Denham Capital to Invest US$80 Million in Plantation Energy

Plantation Energy, Australia’s only manufacturer and exporter of Densified Biomass Fuel (DBF) pellets, and Denham Capital announced that Denham will make up to a US$80 million equity investment in Plantation. Initial proceeds will go towards funding the construction of a new manufacturing plant in Albany, Western Australia. The investment will give Denham majority ownership of the company. The existing Plantation Energy management team will continue to manage the operations of the company.

The company manufactures and exports clean and renewable energy in the form of Densified Biomass Fuel pellets — using harvest residue from sustainably managed plantation forest. Plantation Energy works closely with plantation owners and harvesting contractors to develop efficient and environmentally sensitive procedures for collecting and transporting the residues to the manufacturing plant.

The manufacturing process involves reducing and compressing the raw material into cylindrical pellets of compressed energy. The biomass fuel pellets are used for industrial power generation and can be used alongside other fossil fuels to co-fire power generation plants without modification. There is no net emission of carbon when biomass pellets are used to produce energy and the source material is readily replaced as the plantations are regenerated, thereby making the pellets carbon neutral.

The Albany plant, which is currently under construction, is scheduled to commence production in early 2009. It expects to produce 150,000 tons within the first 12 months and has an eventual target of 250,000 tons per year.

“Through a combination of location, technology and industry knowledge, Plantation is in an outstanding position to meet the growing demand for alternative fuel supplies,” said Carl Tricoli, Managing Partner at Denham Capital. “In addition to the power generation market, pellets have become a very popular fuel for domestic residential heating in Europe and North America, creating a significant secondary market for Plantation Energy.”

“Denham Capital’s investment will enable us to take our business to the next level and achieve our growth targets,” said Richard Allen, Director of Plantation Energy. “The Albany plant is the first of a number of facilities we intend to build across Australia with an eventual goal of being a major supplier of biomass fuel pellets to existing and growing European markets and to markets emerging in Australia and Asia.”

Plantation Energy’s major current market for fuel pellets is Europe where the demand has increased rapidly since the adoption of the Kyoto Protocol, which was created to reduce greenhouse gas emissions. “Biomass pellets provide a low-cost and immediate solution to greenhouse gas reduction targets. The projected total demand for DBF pellets in Europe is estimated to be 60 million tons per annum by 2015 and Plantation is well positioned to capture part of that market”, said Louis van Pletsen, Head of Denham’s London Office.