the beast is stirring

there's certainly been renewed interest in EDE over the last days.. and their projections made nice (if not still fiction) reading...

http://www.theaustralian.news.com.au/story/0,25197,23656807-23634,00.html

WE'VE been passing observers of Eden's passage to India, where it's moving to market with its low-emission brew of natural gas and hydrogen, called Hythane.

It's been a three-year journey and there's still some way to go. But Eden is now confident enough to predict the likely size of the market for its ultra-green product -- and a likely pay-off period for investors.

Eden rather cleverly has surfed on the Indian Government's push to convert industrial users to gas, of which it has sizeable reserves. The Government also plans to have 1 million cars running on hydrogen by 2020, with Hythane seen as the transitional fuel.

Eden's story involves more than a few spaghetti diagrams in the telling, in that there's a number of collaborations and joint ventures involved. In essence, Eden will supply the requisite equipment and the fuel, piggy-backing off distribution networks rolled out by the nation's gas company.

Last May, Eden entered into an agreement with engineering group Larsen & Toubro to get Eden's technology (ie, hydrogen reformers) to market. These reformers are being built at Eden's Chicago facility and are slated to be ready later this year.

Eden has also sewed up deals to market Hythane, including a tie-up with the giant Gujarat State Petroleum. Bus maker Ashok Leyland has been corralled to develop Hythane-friendly vehicles.

On Eden's estimate, 150 buses will be running on Hythane next year, rising to 2150 by 2011 and 17,650 by 2013.

The other key market is the diesel generators used by thousands of Indian industries who can't rely on mains power. It's not uncommon for these plants to chew through 100 litres of diesel an hour and -- you guessed it -- Hythane dual-fuel plants are much more efficient.

Eden expects its Indian unit to deliver a small after-tax profit in 2009-10, with the company overall becoming cash-flow positive "over the next few years". Eden currently earns $US7-8 million from selling reformers to the traditional industrial gas market, rising to $US17 million next year.

"We are targeting a business over the next 10 years significantly north of $1 billion of equipment," says Eden chief Greg Solomon.

While there's been useful Indian offshore finds of late, gas availability is a key risk. Another is that the cost of producing and delivering Hythane is yet to be proved feasible (this will be tested with a demo project later this year).

Another obvious risk is the availability of funding. Eden expects to finance 60 per cent of so-far-unknown capital costs from debt, with the rest from equity funding (including exercising $18.4 million of listed options). Eden plans to tap the market for a $4-5 million placement "in the near future".

The Perth-based Eden is a three-way punt on Hythane, a coal-bed methane play in south Wales and some geothermal (hot-rock) acreage in SA.

But the Indian foray will determine whether investors wallow in the garden of Eden or the bourse equivalent of a Mumbai slum.

In a case of premature anticipation we rated Eden a speculative buy at 73c on May 25 last year. We maintain the call for patient types with an investment time frame of three years or more. An alternative exposure is through hot-rocker Torrens Energy, which holds 26 per cent of Eden.