Today's announcement is a net positive in my opinion but the market is pricing in significant operational time delays and they have said as much in the report.. not a peep of that on HC unfortunately.
This has been the tone of my last 4-5 posts and it was confirmed again today.
People need to understand that first revenues are likely to be LATE CY Q1 2023 at this point if all things go well, and that is only on train 1 (for which we, as of today, receive a higher share of the revenue, but it's still pricing in future uncertainties).
My thoughts mixed in with my questions:
The DSO opportunity was initially unlikely due to loss of product control but "market dynamics" have changed this - what dynamics? It's certainly not supply/demand since that has always been there (apparently). Why is it "increased" demand for DSO now (imo they are caving to DSO as they know that Train 1 is going to blow out in start up time so they need earlier cash flows).
The DSO opportunity has been labeled to "generate early cash flows which could substantially reduce capital requirements" - only if it has enough time to do so. My opinion is that they will commence DSO from the moment they get the ML (and have the contractors/logistics in place to do so, in their words "following site establishment") running until first revenues received via train 1 (delayed).
The DSO opportunity will directly affect how much money they attempt to get debt funded for the GW project so you would assume debt funding conversations are happening after DSO opportunities are locked in (and we are currently locked out of China to complete them due to COVID-19) (delay)
Therefor it could be a few months until they get debt funding sorted (was meant to be now). Unless they plan on using their current equity to purchase plant costs and long lead items etc, I do not see how they are going to get this funded on time (see below)
The water tank pipeline is yet to be agreed to and construction has not started. They are "continuing to work on the advancement of an appropriate solution" i.e. they do not know what to do yet and how to do it and they are meant to be breaking ground in 3 months.
"To enable the plant to be built and commissioned in good time, the list of long lead items is being finalized ready for procurement. This will require some part-payments for those items ahead of construction commencement however, it is not planned to order any capital items prior to attaining the Mining Lease approval from the South Australian Department for Energy and Mining and confirmation of the final phasing of the project."
Procurement is a game of its own. It's all well and good to actually have a list ready for procurement, but going through and literally procuring the items is its own job.
The construction time has gone from 6 to 9 months (last sentence of point 6)
"The company is excited about several new proposed port developments which will likely offer attractive opportunities for our projects" - they are talking about the deep water port that I have commented on in the past. This is very much a Mount Hope positive for when that gets up and running
I think it's fair to say you can push back HPA in line with delays to the GW project since revenues from GW should fund the HPA plant - unless you want to take on more debt, which is not ideal given the risk profile of HPA (feel free to disagree).
There is no reason that they could not update the market on the actual data from the concrete trials so as to give the market something to properly judge the product.
I think the Q&A tomorrow needs to deliver really clear and concise messaging that they are not on time and they should not mislead shareholders into thinking this project will be up and running by the timeline they previously updated. My best case scenario is that they will switch the plant on in a year from now, first revenues as I said, late quarter one 2023.
For some people this is a non issues, for others this is the reason for selling.
I am on the fence. I think the BoD are useless. I think there's a lot of empty promises from JM, but I also think that when it is in production, it will be one of the most risk free, stable, easy projects to manage with massive amounts of upside.
(20min delay)