Kalina Power Limited (ASX: KPO) functions in value creation for its stakeholders through ownership of the Kalina Cycle® technology.
The company today, on 9th April 2019, announced its achievement of an important milestone in support of clean energy distributed power generation program in Alberta, Canada. KPO’s fully-owned Canadian subsidiary, Kalina Distributed Power Limited has secured site control for its first 22 MW Kalina combined Cycle project in Alberta.
KDP has executed a contract to acquire a freehold site situated in an industrial park in Alberta with a purchase price of approximately CAD$500,000 for a closing date of 1st September 2019.
Acquiring Alberta will enable Kalina to move forward on permitting verifications, power contracting, site-specific engineering, and local confirmatory due diligence. Moreover, the acquisition of Alberta is a significant initial step in fulfilling the KDP strategy of building, owning and operating clean energy assets to provide future recurring revenue and income.
KPO recently appointed a leading US-based corporate advisory firm, EAS Advisors, to provide capital market services to access project financing for KDP’s pipeline of projects on a mandatory basis in addition to other corporate financial advisory services. Alberta provides the initial project location and commercial opportunity for project-level financing.
Kalina Distributed Power Limited has identified a market in Alberta to develop an initial portfolio of 10 projects, representing 220 MW of power generation, utilising a Kalina Combined Cycle configuration of a 15.5 MW gas-fired turbine combined with a 6.5 MW Kalina Cycle® power island.
This configuration provides a significant performance advantage, as it generates 40% additional power using the gas turbine waste heat. KDP is currently developing four initial sites on priority, which represents over CAD$200 million of CapEx of Combined Cycle projects utilising the Kalina Cycle® technology, with Alberta as the first of the four initial sites.
The capital cost of each 22 MW Kalina Combined Cycle configuration is approximately CAD$53 million. The projected plant economics provide enough returns for project finance investors, and a free carried interest for Kalina. These project returns include the amounts to be paid to KPO for its engineering and IP license fees. The company has a goal of commencement of construction in 2020 and generating electricity by mid-2021, towards which it is working currently. It is anticipated that the other initial two, three project sites will commence construction either alongside Alberta or be staggered shortly after that.
The initial projects are intended to be funded with project-level financing that will not require significant dilutive equity funding from KPO. From earlier meetings with various capital providers, it is understood that the project economics generate returns sufficient to meet investor hurdle rates and generate a free carried equity interest for KPO.
On the price-performance front, the stock of Kalina Power Limited, at market close on 9th April 2019, was trading at A$0.013, an increase of 8.33% during the day’s trade with a market capitalisation of A$5.32 million. The stock has generated a negative YTD return of 40.0%, with returns of -63.64% and -40.00% over the past six months and three months period, respectively. Its 52-week high price stands at A$0.041, and 52-week low price stands at A$0.010, with an average trading volume of 289,068.
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