Power generation specialist Pacific Energy Limited (ASX: PEA) jumped on ASX after the company announced the good news of new electricity supply contract that it has bagged from Panoramic Resources.
In the announcement dated 30 October 2018, Pacific Energy told that its wholly owned subsidiary, Contract Power Australia Pty Ltd has secured a 14MW power station contract from the subsidiary of Panoramic Resources, Savannah Nickel Mines. The term of contract has been fixed to 8.3 years with a five years extension option to Savannah.
As per the terms of contract, Pacific Energy’s subsidiary Contract Power will restart its 12MW diesel power station from 1 November 2018 and will reportedly undertake the upgradation process, immediately. The company also intends to expand the facility with a further 2MW of power generation capacity that makes initial contracted capacity to 14MW.
Now, Pacific Energy will supply electricity to Panoramic’s fully funded Savannah nickel-copper-cobalt Project for the term of 100 months, i.e. 8.3 years. This marks the restart of Savannah, an Australian base metal project, based on the positive results of recent feasibility study conducted by Panoramic.
Pacific Energy’s Managing Director, James Cullen stated that Contract Power is playing a key role in the restart of Savannah, continuing the relationship and supporting Panoramic in this exciting new phase of the mine.
He added that contract has been constructed with built in flexibility to convert to alternative fuel sources in future and includes provision for an increase in power generation capacity of at least 4MW in approximately one year, at Panoramic’s election.
After securing this new electricity supply contract, Pacific Energy’s total contracted capacity has increased to 391MW. But, company’s earnings guidance remained unchanged to $54 - $55 million of underlying EBITDA.
Today, in a separate release to Australian Securities Exchange, the company has also notified about the on-market buy back for its 256,496 Shares at a price of $0.50 per share. Further, the Annual General Meeting of Pacific Energy Limited is due to be held on 23 November 2018.
Markets sentiments were seen to be bullish in today’s trade for PEA as the stock price has surged by 4.902% or $0.025 to last trade at $0.535 on 30 October 2018. On the same date the stock last traded at a PE multiple of 28.330 x with market capitalization of $218.75 million. But the stock has witnessed a negative performance change of -12.99% over the past one year.
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