So what could the numbers behind the Holcim deal look like?@ a...

So what could the numbers behind the Holcim deal look like?

@ a sale price of $250-350 AUD/tonne

ZEO has the potential to make >$153 million (AUD) EBITDA, off $384mil of gross sales over a 5 year period from a partnership with Holcim.

Year 1: Gross Rev of $60mil AUD @ 38% margin = $22.8 mil EBITDA

Year 1: 200k tons ($22.8mil EBITDA)
Year 2: 400k tons ($45.6mil EBITDA)
Year 3: 600k tons ($68.4mil EBITDA)
Year 4: 1million tons ($114mil EBITDA)
Year 5 : 1million tons ($114mil EBITDA)

Assumptions:-
ZEO will sell it’s metakaolin to Holcim for $300AUD/tonne

Holcim will buy the following quantities:
Year 1: 200k tons
Year 2: 400k tons
Year 3: 600k tons
Year 4: 1million tons
Year 5 : 1million tons -

Costs per tonne (AUD):
o $10 Extraction of kaolin from open pit mine
o $40 Transport
o $120 Total Operation Cost (Labour, Plant maintence & Energy)
o $6 Loan interest from CAPEX expenditure
o $10 Mischalaneous/Additional head office Expenditure$186 total costs = 38% profit margin -

CAPEX costs relating to processing:

o ZEO is yet to select which kiln they will use to calcinate the kaolin to metakaolin

o There are many types of kilns (rotator, flash, MHF, suspension, tunnel etc ) with set up costs ranging from $5-$30mil.

§ No doubt ZEO’s partner will assist ZEO management selecting suitable process equipment based of trial results (starting 18/11/24)

The results of the life cycle analysis (due to be complete in March ‘25) will also play a role in this selection process.·

ZEO will want to ensure their metakaolin production has small carbon footprint that will therefore enable major players to use it in their projects.

§ ZEO can always start with a small processing plant/kiln and add additional kilns in the future... however if the demand is as big what’s being said, then this may enable ZEO to start big!

Funding ZEO’s processing plant and kiln:§

It is not unreasonable to think a large customer/partner such as Holcim or Boral, who needs metakaolin ASAP, will pay for a kiln / processing plant in order to speed things up, ie. be the preferred customer of ZEO§

There is also the possibility of debt finance to pay for the plant (Peter Zardo (ZEO’s MD worked in corporate & industry banking for 20yrs and no doubt has contacts)

Background:-

Most commercial pricing for metakaolin is confidential between parties.-

Metakaolin differs between suppliers in grade/quality/suitability (specifications) for cement; as a result so does pricing.

Lower grade metakaolin from China sells for <$100/tonne however in additional to logistical costs/factors would not be suitable for use in cement.-

ZEO’s metakolin is being promoted as a superior grade quality with minimal imperfections; thus is likely to be priced accordingly.- A carbon credits become more valuable; customers likely able to pay more for metakaolin which will be more valuable. Cc