One reply per ASX announcement from me on these official...

One reply per ASX announcement from me on these official threads, and I'm back to background monitoring mode.

Honestly this query letter and response is a no surprise announcement. I guess ASX deemed it price sensitive because they understand the material fear lots of investors had from The Australian articles over the past weeks.

On the good side:
* more info, more clarity and no redacting or correction of past announcements is always a positive sign.
* great that Sukh Energy showed they are serious by being the ones to fly to meet IM3. Shows they have some backing. And even if you take the absolute most pessimistic view that they might bail on their order next year, the fact that they represent less than 10% of the offtakes and is the only one being queried is a great de-risk, which is probably why IM3 felt it's safe to make some solid revenue projections for the next 3 years.
* revenue projections into 2027 actually show the upper end of the offtake agreement value, which is almost double the minimum. That is a definitely greater upside than I hoped for. Of course ultimately contingent on them actually completing and starting to operate the factory, which I'm mostly confident will happen, barring small delays here and there due to the complexity of these things.

On the not so good side:
* they didn't name the parent company, which usually means they are a sensitive organisation (I was incorrect in directly establishing a link between Omega and Sukh; the structuring aspect turned out true but it was for a completely different parent entity). Given a possible downstream usage by the Indian department for defence, that makes sense. The reason this is a risk is because they can bail on their purchase without much litigation options for IM3. And if there's a change to the US/UK/India Geopolitics governments are the first to discontinue foreign purchases and go local.
* the forward revenue projection for 2022 indicates ~7-800MWh total production, which if you discount the first 6 months, would put the rolling annual production capacity expected by Dec 2022 at around 1.4-1.6GWh, not the full 1.8 GWh.
* there may be more ASX queries since this one only addressed the Sukh Energy item, and The Australian articles did raise a number of other questions. It's probably a good thing in the end since more clarity on board leaders and Townsville will instil more confidence about where the company truly is.

What I interpret from this is that the plant completion does not mean 100% production pace is achieved immediately, which is why customer's offtakes are titrated based on what they can realistically fulfil on their own expectations.

Having said that, the long term still looks great and would make your CAGR 48% if you held through to 2027 from a 30c price (assuming targets met, limited share dilution, and valuation PE ratio at 20:1 post-listing). But there's always risk, so don't be too in love with the idea of guaranteed gains. No project succeeds on belief alone. It takes a lot of talent, hard work and a bit of luck!


IMO. GLTAH. DYOR.