Leigh Creek Energy Ltd (AX:LCK) has received statement of environmental objectives (SEO) approval for the pre-commercial demonstration (PCD) phase of the Leigh Creek Energy Project (LCEP) an important de-risking milestone ahead of commencing process well drilling, plant construction and operation. LCK will now submit activity notifications (ANs) to advise the regulator of specific activities to be carried out under the SEO. Accordingly, we de-risk our valuation for LCEP from a 20% commercial chance of success (COS) to 30%. Our base case valuation rises from A$0.26/share to A$0.38/share (+46%). A successful PCD, permitting and funding for full-field development would significantly de-risk LCEP.
South Australian gas prices remain robust
Domestic wholesale gas prices have risen significantly across Australia over the past two years, currently averaging c A$7-8/GJ and more in line with spot Asian LNG. The closure of coal-fired electricity generation in South Australia and Victoria has driven increased demand for gas, in support of hydro, solar and wind, whilst contracted LNG volumes have limited the availability of gas for the domestic market.
To read the entire report Please click on the pdf File Below: