Ann: E25 HPMSM project selected for US$166M DoE Grant, page-238

As a minor point, the grant is limited to 50% of costs so it can't provide ~57% coverage.

• If the project is brought in at US$289m then the grant can provide US$144.5m
• If the project has an increased capital cost estimate of up to US$332m then the grant can provide 50% of this up to US$166m
• If the project cost becomes over US$332m then the grant has hit its ceiling so 100% of the value above this would need to be found by E25.

However beyond that I'm not quite following.

• If the HPMSM plant isn't built, there is no grant funding (other than possibly a technical point of some stage 1 of 5 funding that may be released before a FID to cover design costs)
• If E25 were to build the capex for the plant and need to put it into C&M because the economics of a US based HPMSM industry didn't exist, there would be a much lower value to the plant and buildings than their cost.
• The primary scenario is however building a HPMSM plant and running it. Within this consideration is needed for the capital build cost, how this is funded and the cashflows generated by running the plant.

The April 2023 Feasibility study was a NPV of US$1,662 but this was on the case of an initial capital cost of US$289m with a second capital cost of US$187m for the expansion. While there could be discounting of the second capital cost in the NPV values, if both stages of the expansion were complete, the projected NPV of the operational cash flows from the project were ~US$2,138m. The $57m of state incentives are part of this US$2,138m figure although a tiny amount may release on expenditure on personnel during construction. The NPV figure changes massively depending on revenue assumptions which may be too high however a value in the $2b range is not impossible if a project is generating US$155/yr of pre-tax cashflow and has expansion options.

The absolute best-case scenario is that E25 secures further debt funding. Stage 2 is funded from operational cash flow. The April case figures are correct for the HPMSM pricing, the debt taken on is repaid from operational cash flow. E25 has its 230.6m shares on issue but the way it funds the project means not many more are required (I'm not sure where the 667m figure comes from). The project value is ~$2b at completion which would put E25 near $10/share (before value from Butcherbird or other HPMSM sites). The market is saying there is a pigs will fly chance of this.

Assuming the project is actually a US$320m capital cost, the current funding stack is a 50% matching US$160m grant and US$105m of offtake customer loans. There is a US$55m capital cost gap to close which is larger than E25's MC making it tough to fill.

Overall the Grant basically acts like an up to US$166m capital raise without needing to issue shares. With E25's equity boosted by this amount, the rest of the HPMSM project can be debt funded and its 50/50 debt equity from a balance sheet viewpoint. Fantastic if it can be pulled off. Huge doubt about whether it will.

The bottom half of the top20 shareholder list at 1 April 2025 from E25's website.