JATENERGY LIMITED - ASX: JAT

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Description

Jatoil is seeking to raise capital to develop its existing jatropha projects and acquire new coal projects, particularly in its acquisition of 100% of the shares of Blackrock Resources Pty Ltd. Pursuant to its Extraordinary Meeting of Shareholders held on February 10th 2011, Jatoil has issued a prospectus to satisfy Chapters 1 and 2 of the ASX listing rules as a condition of Jatoil’s securities recommencing trading on the ASX following the acquisition.

Vietnam Projects

Vietnam is the location of Jatoil’s first large scale biofuel operations because it offers significant attractions for jatropha production. The availability of marginal land and strong domestic fuel markets, together with supportive government policies for biofuels and rural development are major factors. Since jatropha is able to grow in marginal soils not being utilised for food production, it creates a new industry that can provide incremental income for farmers in poorer, rural areas.

Jatoil's commitment to social, environmental and economic sustainability is supported by partnerships with established local companies to leverage networks and knowledge. Our local partner, Green Energy Vietnam (GEV), has developed a strong network of partners in government, with farmer co-operatives, agronomy specialists and experts in rural development - such as the Dutch development organisation SNV.

The business model is based on contract farming of jatropha, through commercial producer organisations -farmer co-operatives. The co-operatives represent the interests of the farmers, enabling them to access better prices for farm inputs and to manage harvest logistics and payments. In return, GEV provides seedlings, training and other farm inputs to establish the trees and purchases the harvested seed. Contracts are established in consultation with the co-operatives, local government representatives and SNV to ensure fairness to all parties. Farmers receive a stable income and retain control of their land in line with our social and environmental sustainability policy, and Jatoil is guaranteed receipt of the harvest. The system reduces supply chain complexities. One added benefit for the farmers is the opportunity to intercrop or graze livestock on the land during the maturation of the jatropha trees.

Indonesia Projects

Jatoil has teamed up with another established jatropha oil producing company, PT Waterland, to develop biofuel farms in Indonesia. The companies have established a new company in Indonesia to pursue the venture, PT Jatoil Waterland, which is owned 70% by Jatoil Limited.

Central Java is a suitable location for jatropha production because there is a significant quantity of suitable land that has been earmarked for sustainable development by the Indonesian government. The land is forestry “buffer” land which is designed to stimulate economic development by creating new agricultural industries. The creation of such an opportunity greatly reduces the instances of illegal exploitation of the protected forest reserves arising from the economic hardship of the local community.

PT Jatoil Waterland has acquired 1,000 hectares of 2 to 3 year-old jatropha plantation in Central Java and signed an off-take agreement covering the total production from this plantation for the next four years. Production started in July 2010 with the sale of the first container load of 10 tonnes destined for the aviation industry. It is expected about 700 tonnes of crude jatropha oil will be harvested over the next 12 to 18 months. PT Jatoil Waterland will also be developing a further 1,000 hectares of new plantation in the latter half of 2010, with further plans to expand to 10,000 hectares through green-fields development of unused lands. This land will be planted with new, more productive strains of the jatropha tree that Jatoil, and PT Waterland, are developing through plant breeding programs.

Also involved in the project is an Indonesia State-owned Enterprise called Perum Perhutani, or General State Forestry Company, which controls the land covered by the joint venture. Over one million hectares has been earmarked by Indonesian government authorities for the development of sustainable biofuel feedstocks, and Jatoil has a vision to develop up to 100,000 hectares of biofuel farms over the next few years.

Indonesia - Coal

Jatoil has been looking for opportunities to expand its energy portfolio, to diversify its asset base and to secure ongoing cash flows. Jatoil has agreed, subject to final due diligence, to acquire 100% of Blackrock Resources Pty Ltd, which hold significant coal assets in Kalimantan, Indonesia.

It is expected that an early-stage coal mining operation would commence within nine months, providing cash flow to assist with the funding of the expansion of Jatoil’s oil feedstock operations in South-East Asia and exploration activities on its acquired coal portfolio.

Blackrock is a Sydney based private company that has interests in multiple coal projects in Kalimantan. It is an area of Indonesia that sustains a substantial export coal mining industry and has established infrastructure. An attraction of Blackrock to the Company is Blackrock’s Indonesian based exploration team that identifies, assesses and acquires new projects.

Blackrock owns Blackrock Energy (Singapore) Pte Limited, which has a number of coal projects in Indonesia through 100% owned foreign investment companies.

Jatoil and Blackrock both have current assets, business networks and operational synergies in Indonesia. Jatoil also sees this as an opportunity to use depleted coal fields for reforestation with oil bearing crops such as Jatropha. This could extend the life of the negotiated areas for another 35 years bearing renewable energy and longer term employment for the local community.

Inter-Cropping

Jatoil has entered a joint venture to develop and breed high value crops to plant within its jatropha biofuel farms in Asia.

Inter-crop planting is becoming best practice in large scale biofuel operations world-wide, especially in the early years of a farm’s life before oil producing jatropha curcas trees have reached maturity. Such inter-crops have the potential to deliver significant additional revenue from the land before jatropha revenue builds up, and also to boost returns to contract farmers.

The joint venture includes two Australian-based specialised plant breeding companies, Nuflora and Floraquest. Initial work will focus on a plant called stevia, which is in strong demand from global food and beverage manufacturers as a natural, low calorie sweetener. Studies will also consider the planting of organic food crops for local hotel markets.

Jatoil’s biofuel farms will remain focussed on producing oil from renewable sources, but a significant proportion of future revenues from jatropha plantations is expected to be generated from the sale of products other than oil such as waste biomass, seedcake that is produced during the oil crushing process, carbon credits, and high value inter-crops such as stevia.

The initial work with Nuflora and Floraquest will involve the identification of suitable crops, nursery management techniques and plant breeding. This will be undertaken in Australia, and transferred to Jatoil’s Asian operations as soon as practicable. A joint venture company, JatIC Pty Ltd, will own the intellectual rights and provide the seeds and marketing support. Jatoil Limited will retain 60% ownership of the joint venture.

New Opportunities

Jatoil believes that while fossil fuels and carbon costs will increase in the longer term, energy businesses need to be robust and competitive over the medium term to survive in volatile energy markets. Jatoil’s initial focus is on developing bio-feedstock and biofuel businesses in Asia and Oceania and welcomes opportunities to discuss new projects, in this field, with developers and investors.

Although Jatoil is not currently producing feedstock in Australia it is investigating opportunities to do so, and is particularly interested in the production of biojet fuel. We are in the early stages of forming a consortium of key supply chain partners to develop the industry over the next decade.

Jatoil is also exploring opportunities to build on core expertise and attract capital to develop a portfolio of energy technology investments and developments to spread both risk and opportunity.

Jatoil is prepared to discuss such projects under strict confidentiality and non-competitive agreements to minimise risk to the parties involved.

Mine For

biodiesel, jatropha, coal

Location of operation(s)

Indonesia, Vietna

Address

Level 6, Suite 8, 55 Miller Street
PYRMONT, NSW, AUSTRALIA

Phone

(61 2) 9571 8300

Email

Website

http://www.jatoil.net

Last Updated

18/5/2011