TEAM > . Thank you for the post, if possible can anyone expand on the BOO Financial model in further details.
Scenario A. ZEN has signed an agreement with a mining comp to construct a power generation plant with an x MW ( lets call it 20MW) using BOO model with a contract for 8 years of supply with possible extension.
Assuming the plant cost's ZEN in labor and material 7 million. which they financed by a loan from the bank or use CR money from shareholders.
on completion, the mine starts using electricity and pay's for KWH used at a specific fee negotiated, that one would assume is higher than the average electrical fee due to the higher cost related to the remoteness of the mine ( transportation etc,,)
my questions are: what is the 50% to 60% margins discussed in the interview above . is it calculated per year of power generated and paid for.
in other words, Does, the 7 million investment (plus financial costs) will generate 50% to 60% profit margins for a contracted year. if that is the case then the first two years pay off the investment and the following years are gratis.
I do appreciate if we can all collaborate on the subject.
There are many aspects and questions about this formula. for example
any dollar value to depreciating assets at the end of the contract.
Does profit margins include administration and head office expenses? i assume it doesn't, so what are those costs.
