You're right, the unit economics of both the Kidston Pumped...

You're right, the unit economics of both the Kidston Pumped Hydro and Bouldercombe are excellent projects. I'd be a very happy shareholder to own a part of both of those, and am very bullish in general on renewable energy generation, batteries and firming. *BUT*...

The capital allocation decisions by management are detrimental to our shareholder value. The crux of the problem is that they need the capital to invest in the projects, and don't have the cash flow today. The Kidston Pumped Hydro needs almost a $1bn and thankfully is backed by government grants and loans. Investing in a profitable project like Bouldercombe is a great idea, but it is cash flow negative. We need the capital right now more than anything, and the cash flow from Bouldercombe is years down the track. The idea of investing in lots more batteries right now is going to put even added pressure to the balance sheet.

Here are my calculations including Bouldercombe with no shareholder dilution. This includes the most recent 2Q22 updates.


Now I do the same calculations with the cap raise of $40m, 266m shares at 15c. You will see no change to enterprise value, just a shift in the capital structure. The returns expecfted have reduced dramatically across all scenarios. From 15% to 10% CAGR on a nightmare situation, 35% to 29% in bear, 47% to 41% in likely, and 59% to 52% in bullish scenario.



If they had done the cap raise at >20c when they should have, those figures would look much better. That's the difference between a good and bad capital allocator at the helm.