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The Offer

Peninsula Ports Pty Ltd

Invest in your future.

Free Eyre Ltd (FEL) is seeking to raise a minimum of $10 million and up to a maximum of $18 million of equity, in order to capitalise its subsidiary Peninsula Ports Pty Ltd (PPPL) sufficiently to finalise the development stages of Peninsula Ports Port Spencer facility.

Port Spencer site detail

The Offer

The Offer is for Ordinary shares in the Company to qualifying investors at an issue price of $2.00 per share, payable in two instalments of $1.00 per instalment.

The Ordinary shares are offered on a partly paid basis with $1 to be paid upon a subscription being made under this offer and balance of $1 to be paid when the Company issues a call, which will not be before 1st March 2020.

All applications must be made by signing and submitting the Application Form attached to the Information Memorandum.

The FEL board can agree to accept further applications for shares at its discretion.

Number of Ordinary Shares on Offer

FEL is targeting the issue of between 4m and 8m Ordinary shares.

Key Dates

The Offer under opens for applications on 18 November 2019 and will close on 20 December 2019.

All dates are subject to change and are indicative only. FEL has the right to vary these dates without prior notice, including the right to close the Offer early or to withdraw the Offer and to accept late applications.

Applicants are encouraged to apply as early as possible.

Background

Of the average 2.5 million tonnes of grain produced on Eyre Peninsula, approximately 1.6 million tonnes are naturally freight advantaged by up to $10 per tonne (average $3.50 per tonne) to Port Spencer as compared to Port Lincoln or the port at Thevenard.

Refer to The Port section for more details.

Use of Funds

The Port Spencer Project is projected to require in the order of $180m to $220m to complete.

Use of funds can be summarised as:

  • Land $1.5M
  • Wharf / Marine structures $63M
  • Ship Loader $15M
  • Silos $37M
  • Site wide Civil’s/Bunkers $29m
  • Bunker Storage Material Handling System $21M
  • Electrical, controls and automation (excl silos) $2.5M
  • Other supply, install & operational contracts $7 M
  • Operating costs $8M
  • Contingency $15M
 

Why Port Spencer?

The Port Spencer facility aims to:

  • be the lowest cash cost operator in the region, enabling the port to be EBITDA positive on 350,000 tonnes of grain throughput with a 16% discount to current market prices.
  • be one of two deep water ports in the region enabling large Panamax vessels (80,000 tonnes of grain) to be loaded efficiently, cost effectively and not subject to weather.
  • be the region’s largest at-port storage facility, with over 800,000 tonnes of at-port storage capacity.
  • avoid the use of up-country storage to meet financial objectives.
  • deliver high financial return as a pure grain port without the necessity for additional, potentially contaminating commodities.
  • built in flexibility to expand at-port storage to 1,500,000 tonnes (87% increase). This will enable Peninsula Ports to become Eyre Peninsula’s largest grain export terminal.
  • provide storage capacity to meet the region’s annual yield improvements (approximating 3% per annum).
  • realise grain road freight cost reduction to users of up to $10 per tonne for approximately 1,600,000 tonnes of grain on Eyre Peninsula (200% of at-port storage capacity).

The Port will provide much needed competition and improvements the grain supply-chain.

Designed with grain grower benefits in mind through supply-chain savings.

The project will re-introduce grower ownership and control of critical grain supply infrastructure.

Enterprise Value estimated on completion of build to be in the range of $160 million to $200 million.

Construction will leverage innovative jetty design technology which has been used in Australia previously.

Currently in planning stage – the aim is for the build to be ready for the 2021/22 harvest.

Return on Funds

The opportunity to purchase $2 A class shares in Pen Ports, paid in instalments: $1 Nov 2019 & $1 Mar 2020

These shares are offered to ‘Farmers’ at $2, whereas the same shares will be offered to institutions at $3 each.

The profitability of the Project is shown to be robust when tested against both receival tonnage scenarios, and storage and storage fee revenue scenarios.

The following table demonstrates combined revenues received from the grower and exporter currently (estimated based on publicly available charges data), and at -$10 and -$20 / per ton (in the event of a pricing ‘war’ with competitors).

PP Sensitivity Analysis

Download Information Memorandum

Peninsula Ports IM

 
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