Investor Presentation
LCK.AX
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ASX ANNOUNCEMENT (ASX:LCK)
Friday, 12 November 2021
Investor Presentation
Leigh Creek Energy Ltd (LCK) today advises that is has released the attached investor presentation.
The Leigh Creek Urea Project (LCUP) is a low-costnitrogen-based fertiliser for local and export agriculture markets. The LCUP will:
In regards to the economic credentials of the LCUP, the following are pertinent:
The Board of Leigh Creek Energy Limited has authorised this announcement to be given to the ASX.
Further information:
Investors
Media
Tony Lawry
Tristan Everett
T: +61 412 467 160 | E: [email protected]
T: +61 403 789 096 | E: [email protected]
www.lcke.com.au
Level 11/19 Grenfell St, Adelaide SA 5000
ACN: 107 531 822
PO Box 12 Rundle Mall SA 5000
For personal use only
About the Leigh Creek Urea Project
The Leigh Creek Urea Project (LCUP) is Leigh Creek Energy's (ASX:LCK) flagship project, developing low-costnitrogen-based fertiliser for local and export agriculture markets. Located in South Australia, 550 kilometres north of Adelaide, the LCUP will initially produce 1Mtpa (with potential to increase to 2Mtpa) of urea.
LCK has a comprehensive environment, social and governance strategy. It has produced syngas within all approved environmental parameters set by the regulator and will be carbon neutral from 2022.
The AUD 2.3 billion LCUP will be one of the biggest infrastructure projects of its type in Australia, providing long term economic development and employment opportunities for the communities of the Upper Spencer Gulf region, northern Flinders Ranges and South Australia.
The LCUP will be the only fully integrated urea production facility in Australia, with all inputs for low carbon urea production on-site. Average nominal operating cost are forecast to be A$109 per tonne which is within the lowest cost quartile of the global urea production cost curve. Pre-tax leveraged Net Present Value (NPV) is A$3.4 billion, with an Internal Rate of Return (IRR) of 30%.
The LCUP will be developed in 2 commercial stages: Stage 1 consists of:
Stage 2 consists of:
Leigh Creek Energy
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A Culture of Carbon Consciousness
Investor Presentation
NOVEMBER 2021
Important Notice
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Disclaimer
This presentation has been prepared by, or for Leigh Creek Energy Limited (LCK). It contains, and we may make other written or verbal forward looking statements with respect to certain of LCK's plans, current goals and expectations relating to future financial condition, performance, results, strategic initiatives and objectives. By their nature, all forward-looking statements involve risk and uncertainty and are subject to factors that could cause actual results to differ materially from those indicated in this presentation and/or any statement, including forward-looking statements. Some of the factors that could cause actual results or trends to differ materially, include but are not limited to: price fluctuations; actual demand; currency fluctuations; drilling & production results, reserve estimates, loss of market, industry competition, market developments and government actions, environmental and physical risks, legislative, fiscal and regulatory developments, local, regional and international political, regulatory, economic and financial market conditions, political risks, the effect of information and technology and third-party service providers for certain of our operations and systems, legal proceedings and regulatory investigations, the impact of operational risks, including inadequate or failed internal and external processes, systems and human error or from external events (including cyber attack), risks associated with arrangements with third parties, including joint ventures, the failure to attract or retain the necessary key personnel; systems errors or regulatory changes, the effect of fluctuations in share price as a result of general market conditions or otherwise, the effect of simplifying operating structure and activities, the effect of a decline in any ratings or recommendations for losses due to defaults by counterparties or restructurings, on the value of investments, changes in interest rates or inflation, changes in equity and/or prices on our investment portfolio, the impact of natural and man-made catastrophic events on business activities and results of operations, reliance on our standing among customers, broker-dealers, shareholders, agents, wholesalers and/or other distributors of our products and/or services, changes to brand / reputation, changes in government regulations or tax laws in jurisdictions where we conduct business, the inability to protect intellectual property, the effect of
undisclosed liabilities, the timing of any regulatory approvals, integration risk, and other uncertainties, such as non-realisation of expected benefits or diversion of management attention and other resources, relating to future acquisitions and/or pending disposals, project delays or advancement, approvals and cost estimates amongst other items and the cumulative impact of items.
While we try to ensure that the information we provide is accurate and complete, LCK advises you to verify the accuracy of any information and/or statement, including a forward-looking statement before relying on it. LCK has no obligation to update the forward-looking statements in this presentation or communication other forward-looking statements we may make. Forward-looking statements in this presentation are current only as of the date on which such statements are made.
This presentation may also contain non-IFRS measures that are unaudited but are derived from and reconciled to the audited accounts. These should only be considered in addition to, and not as a substitute for, or superior to, our IFRS financial measures. All references to dollars, cents or $ in this presentation are to Australian currency, unless otherwise stated.
Gas Resources Compliance Statement
The PRMS resources estimates stated herein were initially reported to the ASX on 27 March 2019. LCK is not aware of any new information or data that materially affects this information and all the material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.
Mineral Resource Compliance Statement
The JORC resource estimates stated herein were initially reported to the ASX on 8 December 2015 and were updated on 27 March 2019. LCK is not aware of any new information or data that materially affects this information and all the material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.
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Cautionary Statement
The Preliminary Feasibility Study ("PFS") referred to in this announcement has been undertaken to assess the alternative commercialisation pathways for the produced syngas and recommending a path forward. It is a preliminary technical and economic study of the potential viability of the Leigh Creek Urea Project ("LCUP"). Operating and capital costs are based on a Class 5 scoping study prepared by thyssenkrupp in 2018. A Class 5 study allows for an expected accuracy variation range of Low -20 to -50 and High +30 to +100% . Further evaluation work and appropriate studies are required before LCK will be in a position to provide any assurance of an economic development case. The PFS is based on the material assumptions outlined below. These include assumptions about the availability of funding. While LCK considers all of the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the PFS will be achieved. To achieve the range of outcomes indicated in the PFS, total funding of in the order of $2.6 billion will likely be required. Investors should note that there is no certainty that LCK will be able to raise that amount of funding when needed. It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of LCK's existing shares. It is also possible that LCK could pursue other 'value realisation' strategies such as a sale, partial sale or joint venture of the project. If it does, this could materially reduce LCK's proportionate ownership of the project. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the PFS.
Material Financial Model Assumptions
Dollar figures are in AUD unless otherwise stated
Debt Raised
50% of capital costs to be debt funded
Loan Repayments
Rolling 7 year facility extending over the project life
Interest expense
Borrowing rate 6%
Income Tax Payable
Financials included in this report are before income tax
Urea pricing
Available CRU forecast to 2030, escalated thereafter
Royalties
Average 9% of gas revenue, comprising SA Government (subject to negotiation) and overriding royalties
Urea plant operating costs
Per thyssenkrupp 2018 scoping study, ex-plant only
Gasifier operating costs
Management assumed gasifier operating costs based on demonstration plant experience
Gasifier replacement
Management assumed gasifier replacement costs based on demonstration plant experience
Capital costs
Per thyssenkrupp 2018 scoping study
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Disclaimer
Leigh Creek Energy Limited published this content on 12 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 November 2021 06:16:06 UTC.