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=D in full agreement! If it isn't a computer made article then it is surely an interm knocking out 100+ pages per day. Still, all press is good press
I sometimes think that Simply Wall Street is trying to out fool the Fool - small caps are always volatile - you have to look long term!
Aandi - thanks for info. As implied below, coal assets can't be worth much. So Kibo ability to finance must be questionable. However, if Idex formally sign up then it shouldn't matter.
aandi..... that's a brilliant set of posts and much appreciated. Many thanks.
Correct Drax. But theoretically, in a fire sale situation, they have assets they could sell to cover the proposed £3m investment in Billingham.
It is well documented that their CEO has too many irons in the fire and no actual results.
Perhaps a deal will be struck with another/larger partner to invest in the development service fees of EQTEC's larger UK flagship projects.
Coal went out of fashion fast after COP26.
Smaller companies are struggling to raise capital now with inflation/resessions worldwide.
Luckily eqtec are somewhat in a good situation with multiple projects at different stages and also a cash cushion in the bank to keep us going into 2022 when revenue is expected on multiple fronts.
Kibo is neither a serious investment or well run company. The directors have never delivered or achieved anything.
With the exception of ridiculous high unearnt salaries
... Comodity prices and wages, the project IRR% increases.
And finally, the 2025 "licensing revenue" figure of €15m is very significant as this would indicate that on a like per like basis comparing with powerhouse energy who earn £500k per DMG unit (DMG being the name for the powerhouse gasifier), eqtec will be earning license fees on an equivilant project number of 20x or more DMG's assuming a like for like gross margin to powerhouse. That's not bad considering that this is in tandem with all the other projects eqtec will be developing/owning/maintaining. It somewhat puts the ever increasing/growing opertunity pipeline into perspective (last announcement Feb 2021 €657m) and how eqtec can hope to convert the pipeline into monetary value into the future.
Should we see the pipeline grow by 2x or 3x over the next 24 months, some of these 2025 forecast figures could be revised upwords quite considerably given the right partners/joint ventures fall into place.
Of course the interesting thing about RDF is it is worth almost £100/tonne in gate fees, a price which has been rising by over 2% year on year over the past 5 or more years. Also, the price of electricity has also been rising, although the long term power purchase agreement price for energy has not spiked as much as the variable rate or today price of electricity during the energy crisis of the past year. Long term PPA prices for electricity are around £50/mwh (5p per kW compared to over 15p/kW the domestic customer pays for their electricity bills today). This is why the change of tactic at billingham/Deeside is interesting, moving from electricity to biofuels/bio methane sales as an output could command a higher sales price than selling electricity, depending on what the Neighbours are willing to pay for guaranteed high quality gas next door allowing operations to continue during a future gas crisis. The project economics suddenly become very interesting for owner/operators such as idex if offtake agreements for gas can be secured long term at favourable rates. Initial IRR''s of 12%+ could jump several percentage points at least perhaps into high teens or early 20's. Then we still haven't accounted for carbon credits. This is of course dependent on government policy and is still an evolving situation post COP26. We do know that carbon credits in Europe are 3x or more what they are in the USA where an agreement is already in place for 2MW Northfork. How carbon credits can be awarded is yet unknown, a form of carbon capture may be required which is very expensive if carbon capture/storage infostructure requires installing from scratch. (sometimes there will be a carbon capture network available locally if a power station/refinery are installing one)
Also worth remembering is that the project IRR's of say 10 to 20% we have seen across different locations is only the advertised IRR% return an outside owner/investor (idex/metal NRG/Northfork community) type partner can see on a project. Eqtec internally earn much larger % returns on each stage of a project as we earn revenues on the following-,
1. development service fees,
2. technology sales,
3. operation and maintenance fees (the smallest gross margin of all at 18%),
4. owned project revenue,
5. licensing fees/revenue (which will not happen for a few years yet once we have the experience/capacity to do so but at 75% gross margin is a fantastic earner long term)
https://pexapark.com/renewable-ppa-price-index-europe/?creative=543045913898&keyword=ppa%20price&matchtype=p&network=g&device=m&gclid=Cj0KCQiAip-PBhDVARIsAPP2xc12TQG9Mt2gpyCoKtq9iYYLGbWgdkkD2Erp9CVd_zEFD4U0alZy-PQaAvz5EALw_wcB
Power purchase plan prices in Europe.
https://www.letsrecycle.com/prices/efw-landfill-rdf/
Landfil tax rates (related to the gate fees) over the past 4 years
https://ember-climate.org/data/carbon-price-viewer/
EU carbon credit prices.
If the above 3 rise faster than comodity
Of course Idex may not stop at Billibgham/Deeside, they may be interested in a larger portfolio of deals, perhaps opening up a wider pipeline in France. Such an arrangement would surely come in the form of a joint venture arangement perhaps including the 'tier 1' engineering procurement company which is selected. The EPC are paid to build the plants and will be working out costs right now submitting quotes for build costs. So there are 3 or 4 partners in each large transaction, the development partner (planning permission, land purchase, local stake holder relations - companies like Logic Developments limited), the owner operator infostructure investor (Idex, or other multi billion asset company), the EPC construction firm (woodgroup/petrofac/siemens/cobra/foster wheeler or the likes), and the small time asset investor like KIBO willing to invest £3m in the SPV early doors before financial close releasing value from a project early in the form of "project developement fees" at a favourable gross margin to eqtec.
In the future, these large projects will be palmed off early to third parties and licensing fees at 75% gross margin will be earned. The total revenue will be much less, but the turn around time will be much much shorter, maybe less than a year per project instead of 2 - 3 years per project such as Billingham has so far taken. Less revenue but higher margins faster = profits sooner and less work. This will not happen until 2024 at the earliest as we develop as a 'group' and secure more partners/JV's
See screen shot of future revenue sources. 9 months out of date now but worth a look.
https://ibb.co/9r2cctT
The fuel source RDF or general landfill rubbish will supply Deeside/Billingham/Southport. There are third party processes (Anaergia announced as partner for 182,000 tonne per year capacity Deeside plant) who will sort the waste initially removing valuables such as glass, metal, organic food waste. These items have a value and can be recycled. The food waste will be anaerobically digested by Anaergia on site and turned into bio methane which they will then sell/combine with eqtec bio methane from our syngas, details yet unknown but we do have Toyota next door keen to buy the gas/power/heat from the plant.
Seperate to the Kibo investment in the Billingham SPV is the large transaction at a projects financial close by large multi billion £ asset/infostructure investment companies such as Idex who will be an owner/operator and will execute the deal at financial close fronting the full capex bill, if they buy for example two plants Deeside and billingham, the Capex is probably over £300m in total. Totally seperate transanction from the Kibo development service fee £3m investment.
https://www.inspiratia.com/renewables/regions/eu-europe/uk/region-news/article/eqtec-eyeing-funding-from-antins-idex-fund-iii-for-uk-efw-plant
The full capex bill will not be paid all at once however, it comes in 4 payment milestones, 40% at financial close then a further 3 payments over the life of the project construction/commissioning.
Here iis an overview of payment milestones at and after financial close.
https://ibb.co/XpRQ50w
Eqtec can expect to earn around 35% of the total Capex as revenue (not including the £3m Kibo type investmment "development servise fees"). Of the total project capex, revenue paid to eqtec is around 35% of which the Goss margin is around 24% so back of the fag packet calcs, eqtec can see a profit of around £25m based on a two project (deeside/Billingham) capex of £300m. The capex may be larger than that following the addition of biofuels/hydrogen/methanation plants, the addition of which have delayed the financial close of these projects as per December revenue RNS, we still don't know full details.
The total development service fees which can be earned is yet unknown as this is the first time this kind of transaction has been made. Also, for Billingham, how the land purchase of £8m will be covered is also yet unknown. We will know something about that before the end of February deadline for Billingham so the pressure is on, something will be announced either way for the good or bad before end of February..
For anyone interested in some background info as far as I understand the situation.
Someone asked the following:
"Is Billingham expected to be coal powered? Can’t they redesign it to use something else?! Sorry if I’m misreading."
My reply (edited)
"No, Billingham will be fuelled by RDF.
Kibo energy with market cap £4.3m planned to invest in the 25mw Billingham plant by way of a £3m equity slice of the SPV, this is a way to release equity from a project early by selling a share of the SPV (not the whole project, just the shell company) and earning eqtec revenue early through "development service fees" at an attractive gross margin rate of 52%. See this screen shot for a breakdown of the various gross margin returns for each type of revenue eqtec earn, (from the latest Arden research)
https://ibb.co/4p0bmZw
Kibo own coal power stations in Africa and a 55% share of Mast energy who own grid baallancing gas power plant assets. Kibo are in the process of selling their coal assets to release funds to make the £3m investment in Billingham.
https://acfequityresearch.com/kibo-energy/
(full report download at bottom of page)