Meeting with Bahay 12 April 2022

Chat with Bahay 12 April 2022

Half Year Report

I asked some questions around the financial numbers in the Half Year Report because I have a background in numbers.

I remember reading about someone on HC mentioning the provision made for doubtful debts, that’s just an auditor requirement, not that they won’t get paid. Don’t argue with auditors. They’ve also got plenty of stock that is now 40% more expensive to get into the country, but they are not allowed to revalue the stock upwards. Accounting Rules.

We talked about inventory and strategically their recent tie up with innovative OEM’s from Europe that gives PWN a strategic position in being the Australian distributor of this particular bit of kit and it’s going to be used potentially with QGC.

Shell Announcement – Feasibility Study

It’s going to be a very collaborative process which means that QGC will be very involved but my take on it is that QGC will be looking at options and what else PWN can do for QGC and Shell and Shell’s interest in the remainder of the Queensland Coal Seam Gas business to resolve some of their top environmental challenges.

Do you know that Shell basically has a 50% stake in the CSG industry in Qld through QGC and their 50% share of Arrow. That’s half the addressable CSG industry in Qld with the one client. Our potential solution could be providing a solution for half the industry, let alone what regulatory requirements could do with the other half when there is a viable solution for Priority 1 Solutions in accordance with the Water Mgt Act.

Priority 1 – Brine or salt residues are treated to create useable products where feasible.

Shell has two water plants in their CSG business and they are operated by one of the world’s largest water treatment companies. And they still can’t deal with the salts and regulated waste problem. But little PWN is going to provide a solution and in 36 weeks time, QGC will have a report that shows how that problem can be taken care of.

The solution including the saleable products are going to pay for the operation of the plant, most likely the amortised cost over the life of the plant and some. In addition, it’s going to reduce QGC and Shell’s environmental liability which at the moment is accumulating every day along with the rest of the CSG industry in Qld. Factor that cost into your models folks.( not to mention that which has already accrued and sitting there waiting to be disposed of at great cost )

Obviously QGC will take that report, review it and take it to FID ( Financial Investment Decision ) timing of which we can only speculate but the environmental liability is accruing every day.

There is every chance that PWN will be looking at lots of options to complement, supplement iBC and who knows, aMES may get an optional gig.

There are lots of variables in the end solution and there are obviously lots of elements to take into account, like the saleable products and who takes them. The positive is that caustic soda sells for USD$695 Tonne in the US.

We discussed the potential build models but it’s speculation at this stage so no need to elaborate. (EPCM/EPC and others ). I tried to work out the timing and when we could expect a build and then revenue but all that is speculation that hopefully an analyst can put together in the form of an Analyst’s Report on PWN. Hope we’ll see one in the next quarter but didn’t mention timing.

Ownership of the plant was another discussion but it’s likely to be an outside provider. PWN annuity model being the name of the game, not the EPCM or EPC builder of the plant. Annuity opportunity here is very exciting and will see a serious re-rate of the share price.

I asked whether or not that Water Industry Partner that was mentioned in the Feb 21 Corporate Update could be in the mix. He just said maybe/maybe not. But they are still around and they are still talking about opportunities.

Bahay mentioned that they have done an incredible amount of work on QGC’s brine and the brines of others in the Qld CSG industry. They did not get to a Feasibility Study based on an idea, on an unproven technology, they’ve got lots of data, lots of hours and tonnes of processing through their initial pilot and will put a few more through the newly built plant. So needless to say that Parkway and QGC are going into to this FS with lots of confidence and enthusiasm. This was great to hear from Bahay, he was very upbeat.

I tried to speculate about the payback period for QGC and suggested one year. We ran through a scenario and I reckon my guess will be pretty close when you factor in the reduction in QGC’s environmental liabilities that accrue with each day’s processing. QGC will get a solution that pays for itself and removes their environmental issues and liabilities. Win, Win, Win. No brainer.

It’s only a matter of time before the market, the analysts and investors totally understand what is happening here and what PWN have achieved with the winning of this FS. I think you’ll see more about this in the next quarter or two as Bahay does a few more interviews. He mentioned one that he is doing with a UK Fund Manager soon.

I’m pretty sure it won’t be long before we see an analyst report from a big time broker, hopefully a globally connected broker.

They are still working away on another $100m opportunity with a global miner and there are lots of others that are at different stages of the lifecycle of getting us to another Feasibility Study. Business is building up in the three businesses and the team are busy working for clients.

Major mining clients are coming to Parkway asking for solutions to complex waste streams, so they are very active. They are winning contracts just not material enough to announce.

They have active pursuits with aMES and unfortunately COVID prevented PWN from going to Europe with a pilot plant to do the testing 18 months ago but we are still talking to them. They mentioned one of these companies in a quarterly or AGM report some time back.

The company mentioned in Slide 18 of the AGM Presentation is still very real, it’s a $100m pa opportunity and this is still being actively pursued and worked. This is in addition to the QGC opportunity that has been won.

I suggested that it would not surprise me when the FS is complete and QGC provides a positive FID, that we could see a Veolia ( $USD20b company) have a crack at Parkway for the tech. Think 10 cents a share and Veolia could potentially control solutions for a multibillion dollar CSG industry in Qld alone for $AUD200m (peanuts for them). Worley would surely be on that list too given how much more they know than any other player. All speculation on my part but Bahay didn’t “not” agree.

We talked about $$ and the options. Bahay mentioned that he was fully funded to execute his strategy and won’t be raising funds anytime soon and I believe him. He is fully aware of the options that are expiring in December and Feb at between 1.9, 2 and 3 cents. He doesn’t want to put out a new Presentation because that will spook the market into thinking a capital raise is around the corner. The story will get out there through his interviews, hopefully an analyst report ( my speculation) and some more news flow. Quarterly should be pretty comprehensive and fulsome.

There is definitely opportunity to share treatment plants with Arrow ( Shell 50% owner ) any of the PWN solutions so we have potentially half the CSG industry as our opportunity with this Feasibility Study. I think there are two plants and there may be some common facilities but I am not sure.

QGC are expecting the FS to be at a Global Shell standard and that’s great for PWN because it builds credibility with other global miners and O&G producers who are watching what PWN is doing with Shell.

Well that’s everything or most of what I wrote down in the 75 minutes that I got from Bahay and I thank him for that. I am full of confidence, I am filled with a great sense of excitement and in the knowledge that Bahay and his team are executing on their strategy. They have achieved what I think is absolutely astonishing for a minnow company with some funky tech that can solve some of the world’s biggest ESG problems, a tie up with one of the world’s largest Oil and Gas producers ( who are very environmentally active).

I am confident that Parkway will do an amazing job, produce with the assistance of Worley’s, an outstanding quality Feasibility Study that will mean and exceed QGC and Shell’s expectations. I really don’t think the market quite understands what PWN has achieved and are achieving and all of that will change over the next 6 months I reckon.

As always, read, DYOR and make your own informed decisions. As for me, not selling a share and if I can, I’ll be buying more, especially if the weak hands give me some more at 1 cent.

Mr M.