The project initially announced its projected CAPEX of $330 million in 2017, which was upgraded to $400 million in 2019. The reason for this difference is two-fold. Firstly, while the fixed-speed turbines we’re now using do cost less than variable-speed – the cost for these and other equipment required has increased since 2017. Secondly, the loan from NAIF factors in the $100m contribution to Powerlink, capitalised interest, owners’ costs/contingency, and O&M.
O&M for pumped hydro is typically equal to 1-2% of CAPEX, annually – so $4-8m split with our JV partner. Without going too far into it, I do expect our O&M to be below what is usually required. We are under no obligation to draw down on the entire loan. Although, at an interest rate of 0.8%, I'm sure we’ll go close.
Remember, K2H is ours and does not belong to EA, I would not expect them to pay all of the O&M. Should they purchase it off us at the end of the 30-years that will reimburse us for the O&M, and then some.We are seeking to farm down our interest in the project to 50%. J-POWER is the front-runner but we received high-level third-party interest in the tender. What happens with J-POWER’s 20% equity investment into GNX will be determined on whether they are successful in winning the tender, and whether we reach financial close.
In terms of revenue, that’s a positively complex question. There are many variables and the sums have changed since our non-binding ESSA. Hopefully, I can discuss this one with certainty soon.
Regards, Jeremy
GNX Price at posting:
22.0¢ Sentiment: None Disclosure: Held
