ferrets stock to watch..read

Ferret's Stock to Watch AUSTRALIAN RENEWABLE FUELS LTD
10:08, Friday, June 08, 2007

ALTERNATIVE ENERGY SOURCE MAKING PROGRESS

Sydney - Friday - June 8: RWE Aust Business News
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OVERVIEW
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Stories about ways of reducing pollution into the air with
alternative power sources have been flooding the global media.
Climate change has become a political football, which maybe a
good thing or may not.
Australia has a number of alternatives now formed into publicly
listed companies to raise funds for such projects.
Among them is Australian Renewable Fuels Ltd (ASX:ARW) which is
already well down the track in in the production of biofuels.
Midweek, CEO John Lillywhite (a most appropriate name) was
interviewed by Corporatefile.
It pointed out that Australian Renewable Fuels recently announced
two sales contracts.
The first is for up to eight million litres of biodiesel over the
next 12 months with Bunbury-based mining and earth moving contractor,
Piacentini & Son.
The second contract with Caltex is for up to five million litres
per year of biodiesel from each of the Adelaide and Picton plants.
Mr Lillywhite was asked what was the significance of these
milestones for the company's progress towards profitability.
He replied that they were a great achievement and were a vote of
confidence in the company.
"The customers are totally satisfied with the performance of our
biodiesel," he said.
"Piacentini operates in the demanding off-road mining and earth
moving sectors where equipment performance and reliability is critical.
"As a refiner and distributor of fuels to customers across
Australia, Caltex insists on its suppliers having the highest standards
of reliability and quality.
"We expect both Piacentini and Caltex to set an example to other
large volume diesel users and distributors to follow," Mr Lillywhite
said.
"All our sales are structured to earn a positive gross margin,
even at today's high feedstock prices, and contribute to fixed costs.
"When feedstock pricing returns to historical trend, both
contracts will generate a highly acceptable net profit," he stated.

WHAT IS BIODIESEL?
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It's worthwhile to identify what is biodiesel, what it is made
from and its uses.
Biodiesel is able to directly replace conventional diesel fuel
without any modification in most modern diesel engines.
It can be used as a blend in any proportion with petroleum
diesel.
Any biogenic fat or oil can be converted into biodiesel.
Alternative feedstocks include palm oil, soybean oil, canola, corn oil,
sunflower oil, olive oil and lard.
Even grease trap waste can be used in some circumstances.
The term 'biodiesel' refers to the methyl (or ethyl) ester of
fatty acids obtained by a process of esterification of new and used fats
or oils.
Through the chemical process of transesterification, the
triglycerides in the fat or oil are converted to the methyl esters from
the fatty acids.
Two by-products, glycerine and mineral fertiliser are the only
other products.
Numerous studies and trials of biodiesel in both the US and
Europe have concluded that biodiesel is a renewable fuel that can readily
replace petroleum diesel resulting in substantial reductions in tailpipe
emissions.
Biodiesel also finds use as a lubricity agent in low and ultra
low-sulphur diesel fuels where the addition of as little as 2 per cent
biodiesel to petroleum diesel significantly improves the lubricity of the
fuel.
Globally, and particularly in Europe and the USA, the production
and use of biodiesel has become well accepted.
About six hundred million gallons are consumed annually.

SHARE PRICE MOVEMENTS
*********************

Shares of ARW yesterday eased 2c to 45c. Rolling high for the
year is $1.97 and low 31c. The company has 172.2 million shares on issue
with a market cap of $77.4 million.
Back to the Corporatefile briefing.
Mr Lillywhite was asked about the operation of two biodiesel
production facilities, one at Largs Bay, near Adelaide, and another at
Picton in Western Australia with a combined annual capacity of 90 million
litres.
He said the latest two contracts took ARW's current Australian
sales volumes up to an annualised 33 million litres.
"We're negotiating sales contracts that will take us close to the
capacity of both plants," he pointed out.
"While we expect these to be signed during the September
quarter, production and sales may not rise to near capacity levels until
the first half of calendar 2008 due to the need for our customers to
re-engineer their terminals for biodiesel storage and blending.
Questioned about capital works, the chief executive said the
company's capital works program is on time and on budget with total
commitments to date of $3.4 million out of a $4.5 million budget.
"A positive outcome of our capital works program has been further
improvement to operating performance so that tallow can now comprise one
hundred percent of our feedstock.
"For sales contracts where a particular cloud point specification
does not require the addition of canola, our feedstock costs will reduce
significantly.
"We'll continue to seek customers who are prepared to contract on
this basis," he added.
The bulk of the plant improvements in Adelaide will be completed
by the end of July with total project completion by the end of September.
The inhouse feedstock filtering project has been temporarily
delayed due to the worldwide introduction by major oil companies and
distributors of a tighter purity specification.
Construction of the Picton methoxide plant has been deferred
until the boom economy pressures in Western Australia have subsided and
reasonable quotes obtained.
Spot methanol prices have retreated from a peak, and cheaper
methoxide prices are expected for the foreseeable future, Mr Lillywhite
added.
Meanwhile, ARW has a 65.5 per cent shareholding in American
Renewable Fuels (ARF) Inc, which is about to undertake an initial capital
raising in the US to fund a feasibility study and the ordering of items
with long lead times.
"We're advising ARF Inc on plant design, feedstock specification
and technical partnering to use our experience and intellectual property
to ensure smooth construction and commissioning," Mr Lillywhite said.
"We're not contributing to the capital raising."
The CEO said the company was focused on closing outstanding
contract negotiations, assisting customers and producing logistic
solutions during the remainder of 2007.
Last month the company welcomed the WA State Government's
Biofuels Taskforce report as a positive contribution to the developing
biofuels industry and the reduction of greenhouse gas emissions in
Western Australia.
"We look forward to working with Government and industry on the
early implementation of the Taskforce recommendations," Mr Lillywhite
added.
ARW's biodiesel plant at Picton has been in production since late
last year, converting tallow (animal fats) and canola oil into biodiesel,
and is Western Australia's only industrial-scale biofuels plant in
operation.
Mr Lillywhite said that ARW had been involved in extensive
discussions with major diesel users including resources, earth-moving and
transport companies in the private and public sectors.
All were very keen to incorporate biodiesel in their fuel mix and
reduce the carbon footprint of their operations.

BACKGROUND
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Australian Renewable Fuels Limited was listed on the Australian
Stock Exchange on May 10, 2005.
The company is developing two biodiesel plants, one in Adelaide
(45m litre capacity), and another in Picton (45m litres).
The company plans to roll out five biodiesel plants by the end of
2007.
It founded American Renewable Fuels in which it holds a 65 per
cent stake in 2006.
ARF Inc's vision is to become the pre-eminent American biodiesel
producer by managing a planned roll-out of two large biodiesel plants
within the United States in the next two years.
The company's expansion program may include the establishment of
biodiesel plants in Mexico and Canada.
Energea Biodiesel Technology, a biodiesel research company
operating in the biodiesel industry since 2000, has provided technology
for four producing multi-feedstock biodiesel plants, including three high
FFA plants that have produced EN 14214 (European) spec fuel using
rapeseed, canola, waste vegetable oil (WVO) and tallow.
Energea technology is known for:
* Its high yields approaching 100 per cent;
* An environmentally sensitive, easy to permit, zero waste stream
process;
* A true continuous process utilising a patented reactor with
five-second reaction time; and
* The leader in multifeedstock, high FFA technology.
Energea Inc will establish a research centre in the US to develop
new and improved processes for producing biodiesel and other renewable
fuels.
This technology will be shared exclusively with ARW producer
partners.
It will also help to promote energy independence from Middle East
oil.