In speaking with management, they are reasonably confident the current test results will provide a solid basis for the PFS. Based on conservatively mining 500kt//annum and producing 100kt of bitumen product for sale at the current QLD government price of $1500/tonne results in a revenue before costs of ~$150M/year. At a conservative mining rate of 500kt/year, this gives a mine life of 15 years with current known reserves. This revenue figure does not include any additional products that may be produced, nor does this figure include anything that may evolve from geothermal activities.
The risks, and steps ahead as I see them are:
* The current testing has to show it can produce the product in the quantity needed and that the process results in low CO2 emissions. If this testing is positive, it will lead to a PFS - currently scheduled for Q1/23. Note that if the CO2 emissions are very low, the focus on the geothermal project will not be so immediate. Alternatives could be considered in order to get Alpha in to production and start producing a cashflow. The alternatives could include carbon capture.
* The PFS will require - amongst other things - a pilot plant to be built so the process developed can be tested at scale during 2023. This will cost money and likely require a capital raise or some other form of capital injection. Success at this stage will lead to a DFS and definitive engineering and design development of the actual site plant perhaps in early 2024.
* If the project proceeds beyond this point there will likely be a capital cost of ~$130M and a construction period of ~12 months. Production may commence in late 2025//early 2026.
I believe the project has potential well beyond the $150M/year for at least 15 years. NPV .......??
My musings. DYOR.
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