, big budget and world-class project, why has Arup opted not to mention the Solar Tower on any of it's websites? They seem to be deliberately avoiding the topic. Further to that, how is Arup coming along with the FEED? (I also asked why they were not at the recent meeting in the US.)

I don't quite recall the answer to this. I suspect there wasn't a direct answer. RD did say later that there will be a La Paz Solar Power Project dedicated web site. There was also a throw away comment during discussions after the formal events that EVM would prefer to have all the contractors together in the US. Arup were not present at the meeting in the US simply because they are based in Melbourne.


4. Instead of issuing shares to the inner circle every month to pay the bills, how about you give your loyal shareholders the opportunity to participate in a placement? Why not do one placement to cover your costs for the next 6 months or 12 months?

RD said it has been tried and the last shareholder placement fell flat. KF mentioned something about sophisticated investors. but the way I see it, that's only relevant for a market placement, not a share purchase plan aimed at shareholders. I'm not exactly sure what she meant here. Maybe she was suggesting that placement shares can't go to 'un-sophisticated investors' (there are ASIC rules about how these people are defined) but that is exactly why the question was aimed at a SPP or rights issue for regular shareholders.


5. What was the blue rectangle in a recent artist impression of the tower? Was it water collected from the canopy?

Yes it was a water pool, but originally it was anticipated to be for collecting heat (i.e. using the water as a heat absorbing and transfer mechanism) but that option has now been dropped. On the subject of collecting water, it seems there will be some condensation on the underside of the canopy, not the top.


One last comment - KF mentioned as we were all leaving that there will soon be an EGM. I rather flippantly said she had said that last year, which she had. I assume this means shareholder approval will be required for the financing deal at an EGM as there would be no other reason to hold one. I'm sure we can all draw our own conclusions from that.