RE: RNS (a good one too!)16 Sep 2020 08:20
there can be no guarantee that it will be able to do so and accordingly, the economics of Greenfield's Plant may be materially different to those set out in the Report.
The Report assumes that the Plant will produce sales products comprising a synthetic heavy fuel oil ("HFO") derived from Quadrise Fuels International plc's ("Quadrise") MSAR® technology, subject to Greenfield entering into a licence with Quadrise for the use of the MSAR® technology at the Plant, as well as raw bitumen and a small diesel fraction extracted from the lighter ends of the bitumen extracted from the sands, along with the heavier ends of the solvent utilised in that extraction.
The Report estimates that the capital cost of the 10,000 bopd Plant will be approximately US$185 million, or US$18,500 per nameplate bopd. The capital cost is inclusive of all project management and engineering, all equipment and systems, site construction, start-up, and commissioning sufficient to have a fully operational oil sands plant capable of processing oil sands ore into high grade bitumen product. The Report assumes that for this design, contract mining will be used to provide ore to the Plant and the capital costs do not include the cost of land, leases and/or mining equipment.
As part of the Report, Crosstrails also undertook a basic economic analysis of the Plant's operations, which indicates favourable economics. The Report sets out that the total incremental cost of production, including mining, fuel, electricity, personnel and all expenses to take oil bearing rock from the earth to a commercial petroleum product is estimated to be below US$30/bbl, with the ultimate target of being less than US$25/bbl in the next round of design through heat recovery and various process optimisations. The Report does not take into account any licence or royalty fees that will potentially be due and the operating costs, including the mining costs, could vary significantly from the costs assumed in the Report based on the final site identified by Greenfield for the Plant and therefore, the cost of production may be materially different.
The Report also details that the Plant could be constructed within a relatively short time frame, as there is no equipment required having a lead time longer than a year. As a result, the Report estimates that from the commencement of construction to the start of production would likely be just over a year, although this will be confirmed as a part of the FEED.
The Board of TomCo believes that the Report provides a high level of confidence that Petroteq Energy Inc's Oil Sands Plant ("POSP") can be scaled up to enable production of 10,000 bopd, subject, inter alia, to the successful completion of the proposed upgrade works to the POSP that are currently underway and the associated trials to demonstrate the POSP's commerciality, the identification and securing of a suitable site for the Plant and a licence being agreed with Quadrise
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