KLL SUSPENDED FROM 21/2/20 TO 1/6/20 to raise 61 millionThe...

KLL SUSPENDED FROM 21/2/20 TO 1/6/20 to raise 61 million

The Company (KLL), with the assistance of variousthird

party specialists, identified that theforecast capital

cost overruns at the time were driven by arange of

factors, including:

► design changes on the Project processing plant

made to accommodate performance guarantees

required by the Company’s Senior Lenders;

► design changes due to additional final product

storage and treatment to meet productintegrity

specifications;

► the Company underestimating the complexity in

applying a German based design to thedesert like

conditions prevalent in the locality of theBSOPP;

► the consequential flow on impacts of design

changes to supply and construction costs of

processing plant and site manning costs;

the actual operating bore performanceinitially

demonstrating brine extraction rates thatwere

lower than expected resulting in therequirement for

additional bores, pumps, pipelines andtrenches;

► an increase in the gas pipeline cost between the

front-end engineering design (FEED)estimate and

entering into the actual contract, due togeotechnical

risk allocation and underestimation; and

► adverse foreign exchange movements, weather

impacts (including two cyclone events) and

underestimated insurance costs.

Following identification of the forecastcapital cost

overrun and in light of the COVID-19pandemic, the

Company’s senior management team undertooka

process of reassessing the developmentstrategy and

the development budget for the Project. Theresult of

this review concluded that an additional$61 million

was required to complete the Project.

funds use total 248.5
capital cost 194.2 operating and finance: 31.4 additional and contingencies 18.2 the others: 4.7