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Genex Power Ltd: THE INVESTMENT CASE

Genex Power Ltd's Simon Kidston talks clean energy in Proactive Q&A Sessions™

Simon Kidston presented at Mines and Money Melbourne.
Genex Power Ltd's Simon Kidston talks clean energy in Proactive Q&A Sessions™
INVESTMENT OVERVIEW: GNX The Big Picture
Simon Kidston, managing director, Genex Power.

PROACTIVE INVESTORS: Welcome Simon.


To start with can you provide a brief overview of Genex Power?

Simon Kidston: Genex Power is a renewable energy company, focused on the production and storage of energy.

Genex is developing a renewable energy hub at the Kidston Gold Mine, 270 kilometres north-west of Townsville.

The energy hub will utilise the existing facilities left from the now closed Kidston gold mine.

Three projects are planned for this renewable hub; a 50MW solar project, a 250MW pumped storage hydro project and an additional 270MW solar project expansion in the final phase.

 

Following the approvals for the solar project, what are the next steps?

Simon Kidston: The solar project is ready to go, and we are now planning to commence construction in December.

We have all the permits and all the approvals, we have negotiated a fixed-price contract with UGL, an Australian construction firm, who are very experienced in developing solar projects.

Any cost over-run or delays in construction will be supported by UGL.

Consequently for a small company like Genex Power, developing a solar project is a very good contract.

We are anticipating commencing construction before the end of this year, with the project completed and generating cash flow by Q4 2017.

 

Can you outline the next key catalysts?

Simon Kidston: The key catalyst we would see would be commencement of construction for the solar project, however our flagship project is the pump storage hydro project.

We have recently announced the completion of the technical feasibility study for this flagship project, which demonstrated that the project works and is technically viable.

Next year we will be focusing on putting in place financial contracts to make the project bankable.

We would anticipate major news flows in the form of continuing our partnership with ARENA and the federal government, and we are also working very closely with the Queensland Government in order to underpin our revenues.

The Queensland Government has been very supportive of Genex and helped us enormously with approvals and permitting.

They have also provided us with a 20-year revenue contract to support our solar project, and we hope to work very closely with them to do something similar for the hydro project.

By the end of 2017, having commenced construction and receiving cash flow from the solar project, we will focus on putting in place financial arrangements to enable financial closing construction for the hydro project.


How does Genex utilise historic infrastructure?

Simon Kidston: Genex Power is currently focused on this one site in North Queensland, with a company strategy to leverage the infrastructure left behind by the mine.

This particular gold mine that we are focused on closed down in 2001, and was in fact the biggest gold mine in the country for many decades.

All of that infrastructure can be utilised to subsidize the cost of construction, as it already includes an accommodation camp, an air strip, very good road access to the site, an existing transmission mine and a dam nearby to provide fresh water.


What are the next steps for the hydro project?

Simon Kidston: We will be seeking to put in place a revenue arrangement to support the financing of the hydro project, which is going to be a major focus during the early part of 2017.

The Queensland Government is very focused in de-carbonising the economy and supporting the growth of renewables with a target of 50% renewables by the year 2030.

Being currently at 7%, this is a long way to go and I think their intention is to put in place arrangements with a range of developers to enable them to achieve that.

Genex Power is in place to help them achieve that target.

 

Genex’s share price has rallied during 2016, what is driving the momentum?

Simon Kidston: We have very good momentum at the moment, and I think this is because investors understand that we are at the beginning of a structural change in the economy.

It is always a good opportunity for nimble companies like Genex to profit from that and this is certainly our business model and our strategy.

I guess it is pleasing to see this has reflected on the share price and we are delighted to have the support of Proactive Investors.

Proactive’s marketing strategy has also helped us with that and we plan to continue the good relationship in the future.


Is there an opportunity to expand solar projects in other Australian states?

Simon Kidston: There is no doubt that there is a strong push for renewables in all states in Australia.

On one hand we are very focused on minimising execution risk, and one way we do that is to partner with the best potential suppliers in the market.

In relation to our solar project, we have chosen to work with UGL because this company is an experienced developer of solar projects.

Our solar panels come from a group called First Solar who is regarded to be the premium supplier of panels in the country.

At every step of the way we use the best of breed supplies, in order to avoid the risk of having problems going wrong in the future, therefore, we want assets that are going to be in place for 30 plus years and we want the equipment that is still robust after that period.

That is a very important philosophy we have.

On the other hand one of the reasons why our flagship, the Kidston pump storage hydro project, is so strategic is because of the growth in renewables in the country.

Renewables, by their nature, are intermittent and generate power when the wind is blowing or the sun is shining.

Consequently there needs to be a very efficient way to store power, and the most efficient way in the world is pump storage hydro due to its mature and low cost technology.


Finally, why should investors consider adding Genex Power to their portfolio?

Simon Kidston: Genex has demonstrated that we can execute renewable energy project development.

We have done that with the first solar project that has generated strong share price momentum, and we are going to replicate that next year with the development of our hydro project and an expanded solar project to go with that.

We believe we are only at the start of the journey, and there are a lot of advances that will happen next year which have the potential to add substantially to share owner wealth.


PROACTIVE INVESTORS: Thank-you Simon.

Simon Kidston presented for Genex Power at Mines and Money Melbourne in November 2016.



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Newswire
September 08 2016

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