RED.L Regulatory News (RED)

7 Aug 2006 07:01

Camco International Ltd07 August 2006 Trading Update - Camco Expands Carbon Credit Portfolio 7th August 2006: Camco International Limited ('Camco') is a leading player inthe origination, co-development, placement and management of carbon creditsunder the Kyoto Protocol. Camco is pleased to provide an update of the progress the Company has made inthe execution of its existing portfolio of greenhouse gas emission reductionprojects and in acquiring new projects since admission to AIM. Camco wasadmitted to trading on AIM on 25 April 2006, when the Company raisedapproximately £24.9 million. HIGHLIGHTS SINCE IPO: - Expansion in overall portfolio to 103,600,000 tonnes, up from 97,400,000 at IPO - Increase in contracted tonnes to 78,800,000 (+10%), up from 71,400,000 at IPO - 7 new contracts signed exclusively by Camco for projects in China, Russia and Africa, totalling an estimated 15,700,000 tonnes of carbon credits - 6 new Host Country Letters of Approval ("LOA") received for a total of 18,400,000 tonnes of carbon credits in our contracted portfolio. Camco now has Host Country approvals for 19,400,000 tonnes, or almost 20% of the total portfolio - 2 projects recently validated, totalling 737,528 tonnes of carbon - 1 project registered with CDM Executive Board, for 741,260 tonnes of carbon credits - Good net portfolio growth, despite reclassification of projects totalling 8.4 million tonnes of the initial portfolio, where management cannot be certain projects will generate credits during the 2008-12 Kyoto commitment period - New presence established in South Africa, a market expected to be the world's 5th largest producer of carbon credits under the CDM Tristan Fischer, CEO of Camco, commenting upon the Company's progress since IPOsaid: "We are very pleased with Camco's performance since our IPO in April. We havedemonstrated our ability to navigate the Kyoto approval process and have signeda significant amount of new projects in just three months. This provides furtherevidence that Camco is able both to execute its existing projects efficientlywhilst continuing to expand its project portfolio. The recent volatility in the EU ETS 2006 price has not significantly affectedCamco's operations, as our revenues will be largely derived during Phase 2 ofthe EU ETS, between 2008-2012. The short term uncertainty in EU-ETS Phase 1pricing has, in fact, strengthened our sell-side partner relationships as morevalue is placed on our ability and strategies to commercialise carbon creditseffectively." PROGRESS IN EXISTING PORTFOLIO Since IPO, Camco has focused heavily on the execution of its existing projectportfolio and has advanced its projects through the Kyoto approval process.Overall, there has been good progress in the implementation of existing projectsresulting in increased certainty of successful carbon credit commercialisation. A key differentiator of Camco's project portfolio is the fact that the projectsare mature and feature lower build-risk, with 95% of our portfolio tonnes havingapproved methodologies (or for JI projects, applicable CDM methodologies)already in place. Host Country approval is one of the most important stages in the Kyotoregulatory process. In the last 3 months, Camco has received 6 Host CountryLetters of Approval from the Chinese authorities for projectstotalling 18,400,000 tonnes across sectors including industrial waste gas,landfill gas, wind, hydro, and cement waste heat recovery. As a result, 25%percent of Camco's contracted project tonnes now have Host Country approval,further improving visibility on estimated volumes of carbon credits. The Company has also recently received the final validation report for a hydropower project in Bulgaria and a wind power project in China, bringing the totalto 5 validated projects. The CDM Executive Board has also recently registered the Taishan Cement WorksWaste Heat Recovery Project where Camco staff authored the methodology. This isa significant achievement, given the potential for further projects using thissame methodology in China, further boosting the potential of Camco's dealpipeline. NEW BUSINESS EXPANSION Camco has increased the number of projects contracted under carbon sharearrangements. The prices achieved to date in these and other sales negotiations,as well as in the term-sheets and ERPAs under negotiation, are consistent withthe expectations of Camco management at IPO. At IPO, Camco's gross portfolio contained an estimated carbon credit volume of97.4 million tonnes, of which 71.5 million were under exclusive contract("CADA") and 25.9 million were under late stage negotiation but not yet underexclusive contract. In the last three months, Camco's gross portfolio expandedto 103.6 million tonnes, of which 78.8 million are now under CADA (10% increasesince IPO) and 24.8 million are under late stage negotiation, demonstratingCamco's success in expanding its portfolio. These figures include adjustments tothe portfolio gross tonnes to account for certain changes in project design,scope or timeline. Camco has also made excellent progress in converting its "Under Negotiation"pipeline into exclusive contracts, with 7 new Carbon Asset DevelopmentAgreements ("CADA") signed since IPO: - 4 CADAs for projects in Russia, totalling an estimated 4,200,000 tonnes - 2 CADAs for projects in China, totalling an estimated 10,400,000 tonnes - 1 CADA for a project in Africa, totalling an estimated 1,100,000 tonnes In addition to good net portfolio growth, Camco has prudently reclassified 8.4tonnes of the IPO portfolio, where it can no longer be certain projects will becompleted in time to contribute in the 2008-12 Kyoto commitment period. Netportfolio conversion during the period since IPO has been highly satisfactory,and we anticipate continued success on this front. OPERATIONS REPORT Camco's operations since IPO have focused on building up our existing teams inChina and in Russia and expanding our presence in other markets. In China, Camco is a well-established and respected market leader and businessthere continues to expand, with new project wins and new staff in both businessdevelopment and CDM process roles. With 6 new Letters of Approval in place fromthe Chinese government and 2 new project contracts in place, Camco continues toboth execute and expand its business in the number 1 CDM country in the world. Camco has expanded its staff numbers in Russia. The enlarged team will nowfacilitate the entire carbon management process in Russia, Ukraine andAzerbaijan. Camco continues to work on its project pipeline in Russia inpreparation for the Russian government's finalisation of JI regulations. In Central and Eastern Europe, there remains good potential for renewable energyprojects, especially in wind energy. Camco will utilise its existing Europeanand Russian presence to develop this market further as warranted. OPERATIONS COMMENCED IN SOUTH AFRICA Camco announces today the commencement of operations in South Africa, with therecruitment of two senior developers to be based in Johannesburg. South Africais widely regarded as having the potential to be the world's fifth largestproducer of carbon credits, with significant energy-related opportunitiessimilar to those of our Chinese projects. Camco's entry into the South African market is expected to deliver short-termproject wins and a high quality pipeline of new projects delivering carboncredits in substantial volumes. This will further diversify Camco's portfolioboth in terms of markets and technologies. - ENDS - For further information please contact: Camco International Limited +44 (0) 20 7256 7979 Tristan Fischer, Chief Executive OfficerScott McGregor, Chief Financial Officer PRESS Gavin Anderson +44 (0) 20 7554 1400 Ken CroninJanine Brewis ABOUT CAMCO: Camco is a leading player in the origination, co-development, placement andmanagement of carbon credits under the Kyoto Protocol. Camco works with industrial companies and utilities to identify and developgreenhouse gas emission reduction projects, managing the entire process fromproject initiation to carbon credit delivery. Camco helps maximise the volume ofcredits produced and facilitate their placement with purchasers in theinternational carbon market. This 'origination to delivery' capability provides greater clarity andmanagement of carbon credit risks, adding value to both sellers and buyersparticipating in Camco's transactions. Camco is a market leader in carbon credit origination in China and Russia, twoof the largest potential markets for carbon credits, as well as Eastern Europeand Africa. Additional information is available at www.camco-international.com END This information is provided by RNS The company news service from the London Stock Exchange