SA1 Financials, page-2

Great idea and thanks for starting this new thread. Looks like some good starting analysis and I think you have captured the key components.

In the recent AGM Presentation - DEL makes is clear (and consistent with other historical announcements) that these projects will deliver a 'stack' of revenue streams. These can be summarised broadly speaking as:

1. EPC & O&M Margins - the EPC Margin will only exist over the duration of the construction period (in the case of SA1) management have guided to 15 months. Management have never guided to what the EPC margin would be - but let's assume its 10% as a starting point. Of course it depends on the risk allocation of the underling contract and how this is managed/delivered during construction. This revenue stream is missing from your revenue stack.

O&M Margins - again hard to forecast but in the recent YVW contract - DEL have guided to $6.8m over a 2 year period. That is for a 50kpta facility and SA1 will be larger again so provides some guidance. This revenue stream is missing from your revenue stack.

2. Acceptance of organic waste from commercial and municipal sources - these are the gate fees you have captured in your analysis. Hard for me to argue against what you have outlined above and a reasonable starting point. I would note there could be material upside to the $/tonne you are quoting but probably best to maintain a conservative baseline for now and let upside take care of itself. Gate fees for waste have typically been materially higher than $30-$40/tonne. See here for example. https://www.epa.sa.gov.au/business_and_industry/waste-levy
Gate Fees are also materially different on a state by state basis - so VIC1 will be different from SA1. I would finally note the price achieved will also depend on DEL's contracting strategy. So does DEL maintain a 'spot' exposure for waste, or so it sacrifice some price upside for price certainty with indexed imbedded long duration contract pricing over a say a 10 or 15 year duration. OR does it maintain a mix of both?

3. Production and sale of renewable gas and electricity - you have captured the the sale from renewable gas - hard for me to comment again on the forecast but appears a reasonable starting point.

Where I struggle - is what is the attribution of sale of renewable gas vs electricity? The AD facility will produce gas, then gas can then be connected to a generator and produce electricity or it can be sold into the market (i.e. DEL have advised in recent announcements that continue to work on gas offtake for the gas to someone i.e. AGIG etc). But how do we know whether 100% of the gas is sold to the market/grid, or some other % is used to produce electricity? I am not sure of the allocation and it cannot be the case that both are 'on' (double counted) so this is a bit of an optimisation game.

4. Production and sale of environmental credits generated by DEL projects (ACCU/LGC/RGGO) - ACCUs you have captured, last trade for ACCUs was $36.25/t CO2e - ACCUs are extremely hard to forecast like any spot traded commodity - but your numbers look reasonable for ACCUs.

I would note that LGCs (Large Scale Generation Certificates) can only be produced when electricity is produced - so this goes to my above point - if 100% of the gas is being sold in an offtake arrangement and never used in the production of electricity there will never be any LGC revenue. LGCs last spot traded at $32. Every 1MWh of electricity generated will generate 1 LGC certificate.

RGGOs - (Renewable Gas Guarantees of Origin) - I actually need to do more work on understanding this potential revenue stream but my understanding is it from the Future Made in Australia policy, more here: https://www.dcceew.gov.au/energy/renewable/guarantee-of-origin-scheme

5. Production and sale of CO2 by products - DEL are treating this as upside and not in the case case. Suggest we leave off for now in any numbers and run as sensitivity. TBD

6. Production and sale of biofertiliser as markets develop - DEL are treating this as an upside and not in the case base. Suggest we leave off for now in any numbers and run as a sensitivity. TBD

So overall, I would say your numbers are a great starting point, and possibly conservative given the EPC/O&M margins are not included. It will be key to understand how DEL intend on optimising the revenue stack for reasons highlighted above - i.e. gas sales vs electricity sales.

I'll continue to monitor this thread and contribute as necessary.