Share
1,228 Posts.
lightbulb Created with Sketch. 2726
clock Created with Sketch. 04/05/21
18:32
Share
Originally posted by bricklebar:
↑
Small 'caps' from the dealing desk. SS Insight would like to update you on our current buy recommendation on LCK due to LCK market news today.Leigh Creek Energy (LCK .ASX) – Pulse Markets initiated coverage on LCK on the 28th of October 2020 at $0.09 we again recommended it in March at price $0.15 Last $0.275 Buy Recommended LCK has been going up very well over the last 3 months and we are still anticipating that within the next 6 weeks management will be able to close one of the following tasks that will re-rate the stock. Short to medium term positive catalysts. Strategic PartnerOff take agreementFunding agreementLCK today announced a binding and exclusive heads of agreement for stage 2 of the Urea project which we see as a positive catalyst for the share price.Highlights• Execution of the binding Heads of Agreement (HoA) grants DL E&C Co., Ltd. (DL E&C) an exclusive right to negotiate the terms & conditions of the proposed agreement (Agreement) by 31 May 2021.• Under the HoA, DL E&C and LCK agree to settle the Agreement terms by which DL E&C will become the Engineering, Procurement, Construction, and Commissioning (EPCC) contractor.• Under the Agreement DL E&C will be contracted for the Feasibility, Front End Engineering & Design (FEED) stages, the EPCC contract and start-up of the urea manufacturing facility will be exclusively negotiated between the two parties.• Under the Agreement, DL E&C with LCK’s assistance will arrange the required finance for the turnkey price of the urea manufacturing facility from mainly Korean financial institutions.• DL E&C is a leading global engineering, procurement and construction contractor with deep technical expertise and corporate capability to partner with LCK.• Once the Agreement is finalised LCK will retain 100% ownership of the Leigh Creek Energy Project (LCEP).• The LCEP will be the only fully integrated urea production facility in Australia, with all inputs for low carbon urea production on-site. The project has strong economics with a Pre-tax leveraged Net Present Value (NPV) of A$3.4 billion, and an Internal Rate of Return (IRR) of 30%. This is substantial and we think the market may have missed that this could be a debt deal as LCK could potentially retain 100% of the project.Also as the contract will be signed by the 31st May 2021 we believe the share price will re-rate once the HoA becomes a binding contract. Clearly, the binding and exclusive nature of the HoA shows how serious DL E&C is to conclude a contract with LCK.Also, given the size of DL E&C, we can assume that their due diligence of LCK’s urea project has been detailed and comprehensive, so this announcement not only represents a significant de-risking event for LCK, it also shows another instance of third party validation of the urea project technical operations and market economics.Watch this space closely.
Expand
Great pick up Brickle. However, the summary from SS Insight is aided by setting the text up a bit for us who are hard at reading. Anyhow, here's my best points from the blurb:
(20min delay)