The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Brad, on the issue of the tariff... You quote one Chukker saying that "The company’s proposal had the most competitive Levelised Cost of Energy (LCOE) for the project." That is consistent with my understanding too - I remember TG making that statement on TV at the time that Tlou became a Preferred Bidder.
This is the reason why I asked the question on tariffs - how does a 10MW power plant end up delivering electricity cheaper than a 97MW power plant? It does not make sense to me - there are very definite economies of scale in power projects. I do not have a handle on the tariffs at all (have not seen anything firm on that) but if the tariff is US 12c/kWh as you say below, I'd be very curious. South Africa just conducted an emergency power procurement programme with the lowest tariffs coming in at around R1.50/kWh or US 10c/kWh for a 450 MW power ship (LNG to power) anchored in the harbour. Virtually zero transmission line to build.
PS. Drop the Donk thingie please. I don't know who that is.
Brad no... the tender / RFP was for how much you can produce and at what price you can do it. The tender evaluation people will obviously look at issues like credibility, ability to finance the bid, job creation, local content, etc. but the question is NOT what you can produce and how credible you are as per your post. It does not work like that anywhere in the world.
As for the tender under discussion... it was for up to 100MW maximum to be spread between the two bidders. Tlou bid for 2MW (Phase 1) which it would like to grow to 10MW (Phase 2) over time. One assumes that Tlou has some sort of right to decide for itself if / when it wants to initiate Phase 2 - possibly a risk mitigation strategy contingent on having enough gas for 10MW.
I'm not sure how Govmt. handles the fact that 10MW (Phase 2) plus Kalahari's 97MW exceeds the 100MW threshold. My sense is that it would be easiest for Govmt. to simply up the target MWs from 100MW to 107MW as it would not make a big difference in their lives. Dunno...
I think it is highly likely that Govmt. will award Tlou its wish for 2MW scalable to 10MW and award Kalahari its wish for 97MW as well. The issue here is that Govmt. wants to get a CBM-industry going in Botswana - i.e. there is a developmental agenda and it does not make sense to enable just 1 entity to establish an industry.
Sjoe Brad, now I need to go find out who Donk is...
I'm new here and was hoping to find credible info on the Tlou share. On the face of it, Tlou looks like an interesting play but there seems to be a lack of credible information and a glut of garbage out here.
How does one even begin to respond to a statement that the tariffs were never agreed? It is my understanding that both Tlou and Kalahari submitted a tariff into a competitive bidding process. So if there is no agreed-to tariff, then what was the bidding process all about?
You confuse me....
Brad, it is not just the price of diesel at the pumps hey. The cost of electricity from Eskom is set to increase and increase and increase... That would be assuming Eskom has the capacity to provide the electricity required by Botswana. It is a big assumption and one has to acknowledge that the (sad) state of affairs at Eskom poses a very real and very substantial risk to Botswana's entire economy.
myfirstmillion, your comment on receiving revenue during Phase 1 is interesting. Help me a little bit here if you can please...
We know that Tlou bid a lower tariff than Kalahari's tariff from the public announcements that I could find. I find that quite weird as one would expect economies of scale for a 97MW plant vs. a 2MW to 10MW plant but do we actually know what the tariffs are that was bid?
MM, you may of course be right. But then again... maybe I'm just allergic to obvious BS and malicious gossip while trying to make up my own mind on a small punt. Your call.
Appiamma, MM has answered the methane content subsequently. CH4 is at 85% and that is a good number for now.
Do I think it is giant scam? LOL! Nooooo!! I just like to understand the fundamentals before I invest. There seems to be nice momentum building with the PPA negotiation process. Interesting...
MM, this paragraph from one of your most recent posts....
"There is one final factor here, and that is the embargo on any news release of the actual water and gas flow. In my opinion this is to do with the PPA process in which the other tenderer has no gas flow and no knowledge of the dewatering process and mechanics, including timescales and wells needed. Being in sole possession of this information greatly assists the company in achieving the maximum we can from the PPA process."
This is drivel of the highest order and I'm wondering about your source of information and your motive for making a statement like that. Sounds defamatory or libelous to me. But then, I'm not a lawyer.
I am historically familiar with Tlou's competition (let's just call them Kalahari, shall we?) as I was obliquely involved in Exxaro's JV with Kalahari many years ago. Please allow me to share some information from back then in order to make sure you don't make an ass of yourself again and / or expose yourself to a potential lawsuit. All in your own interest of course :)
The Kalahari / Exxaro JV was advised by a USA-based crowd called ARI and they drilled quite a few production wells in and around a 5-spot many years ago. These wells were dewatered and produced significant gas-flows over a long period. They stopped pumping the wells at roughly the time that Exxaro decided that they're not seeing enough progress from Government and withdrew from the JV. I.e. Kalahari actually achieved the gas-flows that Tlou is trying to achieve now, many years ago already.
ARI is one of the top CBM advisors in the world and if you believe that Kalahari does not know how many wells they needed for their bid, you are smoking some really potent stuff.
Thanks for the info on gas composition MM. I have not seen that presentation before but 85% methane content is a good number for use as fuel in an internal combustion engine. Most of these things (Jenbacher, Wartsilla, Rolls, etc.) will run comfortably on methane numbers down to 75%
Well yes. Agree with you I do. It might be more accurate to say that the important measurement is the ratio of methane to the rest of the gases. CO2 and nitrogen will be the most important contributors to the stuff that refuse to burn and which require huge CAPEX to clean
Thanks Appiamma. I went looking for the graph but it does not provide any real information. It is a sort of CBM-for-dummies graph without a timescale (totally understandable) but there is nothing on the actual volumes of gas flowing except a rather bland statement that it will go up once additional wells have been drilled. This is also totally understandable - it is how CBM works.
Thing is... without gas flow information and very importantly - the composition of the gas - one cannot even begin to tell if there is a real opportunity here. It looks really interesting from a permitting perspective but surely they should have a proper handle on the composition of the gas by now? CBM gas may be 95% methane with a bit of other gases (mostly nitrogen and possibly trace elements of helium) but it may also be 25% methane and a LOT of nitrogen. As we all know... nitrogen does not burn well but I've been looking for something on gas composition on the net but I cannot find anything. Are you aware of any data on gas composition in the public domain?
I missed the TG interview and was wondering... did he give any recent information on gas flows and gas composition at the site?
They've been awfully quiet on both of these key bits of information for a while now. Or am I not looking in the right places?