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  1. #1
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    Default GNX - Genex Power

    I thought it deserves its own thread as the coming weeks will be interesting as the feasibility study for its pumped hydro power station and a bigger solar farm will be released.

    In summary:
    ​Genex Power is an Australian public company, focused on the production and storage of renewable energy. Genex is currently developing two innovative clean projects located in Northern Queensland, which will aim to deliver attractive commercial returns for its shareholders. http://www.genexpower.com.au/

    Project One: The Kidston Solar Project​
    (a) Phase one of the project will have a capacity production of up to 50MW. GNX has secured an $8.85 million grant from the Australian Renewable Energy Agency, and a 20 year power purchase agreement from the Queensland government (GNX is targeting financial close on the solar project in November 2016, with first operations in Q4 2017). QLD Government has indicated that prices of $80-100/MWh were acceptable. The mid-point of this price range would result in the project generating close to $13m pa of revenue. GNX has selected First Solar as its supplier of PV modules.
    Morgans summarized as follows "Given the solar project has secured a long-term government-backed revenue stream, we expect a high proportion of the construction costs may be funded by project finance debt (we assume >$100m). This gearing, combined with the ARENA grant, should minimise equity funding requirements. Our project modelling assumes only $10m of an estimated $126m construction cost (cost sourced from ARENA) will be funded by equity. If GNX sells down an equity interest in the project, there may be no need for a capital raising by GNX to fund the equity requirement (albeit GNX's share of the project will be diluted). GNX is in discussions with potential investors in the project."

    (b) Phase two of the project will increase this total nameplate capacity up to 150MW. ​

    Project Two: The Kidston Pumped Storage Hydro Project
    (a) Upon completion, this project will have a total capacity of 1,500MWh to 2,250MWh.
    That study, also supported by a grant from ARENA, is expected to pave the way for Genex to seek funding which will also include some 180kms of transmission. First production from this project is targeted for 2019

    As I said the next few weeks will be interesting. I've accumulated below its 20c IPO price (current SP 22.5c). Yesterday it had it's highest turnover of shares ever with an intraday increase of +15.4%. Not sure yet whether this is a whisper of confidence about the pumped hydro storage project.
    Last edited by silu; 30-09-2016 at 09:49 AM.

  2. #2
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    Another suprising hig volume day +11.1% with a SP of 25c its all time highest. Spidey senses tell me that a positive report is expected.

    Maybe of interest. In 2015 only 14.6% of all energy production in Australia was renewable. By contrast New Zealand's in 2014 was nearly 80%. There's some catching up to do by the Aussies.

  3. #3
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    They don't have the Hydro we are blessed with.

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    Quote Originally Posted by Joshuatree View Post
    They don't have the Hydro we are blessed with.
    True but lots more sun

  5. #5
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    Article of interest:
    Queensland lays out three “cost neutral” paths to 50% renewables
    http://reneweconomy.com.au/2016/quee...newables-48174

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    Good read thanks silu. Its rapidly becoming accepted globally that we have to act now ., decisively, and fast so i believe the emissions cut by 45% is just the beginning.

    "Indeed, the only scenario where coal generation is forced out is if the federal government pushes a national scheme that aims to cut emissions by 45 per cent by 2030 – the level considered by most as the bare minimum needed by Australia to meet its fair share of the Paris climate deal. In this scenario, about 1,500MW of coal-fired capacity might be forced to retire."

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    Thanks for dej for sharing this on HC.
    https://www.finnewsnetwork.com.au/ar...ork124800.html
    Finance News Network transcription of Genex Power Ltd (ASX:GNX) discussion on its conversion of a former Queensland gold mine into an advanced hydro project backed by the Queensland government.

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    Good point re the power of the sun up there silu.Do you and den have price targets for GNX;im having difficulty in valuing it(pretty useless at that to be honest).?

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    Quote Originally Posted by Joshuatree View Post
    Good point re the power of the sun up there silu.Do you and den have price targets for GNX;im having difficulty in valuing it(pretty useless at that to be honest).?
    I'm at work so don't have my file on me but I do believe that within 3 years a MC of $75-$100m (if they continue to tick off their milestones as they have done so far) could be a fair valuation which would mean a SP of around 65c (current SP 23.5c).
    Last edited by silu; 04-11-2016 at 08:54 AM.

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    Thanks for that silu lots to like here. And sorry its dej not den.

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    The Feasibility study for the large pumped hydro project has been concluded.
    Highlights are as follows:
    250MW generation capacity with 6 hours continous generation
    1,500MW storage capacity
    and more on the main announcement http://www.asx.com.au/asx/statistics...idsId=01799665

    Management points out that the energy market in Australia is in an intense transition period to divest from fossil fuel generation to renewable generation and have received significant interest from funding and financing entities. The obviously want to get on board early.

    All in all great news. I for one will top up today hopefully under 25c.

  12. #12
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    My thoughts, as seen on HC:

    Main positive points from me:
    - We have a TFS for the pumped hydro. These reports are hard to complete and with such a small team at Genex I am impressed by their work.


    Main negative points for me:
    - Optimized model gives reduction from 450MW installed capacity to 250MW. Originally, back when the prospectus was filed, they stated an installed capacity of 330MW between the two existing pits. Then they said they can get 450MW from a turkeys nest to lower pit arrangement. The additional capital cost of the turkeys nest was balanced with the additional capacity. Now we have a turkeys nest with 250MW capacity. So additional capital cost and less capacity.
    - As per a snapshot of timelines from a presentation (will try find link if anyone is interested) the timeline for financial close was Q1 2017 and this is now Q4 2017. That's a huge discrepancy.
    - Not sure if the TFS will pass off as a BFS. The BFS for the Pumped Hydro project, as per same presentation from above, was meant to be completed in Q3 2016. Given you need capital cost estimates for a BFS, and the capital cost estimates from this announcement state they will continue into Q1 and Q2 of 2017, then the BFS is now going to be around the same sized discrepancy as the financial close.


    What I took from this announcement is that the PHS project has been delayed approximately 6 - 12 months. (Side note, I realise projects are always delivered later than planned and usually cost more).


    Would love to have some discussion regarding some of the points above.

    http://hotcopper.com.au/threads/ann-...#post-20440982
    “If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment.” ― Marcus Aurelius

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    Jeez that double up on boards is confusing Thanks for your points Dej. I will look into them a little closer. Just saw that most of my order at 24c got filled now. I have now a pretty sizeable (relativ to portfolio) parcel of shares. I am highly aware that any big project generally is plagued with delays, cost overruns and funding amongst other things. However I believe that GNX is well placed to negotiate the best possible terms for financing.

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    Been too busy reading Twitter about the US elections so in the meantime an article of interest

    Kidston solar and pumped hydro plant clears another hurdle
    http://reneweconomy.com.au/kidston-s...-hurdle-96381/

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    A research note from Canaccord suggest a 12 month target for GNX of 75c and a potential valuation of $1.69 (current 26.5c). It seems a bit high to me but I would certainly be happy if it were true. I usually try to value companies on a minimum earnings multiple and if it still makes me money I will invest. The market itself then decides what it thinks it is worth for the added bonus.

    Their key risk seems to be that it needs to raise more equity funds if debt funding or equity partners are not forthcoming.

    Personally I think that they have scaled down the project from their IPO prospectus as not to have this problem. I am sure that management has negotiated well in advance about this and amended their feasability study for the pumped hydro project accordingly. Well at least I hope they had this kind of foresight as they do pay themselves handsomly.

    http://www.genexpower.com.au/uploads...-_nov_2016.pdf

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