I've been running the numbers on CXY's proposed 40mw GT plant. Based on the CXY proposal for a 40mw GT plant selling electricity at 32.50 $/MWh with capital cost of 55 $million, with discount rate at 12% and WACC at 10%, 60% debt and new equity raising of 13 $million at 0.05 $/share then I end up with a NPV of 31 $million for power station with an assumed 20 year life.
This translates to 0.0496 $/share.
At current share price seems this value is fully priced in already.
Also I think the actual NPV will be lower than this cos I expect the capital cost for the GT to be somewhat higher and financing costs also a bit higher (maybe 14-15 % for WACC). In this worst case scenario the NPV is negative and the project won't fly.
On the other hand NPV could be higher if a higher electricity cost can be obtained - average Queensland wholesale pool prices for 1998-2007 were 50 $/MWh while 2007 prices were around 70 - 75 $/MWh. In this best case scenario the NPV is 142 $million or $0.22/share.
At current share price looks like any project value is fairly much fully priced in at the moment.
Also project depends strongly on electricity prices, capital cost and financing costs.
Anyone else done some analysis of this type?
CXY Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
