Zenith Energy Limited (ASX: ZEN) announced that it has entered into a Power Purchase Agreement (PPA) with Kirkalocka Gold SPV Pty Ltd for gas-fired Power Station at the Kirkalocka Gold Project. The news sent the shares to zoom up by 2.963% to stand at $0.695 on 12 February 2019 (3:12 PM AEST).
The agreement has been executed through Zenith’s wholly owned subsidiary Zenith Pacific Pty Ltd under which Zenith will own, build and operate the 14.5MW power station to reliably and efficiently service the power needs of the mine, located approximately 70km south of Mount Magnet in Western Australia. It consists of 9.9MW gas-fired and approximately 4.6MW of diesel back-up power generation at Adaman Resources’ Kirkalocka Gold Project.
Managing Director of Zenith Energy, Hamish Moffat stated that this new Power Purchase Agreement with Kirkalocka outlines the company’s potential to deliver highly efficient, innovative, reliable, and cost-effective power generation solutions to support the diverse needs of its clients in remote locations.
This new PPA with KIRKALOCKA comes in line with recent agreements inked with mining magnates like Dacian Gold, Gascoyne Resources and Newmont Mining. In March 2018, Dacian Gold awarded Zenith a Power Purchase Agreement (PPA) to build, own and operate a 17MW power station at its Mt Morgans Gold Project in Western Australia. Gascoyne Resources joined hands with Zenith for its 15MW power station at Dalgaranga Project in Western Australia.
With these new PPA’s in place, the company disclosed in its Annual 2018 Report that its average PPA term has increased to 7.3 years, offering long term revenue streams for investors. Moreover, Zenith’s contracted Build Own Operate (BOO) capacity will reportedly grow to circa 209MW on completion of the new power station for Kirkalocka.
Gold Miner Kirkalocka is wholly owned by a private resource investment company, Adaman Resources. Established in 2017, Adaman Resources is involved in spotting and acquiring the resource opportunities that require turnkey mining solutions.
The supply from the Kirkalocka facility is expected to reportedly commence in the first quarter of Fiscal 2020 with an initial term of 10 years. Moreover, the power supply under the PPA with Newmont Mining Services Pty Ltd is expected to begin shortly, i.e., as per its schedule timeframe of the first quarter of 2019. The agreement has been executed to build, own and operate a 62MW Power Station at Newmont’s Tanami Gold Mine.
The agreement demonstrates an active catalyst to boost Zenith’s Fiscal 2020 earnings.
For the Fiscal Year ended 30 June 2018, Zenith reported a net profit after tax of $8.47 million, representing an increase of 171% on FY17. Its revenue for the year increased by 64% to $51.43 million, delivering earnings per share of 8.65 cents. The company has posted robust financial performance with NPAT growth as massive as 171%.
Over the past 12 months, the ZEN stock has plunged by 10.00% including a negative price change of 11.18% over the past 3 months.
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