The principal activities of the Consolidated Entity during the course of the half year consisted of completing the TFS of the KPSH Project as well as the development of the Kidston Solar Project. The TFS of the KPSH Project was completed in November 2016 and it was concluded that the project was technically feasible. The feasibility design concluded that a 250MW scheme with storage capacity of up to 6 hours was the optimal design for the scheme in consideration of its location and market dynamics. Since completion of the TFS, Genex has been actively developing a funding strategy for the project with a view to achieving financial close in 2017.
In conjunction with work on the KPSH Project, Genex has also been successful in completing development and other preconstruction works on the Solar Project during the reporting period. In September 2016, the Company was successful in securing a grant of $8.85 million from ARENA for the Solar Project in ARENA's competitive Large-Scale Solar Funding Award Program. At the same time, Genex was also awarded a 20 year revenue support deed from the Queensland Government, which ensures a minimum price floor for electricity generated and sold into the grid from the Kidston Solar Project. Together, with the appointment of UGL as the EPC contractor for the Solar Project, Genex was able to secure credit approval for a project debt facility in excess of $100 million in December 2016 which enabled the Solar Project to reach financial close and commencement of construction in February 2017.
In addition, Genex raised $9.9 million in December 2016 via a placement to advance the development of the Kidston Solar Project as well as progress the Solar Project towards financial close. The placement was undertaken in conjunction with a Share Purchase Plan (SPP) which was completed subsequent to end of the period in January 2017. Funds raised under the SPP are also to be applied towards the Kidston Solar Project.
During the period, Genex drew down $453,035 from the Convertible Note facility pursuant to the $4 million ARENA Funding Agreement executed and announced to the market in December 2015 in relation to funding the feasibility of the KPSH Project. In accordance with the provisions of the agreement with ARENA, the Convertible Notes issued are convertible into Genex shares at $0.20 per share.
The Company did not receive any revenue during the period other than interest earned from its bank accounts and fuel tax credits totalling $185,889.
In October 2016, the Company announced the receipt of a favourable private tax ruling from the Australian Taxation Office (ATO) in respect of approximately $39.5 million of tax losses arising from the original acquisition of Kidston Gold Mines Limited. Under the terms of the Private Tax Ruling, and subject to appropriate valuation and the respective usage calculation under the available fraction guidelines, Genex will be able to offset these losses against future taxable earnings achieved across the Genex tax consolidated group.
The Consolidated Entity generated an operating loss of $2,652,629 for the half year ended 31 December 2016 (which is a decrease of $569,135 based on the loss of $3,221,764 for the period ended 31 December 2015), principally due to additional capitalisation of Kidston Solar costs rather than expensing as the project moved towards construction.
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About Genex Power Ltd
Genex Power Limited (ASX:GNX) is a power generation development company listed on the ASX. The Company is focused on innovative clean energy generation and electricity storage solutions which deliver attractive commercial returns for shareholders. Following Financial Close of the first phase 50MW Kidston Solar Project (KSP1), the Company’s focus is now on the development of its Stage 2 Projects comprising a 250MW Pumped Storage Hydro Project (PSHP) and the integrated 270MW Kidston Solar Project (KSP2) located at Genex’s Kidston Renewable Energy-Hub in Northern Queensland.
Genex Power Ltd