Lockyer Deep - From the horse's mouth OR What the JV partner really thinks about Lockyer Gas

Here is a lightly edited transcript of MINs annual results presentation...see link for original trim.



Journo/Analyst:

On the gas, pretty unbelievable discovery…You must have a number how big it is…What’s your thoughts?

CE: I want to build a gas plant.

Need to do some development holes (ed note. Note he did not say "exploration", he said "development" - big difference) we put some step out holes around it first and IT WILL GROW in size (CEs emphasis).

Already getting our development approvals in place.

I want a Gas plant operating in 2024.

I like what Beach and Mitsui are doing with Woodside LNG.

Id like to power all our MIN plants with gas

I reckon I could do that for around $1/GJ in cost (ed. note: current wholesale is $6/GJ, so he expects to make 6 x what its costing him.LNG netback is $20-$30, so that’s…20-30x what its costing him…no wonder he likes the Beach/Mitsui duet!!)

Id like to turn magnetite into pellets…(ed note: yep good idea, Gina will like that too).

(my ad lib...Id like to turn base things into gold…like NWE…um hold on a minute bro that’s not completely yours…we want a slice of the action too).

Journo/Analyst

How big a gas plant were you looking at?

CE: Need to get a bit more information on it…but were looking at a 250 TJ/day plant from Day 1…

CFO: were looking at a modular design so we can add to it in future…scale up…because we know there is a LOT MORE GAS THERE (CFO emphasis)…

CFO: It wasn’t the most prospective hole we dug first (big smile on face).

Then they started talking about Wagina…but is was the Lithium, not the oil…But in a few months after NED-1, it may also rate a mention....

Now in case you missed it...the range of possibilities for Lockyer Deep Gas Field...obtained by extrapolating the numbers obtained by the JV during the drill, flow test and recent seismic mapping. These numbers are an extrapolation of data from Lockyer Deep 1 and are possible ranges of GAS IN PLACE for the 20m interval of Kingia Reservoir only,


The company believes the field could be 100km2, but the structure itself has mapped closure of 160 km2. Only a drill hole will tell you if it is more, or less...62084407...

ADD 6,000 BBL condensate/BCF 60458294 (i said 3 previously, my bad)

Using company notices...56254934

• There is another 14 m of gas in lower permeability Kingia sandstone that needs assessment. It may offer recharge to the main producing horizon during long term production.
• There is also the High Cliff, which is low permeability here, but may offer better permeabilty elsewhere in the Lockyer structure.
• There is a 66m gross oil column in the Wagina/Dongara. Low permeability here...but who knows elsewhere in the structure.

So you can see maybe why both Chris and the CFO were being quite honest and candid with their views and had smiles from ear to ear? ...maybe because they have seen numbers like these?

Now, lets have a look at what a 250TJ/day gas plant could mean for the JV.

A 250TJ/day gas plant could give NWE around $200Million per annum revenue…or more given CE would like to do what Beach and Mitsui are doing.
It could give MIN $800M per annum. Which is not to be sneezed at. But if you look at what this means in proportion to market cap...you have NWE at 200M with 500M MC and MIN with 800M at 17,800M MC...

And theres a lot more gas there than they thought, so the modular gas plant they are talking about can be expanded to accomodate more production at $1/GJ...for the JV.

So, as a NWE shareholder, who invested for the energy play, Im here for the big pay day...which in my opinion will not come from MIN...it will come from production...NWE can ride on the coat tails of MIN. By that time, NWE will be too expensive to be bought out by anyone and maybe they can think about a merger and float - that would be a more appropriate preservation of the current JV... The best bit for NWE shareholders…we already have our ticket for the train…we have the money for the development drilling...the 4 drills and the 3D seismic...no need to jump off now. No we don’t need your money thanks Chris, we have our own. Please get on with the drilling, and maybe if you guys are that good an operator, we should be nearing completion of Lockyer 2 by now.