Ann: Southern Cooper Basin Gas Project Operations Update, page-25

The Gas Supply Agreement (GSA) with Orica will fund up to $47.5m by way of elective prepayments for the gas that align with project development milestones.

In May last year, Orica made the first pre-payment of $7.5 million (after the initial contingent resource certification of 155 Bcf 2C). I expect that Orica will elect to make the next prepayment (a part of the remaining $40m) after passing the commercial gas rate threshold.

Following the presentation (slide #4) they expect to pass the commercial threshold with Klebb 2/3. If I interpret the symbols correctly, then the dark pink part of the arrow seems to indicate that they – even under constrained gas flow conditions – already achieved a flow rate of about 75% of the commercial threshold.

Supported by the increased pumping capacity I think we will pass the commercial threshold at Klebb 2/3 during April or May and this will probably trigger the next prepayment by Orica. Therefore I think capital rising may not be necessary in the coming months.

The max flow rate seems to be at least 3 times the commercial threshold. Should we bear in mind when the commercial flow rate will be announced…