Ann: Appointment of Specialist Corporate Finance Energy Advisors, page-52

The more I look at the option of farming down the project the more sense it seems to make. (and I really do like your thought of 25%) If they farmed out another 15% they could be free carried for their remaining 25%.

The current HHR capital costs are

1		Farm In
2	Bonus	$41
3	HHR cash	$20
4	HHR debt	$104
5	Total Capex	$260 (40%)

Assuming HHR put $20m cash in they still need another $104m in debt/offtake/bonds etc. It's possible but would take some heavy lifting and multiple tranches to get over the line.

So if HHR farm out another 15% at the price as the RR farmout it would be $49m as a mix of cash and carry. (maybe $22.5 cash and $26.5 carry)

1		Free Carry (RR)
2	Bonus (RR)	$41
3	Free Carry (New)	$26.5
4	Total Capex.	$162.5 (25%)

So HHR could be free carried for their portion of capex, retain a 25% interest in the project and have another $22m cash in the bank. Not a bad outcome! The further HHR can progress the project before another farmout the more valuable it will be.

This is only one of a number of options HHR must be currently looking at. There are multiple iterations depending the blend of finance and farmout used. With cash in the bank and milestones ticking by they have time to work out the best path.