Discussion with Bahay about the Master Plan

Chat with Bahay about the Master Plan

I pretty much followed the Master Plan presentation as I asked my questions of Bahay.

Slide 8 – Qld Govt Coal Seam Gas Brine Mgt Action Plan 2023-2033

Q. What is the significance of that plan, When doesindustry have to comply with it?

A. Bahay referred me to slide 16 CSG Regulatory Framework in Qld.The hierarchy is most important as it emphasises Priority 1. Sale of salts

Each of the CSG companies are required to report annually in Aug/Sep each under the EPCB Act in relation to what they are doing about salt recovery/disposal based on available technologies.Should be interesting this year.

Slide 22 – Cracking the CSG Brine Code with Technology

Q. Upstream Brine Processing. Isn’t this what QGC’splants do?

A. Yes, they concentrate brine but then put that into a brine pond.It goes no where until Parkway comes along and cleans it up.

Q. Does what Parkway is doing with QGC/Shell in anyway separatefrom the Master Plan?

A. The Master Plan accommodates what Parkway and the Master Plan is doing.QGC has two Upstream Plants.A central and a northern water treatment plant. Both these plants could be incorporated into the Master Plan.Still to be discussed and decided as there are various permutations on how it could fit into the Master Plan.Check the Map out and do the research on where the plants are.

Slide 25 & 26. Upstream and Downstream Technology Package.

Q. What is the cost of an upstream plant and a downstreamplant and what is the build timeframe?

A. I made some guesses here and he neither agreed or disagreed with my guesses.The other consideration was where the plant was, proximity to the other CSG players and their specific needs for processing so not that straight forward except to say that Upstream is 6-9 months for the build, 6-12 if it’s larger and more sophisticated, and 12-18 months for the downstream plants.

Slide 29 & 30 QBS Optimisation 1 (Residual Brine Processing)and Optimisation 2 Chlor-Alkali Plant Integration.

Not a question but more of an observation.

Between these two optimisations for which there is very little if any upgrade costs, Parkway could generate $200million a year in additional revenue, from $139m a year to $339m a year.Wow, serious, they didn’t want to complicate the plants with these additions but they are NO BRAINERS.

THESE WONT BE IN THE VALUATION RESEARCH REPORT IN THE FIRST INSTANCE BUT WILL BE ADDED LATER AND IMAGINE WHAT THOSE NUMBERS WILL DO TO THE VALUATION!!

Slide 33 Indicative Roadmap.

Q. Does the light blue square on FY24 represent the constructionyear or the revenue generating year?

A.Post FID, it represents the build.Add in the build timeframes I have been given above and we know when this revenue starts to flow.However, I counter this with the knowledge that the upstream plants take a shorter amount of time to build.So revenues could be flowing earlier than end of calendar 2024.

The other complication here is the integration of the QGC/Shell plants into the Master Plan so dates could be sooner right through out that 4 hub timeframe.

Q. When will revenues be generated based on the roadmapon page 33?

A. My guess is above, but the research report will provide this.

Q. When will the full 4 hub and Master Plan beoperational?

A. Road map says 2033 but it will be much sooner than that due to the upstreams taking up to 9 months and the integration of the existing downstreams, so could be much sooner.Later we talk about the revenue generated by each hub, wait for that.

Conversation then led to slide 42.Read the bolded Blue text in the heading on the right hand side up the top.“ Alternative Scenario – Master Plan (QBS Hub)”. The revenue generated by each hub is $134m per annum.Gross margin generated by each Hub is $96m/$97m per annum.Multiply that by the number of hubs proposed, you work out the gross margin, the EBIT and then revenue per share based on current number of Shares on Issue.Over 4 cents a share per hub that’s without Optimisation 1 and 2.which increases revenue by $200m per year, 9 cents a share.These are my calcs only.

Q.I asked whenthe independent research will be released?

A.This led to quite a discussion about the timing and whether it should have been released after the Master Plan and clearly it should have because there is a lot of data, lots of revenue and cost calcs in that.

So the answer is, it’s being updated now and should be released very soon. Bahay’s words, you make of that what you will, I’m confident, sooner rather later.

Interesting that the researcher thought the Master Plan capex and revenues were very different because the additional data was provided in the Master Plan presentation.So it’s upside, and I think PWN are being conservative.

Q. QGC/Shell, what’s next and when?

A. Next Stage is obvious, it’s FEED but it’s more about where the FS is.It’s obviously with head office being evaluated.I don’t think most people/investors/analysts appreciate the significance of that.A tiny minnow called Parkway, developed an FS for an industry wide solution that is technologically advanced and far superior to anything that exists today and Shell globally are considering it and going to make potentially global decisions on how it’s used in their business.Let’s not forget that Shell is 50% of QLD CSG through QGC and Arrow.This is not insignificant. Let that sink in.They are absolutely committed to a solution and are still excited about PWN’s solution.

Q. I made a statement here that led to some serious discussion.I said, the market won’t give a shite untilthey see a contract signed.They willsee the Master Plan, the $15B in savings, the capex, the revenue but until we gettraction with a contract, nothing happens.

He said and I agreed, that he can’t control the share price, all he and his team can do is build the tech, test the tech, produce the FS’s, get the attention of the stakeholders about a viable, cost effective, circular, environmentally friend solution, get the investors and funders on board and work it.That’s what they’re doing, Mike is onboard, his specialty.He’ll help get it done.

He also stated that the market sometimes misprices companies and I agreed it does, both on the downside and the upside.For me examples of upside mispricing was Brainchip and Novonix. Both these stocks went up 30-40 fold on hype rather than a plan and execution.

So, I believe it’s only a matter of time before the value in PWN is recognised and the share price reflects it.

He talked about what he’s achieved in 3 years and what we have now, the fact that we almost have a self sustaining business that will be funding the big picture.He’s got a capable, committed, competent team that is delivering.

He’s building a business with a MOAT.

Q. Funding for the Master Plan. Slide 43 Potential FundingOptions

A. This really depends on the model but it has all been considered, and it’s in the slide. Obviously there is more upside in ownership and there are options here too.Talked about both models and the possibilities and there is so much upside here.

Slide 44

Q. Are the Qld Govt on board and the stakeholders?

A. Yes they are, the want a part of the revolution that technologically transforms the CSG industry into a circular, decarbonisation machine. They want to lead Australia in this space.

Q. Have you considered NAIF funding?

A. Yes and it’s still an option.

Slide 35 Near Term Priorities.

Q. Does this involve more FS’s, studies/FID?

A. Yes but to varying degrees as a significant study with the biggest player has been completed so a lot of knowledge has been developed and gained.

Need to get stakeholders on board, other CSG players to be part of the solution for the industry. This will then gain traction and action.

Q. Commercial Arrangements. How, when, who?

A. These are ongoing. Made mention that projects, as they are developed are being de-risked and this means higher valuations.Would not be surprised if the first FID didn’t assist in getting to a $100m market cap as has been seen time and time and again in the market.Obviously this is an opinion based on experience, not somefinancial or revenue metric.

Bahay gave me an hour and 20 minutes and for that I am grateful. It was an honest and frank conversation, not a blow hot air up a shareholders ar$e.

I came away reiterating my thoughts on HC earlier today where I said, I can’t reconcile why someone would sell down PWN to 0.007 cents when a plan for PWN has been laid out that clearly has enormous value and potential and could see in my opinion, a share price north of 30-50 cents in 3-5 years time.There is a lot of information in that Master Plan, about people, about capability, about experience, about knowledge, about commitment and about process.

They have a plan, a strategy and they are executing, one step at a time.

They have the attention of a lot of investors, venture capital funds, and serious global partners.This is no mean feat.Worley are on board and sticking around.

So long as Bahay and his team keep executing on strategy, we’ll benefit. He’s the major shareholder, his success is your and my success.Not many companies you invest in can say that.

I’ve come away pleased, not with the share price, but the direction of the company, the share price will follow suite.

As always, DYOR.

Mr M.