Ann: Strike and Koch Fertilizer Agree to Urea Offtake, page-58

Brilliant announcement, no two ways about it.

STX first announced it's vision for Haber back in Jan 2021 with pre-feasibility studies based on a urea price of ~AUD$350pmt... urea is now ~AUD$1,250pmt, up some 350%. No one could have predicted such an increase in a little over 12 months. Haber gross revenues would now be ~$1.75bn p.a. or ~$26bn over the projected 15 yr offtake agreement with Koch. The "industrial" revenues from Haber will far exceed anything possible by simply selling gas domestically, whether it is at $10 GJ or more. The gross profit margins and resultant FCF will be very attractive for investors. Thinking dividends too.

@invertedva I agree, I don't think the market has fully understood the significance of Project Haber and what it means to the fundamental valuation for STX.

In fact, if I was to say that the projected revenues from this urea offtake agreement was the equivalent to exporting the entire 628PJ gas as LNG at an approx. price of AUD$40 per GJ, wouldn't that ruffle the markets interest? We have had a great deal of angst and hope that our (and others) PB gas could be exported via the NWS... when in actual fact the revenue, and one could argue the gross profit and FCF, could be as good if not better, keeping it onshore and pushing it further downstream, processing it into urea! Now I am not going to assume LNG or urea prices are going to stay this high for the next 10-15 years, but given the current geo-political environment, you wouldn't be confident either that prices will return to the low historical long term prices (see below graphs).. Food for thought.

The other important fact to acknowledge is that by downstreaming and "adding value" to our natural resources, STX are likely allowing favourable standing for govt export exemption... thereby giving STX optionality in how they best monetise this world class asset.





So I look forward to seeing the eventual DFS / BFS... projected NPV, IRR, pay back I suspect will be very amenable to future debt funding. Potential equity partners will be scrambling to secure a spot at the table, although I suspect Koch is in the box seat here. Like others, I also believe that Haber will be upscaled, given STX's 2nd round of offtake interest was easily 3 times oversubscribed. IMO Haber could also become like the NWS LNG plant... a tolling infrastructure asset, processing third party gas from the giant PB gas fields into a high demand, low carbon product... and making a very tidy clip doing so.

Lots of catalysts to look forward to for the rest of this year and next.

Cheers