Market Update

General - Genex Power

Good afternoon

Austria is playing with teh idea to issue a 100-year bond, yielding 1%…do I need to say more????

Bonds are strong again…the melt-up of everything continues! Equities a touch softer again - geopolitics not helping…

Metals are looking much better today, including gold - trading at 1435 US$ late afternoon here, and a stunning 2057 A$/oz!! That´s up by 12% since the end of May!

BWM will increase roll out of EV´s and hybrids at a faster rate than previously planned…want to increase sales of those cars by 30% p.a.

Genex - bad surprise at first glance today - but having a second look, it all makes sense: Stock is supended to raise 16 Mill A$ in a placement at 24ct to pay the balance of the pruchase price ( 5,2 Mill A$ ) for the Jemalong Solar Project, and provide the necessary equity for the financing of it. Jemalong should have a total cost of around 90 Mill A$, and according to today´s presentation, will have 13-15 mill A$ in revenue p.a.. The project will be ehavily debt-financed, and the existing Kidston Solar Project will be refinanced alongside. Given movement of interest rates , i expect them to pay up to 1.5% less than they paid originally - 3.5-3.7% as a guess. Evenm using 4%, Jemlaong is a very profitable excercise: say 90 mill cost all up ( perhaps 100? ) , 10 mill in equity, so 80 mill in debt for 4% interest. We know approximate returns of solar plants in Australia from GNX´s first project - that project with exactly the same size ( 50 MW )has operating costs of about 1 mill A$ p.,a. only. So 13 mill A$ ( taking the bottom of GNX´s forecast revenue from Jemalong ) , less 1 mill$ operating costs less 3,2% interest on 80 mill A$ ( = 3.2 mill A$ ) does give me a return of 8.8 Mill A$ on project level….assuming a 15 year credit agreement, and payback over 15 years at equal instalments, let me arrive at about 5 mill A$ in free cash for the first 15 years, and nearly 8,5 mill A$ thereafter ( solar projects like Jemalong are expected to have a 30 year life ). This sounds like a good deal to me! And it soubles GNX´s cash flow from mid-2020 on. Construction will start next month, and should take 12 month, with very small risk. All agreements are in place.

Unfortunately, this placements had to be done now, as the second instalment of the 5.2 mill A$ total price for Jemalong has to be paid right now. While the potentially very bullish announcement of the completed NAIF financing for the hydro project will potentially very bullish, and done anytime soon, the company could not wait. A bit annoying - but does not change the long term outlook for GNX, which is very positive indeed! GNX do hold 12 mill A$ in cash, but that is largely commited.

The rational for the company to drive Jemalong strongly forward now is to have a strong earningsstream in the short term ( from mid 2020 ), as the hydro project will take 3 years tocontribute.

All good - a little unfortunate timing, but sensible to do it now…

have a nice evening