KPO

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0.3¢ kalina power limited

the reality is they have had a shovel ready project for over a...

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beaches811

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24/06/23

13:20

Post #: 68450437
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Originally posted by Tipton: ↑

Often ,when you are building a company, you end up going down a path that was not planned or even envisaged.
Like it or not,KPO is now a clean power development company and the Kalina technology has become a second string to
its bow.
I am delighted with this as commercialising technology is a struggle.
But in the process of trying to commercialise the Kalina cycle ,management unearthed an amazing opportunity as a way of
making money.It is easy to be cynical but at least they are working on a solution to ending the dillutive fund raisings.
How much money they will make from this change of direction we will find out fairly soon (in a matter of weeks) as PWC starts marketing the sale of 50 per cent of KDP.
KPO management are hoping to sell 50 per cent of KDP for $50 million.
I don't think management would have published such a number without a basis and
PWC will have to produce a report that justifies that price.
The valuation logic is:
1.KDP have secured control of 4 sites.A site needs to be near gas pipelines,transmission lines and sequestration hubs;
2.Each site must support at least one,but possibly two, 200 MW gas fired power plants ;
3.All sites are in Alberta which plans to shutdown over 5000 MW of coal burning power.
The Capex of developing each 200 MW site is around $800 million and generous tax concessions are available.
In return for getting each site shovel ready KDP will receive;
1. A refund on the cost of getting it to that point; say $20 million and 2 years;
2.A 5 per cent development fee .($40 million)
3.A 10 per cent free carry on the equity for the build which if the normal 70/30 debt equity is applied ($24 million)
The first question you ask is where is KDP getting the $20 million required to get one project shovel ready?
The answer is by selling down equity in KDP.
They also have Saddle Hills shovel ready to sell .Also they should find gas and transmission companies interested
in meeting some of the front end costs
At 8 cents a share KPO is capitalised at $12 million.
Should PWC verify the number above it will not be there for long.so the odds are not great as they have failed at everything they have touched in the last 6 years.

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the reality is they have had a shovel ready project for over a year and could not get financing for it. The other sites were just an opportunistic grab due to the legislation.

KPO Price at posting: 0.7¢ Sentiment: None Disclosure: Held
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