Queensland Pacific Metals (QPM) - Cost reduction provides downside protection (Petra 6/9/24)
QPM has executed non-binding term sheets to restructure its core Moranbah Gas Project (MGP) operating agreements with Ratch Australia (for access rights to the Townsville Power Station “TPS”) and Palisade (for use of the North Queensland Gas Pipeline “NQGP”) from 1 July 2025. The restructuring will reduce fixed costs by 83% (Petra estimates $50m p/a in savings) in exchange for an excess profits sharing agreement, which we estimate at ~$40-45m p/a foregone revenue at steady state. These revisions provide downside protection, thereby adding balance sheet certainty for QPM, and incrementally increase our steady state earnings. BUY, PT A$0.10/sh (unch.)
( It's good to know that this stock finally has some "downside protection" - even a broken clock is right at some point in time.)
( perhaps there's one more CR left in this nice little 'earner' ?? )
