There are 13 of them currently. An interesting mix. They are...

There are 13 of them currently. An interesting mix. They are very solid clients and projects. Where the client / project is not so long term or solid, they are in the gold mining game. Hence the growing POG makes them more solid and long term every day.

I wrote this for myself (as I did the projected finances). As I wrote I feel good re the long term prospects of these projects and therefore Zenith. So without further ado, here are the Zenith clients/projects.

Plutonic = 5MW BOO, 27 MW MOM. Expiry 2021. A 100,000 oz gold per year produced and replacing depleted Oz. 414k reserves. And over 3 mill oz resources. Grades are around 4 g/t. Seems a long, long term mine. So hopefully contracts are renewed.

Ok Tedi =142 MW MOM. Expiry 2020, but “Zenith” have option to extend to 2023. Ok Tedi is a PNG huge miner. One could expect this contract to continue and continue.re is a construction proposal in QLD govt to have (amongst other locations)

Phosphate Hill power station connected to the grid by 2024. Currently the Zenith contract is renewed year by year. Currently only up to 31 July this year. So I would expect the year by year renewals until at least 2024 (maybe longer if you consider the QLD govt is in charge and say ‘maybe by 2024’). I added some notes below, as I wrote this before the MOM ‘contract end’.

DaisyMilano – 18.3 MW BOO, new 55 month contract extension – to end 2023. Producesabout 150k oz a year. But only about 4 years reserves. But! 3.7 mill resource at 3.7 g/t. Goal stated by Silver Lake is to replace depleted Oz each year. And they have for the last 5 years. So that will likely continue. And the PPA should be needed long term.

Gascoyne –15 MW BOO. This is ‘the one’ in administration; contract goes to 2028. But the mine may not survive. However, with the POG increase they are currently cashflow positive (for at least the next 6 months) and looking for a new buyer. POG will determine survival. If ZEN plant and equipment need to be relocated, it will cost about $1 mill to ZEN – and lost revenue, of course. I guess a buyer will be found (and all capital (shareholders) and creditors will be wiped out). But the new owner will have all the gold processing plant and equipment, and still need power. But no one knows for sure!

Dacian – 17MW BOO. Contract to 2026. Was nearly another mining failure – because of the over-estimate of gold grade. There resource is less than first thought, but profitable assuming you believe their latest mine life plan (at 8 years!). So, the contract should fulfill to the end. Best if POG increases and they find more gold. They are trying!

*** as Itype, I consider it is good to have PPAs with gold mines that only have a ‘fewmore years’ in them; this is because the mine owner will not go out and obtain another 6 or 8 or 10 year contract with another PPA vendor; this type of mine is living year by year; but with the POG increased, the year by year can go on forever; so I expect to see lots and lots of 1 and 2 year ‘extensions’

Nova Nickel– 25 MW BOO (19 Diesel and 6 Solar PV). Contracted until 2026 with a 2 year option after that. This is a ground breaking project/relationship. A new nickel mine. It will be long term. The client IGO is huge ($3.3 billion market cap). The PV install (soon to be completed) is the 8^th largest PV install in the WORLD on a mine site. It will provide 45-50% of power needs. IGO will save 3 million litres of diesel a year. The project is the FIRST of its kind in Australia – and is on a commercial cost benefit basis.

A very goodread about this is here https://australia.energyandmines.com/files/FEATURE-Australia-2018-Zenith-v5-web.pdf

Halls Creek – 6 MW Diesel contracted until 2022 (5 years starting in 2017). A gold mine run by Pantoro. I only see 600k oz of resource, but like the other gold mines that are ‘year by year’, with POG so high now, I expect such a mine to just keep going and needing power. Note that Pantoro just bought 50% of Central Norseman Gold Mine and are saying they will restart it, ala Halls Creek. One can hope they will need power. I don’t know much about Central Norseman, but my point is all the Zenith clients that are gold miners are EXPANDING. And it creates opportunity for Zenith.

Kundana – 14 MW diesel BOO with Northern Star as the client. I actually cannot see how long the PPA is for. And Kundana is a bit messy re ownership (joint ventures all over). But it is at least 2 mill oz. PPA started in 2017. So it must be long term.

Jundee – 37 MW (BOO 25 MOM 12). Jundee is a huge Northern Star mine. Produced 285 oz in 2018. The 25 MW BOO has a 10 year PPA that goes to 2029.

Tanami – 62 MW BOO with Newmont as client. Only commenced Feb 2019. PPA agreement is 10 years ending 2029.

Kirkalocka – 14.5 MW BOO. A restartup gold mine. Should commence within the next month. PPA is for 10 years. Andaman is the client. And interesting blurb re Andaman: “Kirkalocka Gold SPV Pty Ltd is wholly owned by Adaman Resources, a private resource investment company, established in 2017 to find and acquire resource opportunities requiring turnkey mining solutions.”

I hope Andaman is finding more gold restartup opportunities! As Zenith is part of their turnkey mining solutions.

I don’t know about the Kirkalocka mine, but I can only assume if it is an old mine, the resource is well known. And with POG high and PPA of 10 years it is not a scenario where is can go all “Gascoyne” on Zenith.

Barrow Island – 20 MW BOO with Chevron on WAs largest oil discovery/resource. PPA goes 10 year from 2019 to 2029.

*** in conclusion the clients are mostly huge; they are good clients to have; with price of gold going so high it would seem just expansion on existing projects or new ‘re start up gold mines’ will provide future growth

I don’t see PPAs that will finish soon. Where the PPA finish soon (in the next three years)… Plutonic, Halls Creek, Daisy Milano, I only see gold mines that will keep going year by year by year by year. So I really do not see them finishing.

The solar expansion at Nova seems a great benchmark to be used for clients. And Zenith really is leading the way on a commercial, cost-benefit for the client basis.

Since I wrote about Phosphate Hill continuing year by year, it seems it will STOP even this week. I am not sure I believe that! We will see. It may be a MOM loss / stop. And a 200k negative hit to EBITDA.