Managing Director's Address and Presentation
Key Milestones achieved during the 2017 Financial Year:
The 2017 financial year saw the achievement of a significant number of key milestones for the Company. These include:
- Continued support from the Australian Renewable Energy Agency (ARENA) via an $8.85M funding grant for KS1 as part of ARENA's Large-Scale Solar Competitive Round. The KS1 ARENA grant is further evidence of ARENA's support for the Company and follows on from the $4m funding provided for the Company's hydro project in December 2015;
- A favourable private tax ruling from the ATO in respect of a tax loss of approximately $39.5 million which originally arose upon the acquisition of Kidston Gold Mines Limited by Genex in June 2014. Under the terms of the Private Tax Ruling, and subject to appropriate valuation and the respective usage calculation under the available fraction, Genex will be able to offset these losses against future taxable earnings achieved across the Genex tax consolidated group;
- Completion of the technical feasibility study for the Kidston Pumped Storage Hydro Project (KPSHP);
- Execution of the Solar 150 Financial Support Deed with the Queensland State Government for 100% of the energy that will be produced from KS1 via a long-term price guarantee (akin to what is known in the industry as a 'Power Purchase Agreement' or 'PPA');
- KS1 reaching financial close with approximately $100m of debt finance from the Clean Energy Finance Corporation (CEFC) and Societe Generale;
- Construction of KS1 almost complete, with first revenue generation scheduled for next month and practical completion early in calendar year 2018;
- Declarations of 'Critical Infrastructure' and 'Prescribed Project' by the Queensland Government for the entire Kidston Renewable Energy Hub area as well as the existing water pipeline easement from the Copperfield Dam to the Kidston site and the designated 180km transmission easement corridor between the Kidston site and Mount Fox; and
- The raising of over $20 million (before expenses) from the equity markets to fund KS1 and the Company's continuing operations which are now heavily focussed on the Company's Stage 2 projects.
Business Highlights (post the 2017 financial year):
The current financial year has already seen the Company tick off a number of key milestone achievements particularly around its Stage 2 projects:
- First-stage board approval from Northern Australia Infrastructure Facility (NAIF) for concessional debt funding for Genex's Stage Two Projects;
- The provision of a $4.1 million corporate facility by CEFC to fund general corporate expenses comprising part of the financial close arrangements for KS1;
- Execution of a binding Heads of Agreement between Genex and Powerlink Queensland to progress a range of key activities which are critical to the connection of Genex's Kidston Hydro- Solar Project to the Queensland transmission network. This Agreement builds on the Queensland Government's Powering North Queensland Plan, which includes a $150 million reinvestment of Powerlink dividends to develop strategic transmission infrastructure in North and North-west Queensland to support a clean energy hub;
- Completion by Mott MacDonald of a feasibility optimisation study for the Company's KPSHP;
- The appointment of McConnell Dowell/Downer as Genex's preferred EPC contractor for the KPSHP scheme under the terms of an ECI arrangement;
And, as announced last week
- The award of an additional $5m of ARENA funding to facilitate key activities required to bring Genex's Stage 2 hydro and solar projects to financial close in 2018.
The Year Ahead:
The year ahead will mark several very important milestones for the Company, with first revenue generation scheduled to occur from KS1 next month. Given the revenue support deed for KS1 from the Queensland State Government, Genex will have guaranteed revenues from KS1 for the next 20- years.
Further, the anticipated financial close of Genex's Stage Two Projects in mid 2018 will underpin the future value of the Company. Discussions with potential energy offtake partners are progressing well, with Genex looking to formalise energy offtake arrangements over the course of the next few months.
In conclusion, I would like to take this opportunity to thank all of our stakeholders for their continued efforts and support over the past financial year. These include:
- Our executive management team and our Board;
- The Federal and Queensland State Governments;
- The Australian Renewable Energy Agency and the Clean Energy Finance Corporation;
- The Etheridge Shire Council;
- Our consultants, contractors and bankers;
- Our local communities and their community bodies, and
- Our supportive shareholders.
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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. The Company has a development pipeline of up to 770MW of renewable energy generation and storage projects within its portfolio, underpinned by the Kidston Renewable Energy Hub in far-north Queensland (Kidston Hub). The Kidston Hub is comprised of the operating 50MW Stage 1 Solar Project (KS1), the 250MW Pumped Storage Hydro Project (K2-Hydro) and the multi-staged integrated Solar Project of up to 270MW (K2-Solar) under development and the Kidston Stage 3 Wind Project of up to 150MW under feasibility. In addition, the Company has acquired the 50MW Jemalong Solar Project (JSP), located near Forbes in NSW, which is also under development.
Genex continues to acknowledge the support from the Federal Government, through the Australian Renewable Energy Agency (ARENA), which provided $8.9 million in funding to support the construction of the KS1 Project, in addition to their support of up to $9 million in funding to support the development of the stage 2 projects. Genex also acknowledges the support of the Queensland State Government through providing a 20-year revenue support deed and designating the Hub as 'Critical Infrastructure' to the State.
Genex Power Ltd