Zenith Energy Market Update
On 25 June 2019, Zenith Energy (Zenith, Company) released a further update following Gascoyne Resources (Gascoyne) appointing a voluntary administrator in early June. Zenith announced that the Company has received power purchase orders for the period June through September with no changes to the Power Purchase Agreement (PPA) terms and conditions. Further, Zenith continues to maintain all its rights under the PPA, along with the four options as discussed in our update on 11 June 2019.
As a result, Zenith has confirmed that there has been no adverse impact to its FY19 earnings guidance and any possible impact for 1Q20 earnings has been mitigated by the administrator’s commitment of the power purchase orders through to 30 September 2019. Zenith noted in its original release on 5 June 2019 that removing the Gascoyne contract entirely from its FY20 forecasts, the Company would anticipate a AUD2m reduction in its EBITDA. The Company now believes that any adverse impact to FY20 earnings from the Gascoyne voluntary administration is likely to be materially less than this worst-case scenario.
Barminco New Contract
On 24 June 2019, Ausdrill announced its subsidiary, Barminco Holdings (Barminco), had been awarded a 5 year underground mining services contract at the Zone 5 Mine in Botswana. The contract with Khoemacau Copper Mining Pty Ltd (Khoemacau) is worth approximately AUD800m.
Khoemacau’s Zone 5 operation is a new, large and long-life mine development project located in the highly-prospective Kalahari copper belt in Botswana. Barminco’s scope of services includes mine development, establishment of underground mine infrastructure, diamond drilling and mine production at an initial rate of 3.6 million tonnes per annum of copper ore with multiple expansion opportunities. Barminco is expected to commence mining services in December 2019.
NCIG Refinancing
On 27 June 2019, Newcastle Coal Infrastructure Group (NCIG) announced that it had completed USD340m five year refinancing. While initially deal was flagged to refinance USD135m of December 2019 private placement notes at their maturity, off the back of strong demand, the transaction was upsized to USD340m, enabling NCIG to cover all its refinancing needs until March 2022. We view this as credit positive and believe it is further evidence of NCIG’s proactive approach to managing its capital structure.