Definitive Feasibility Study Confirms Strong Financial Returns, Rapid Payback for Waroona Renewable Energy Project

HIGHLIGHTS

• Study confirms the Project as a long life, low operating cost and highly profitable renewable energy project. The Project is now advancing towards a Final Investment Decision (FID)
• Project generates average EBITDA¹ of $68 million pa over first five years of production and $63m pa over first 10 years of production
  • Aurora Energy Research provided independent revenue forecasts for the Project
• Post-tax payback¹ of 5.8 years (4.6 years pre-tax) based on $304m total initial capital cost
• Leveraged² post-tax Internal Rate of Return (IRR) is 21.6%¹ and pre-tax IRR of 27.3%¹. 100% equity financed post-tax IRR is 14.8%1 and the pre-tax IRR is 18.0%¹
  • Frontier expects to earn a highly leveraged return, based on the Company’s financing strategy and initial debt market soundings
• First year solar energy generation forecast at 258GWh³, with 119GWh discharged/sold through the battery (in peak periods) and 115GWh discharged from direct solar generation (daytime market) into the WA Wholesale Electricity Market (WEM)
  • The average energy price forecast over the life of the operation is $143/MWh⁴ (peak periods) and $80MWh⁴ (solar price), in line with 2023 actual prices on the WEM
• Stage One utilises only a third of Frontier’s 868ha landholding and represents a fraction of total long-term potential generation the Project can unlock
• Barrenjoey appointed as Corporate Advisor to assess strategic partnerships for Stage One development and future expansion opportunities
  • The Company received multiple unsolicited approaches over the past year from a range of multi-nationals, global renewable energy producers and industrial firms expressing interest in the Project
• Debt financing discussions commenced; Frontier expects indicative terms during 2Q24

This comes at a time when energy demand continues to outpace supply in WA, resulting in electricity prices reaching record highs. Just last week, record peak demand on the South West Interconnected System was surpassed once again, with the top six operational demand peaks ever recorded in the state’s main grid all happening between January 31 and Feb 19 this year. Unfortunately, the majority of the energy to meet this record demand peak came from carbon emitting sources, with 58% being gas and 32% being coal generated. This highlights the urgent requirement for renewable energy storage solutions, such as our 100% renewable energy Waroona solar/battery project, to quickly come online.

Highlights of the Study include exceptionally strong financial returns under all key metrics, including forecast EBITDA averaging $68m per annum over the first five years of production. ⁵

These strong returns drive a rapid post tax payback of 5.8 years, or 19% of the project life of 30 years. A major contributor to this is the Reserve Capacity Payment, a feature unique to WA, which is forecast to provide revenue of about $28m per annum during the first five years of production.

We aim to now move rapidly towards a Final Investment Decision by mid-2024. Central to this is finalising our funding strategy. Debt financing work is well underway – we have NDAs signed with multiple banks and an Information Memorandum and data room ready for banks shortly.

We have also appointed Barrenjoey, a leader in renewable energy transactions in Australia, as Corporate Advisor to assess strategic development partnerships. This follows multiple unsolicited approaches over the past year from a range of multi-nationals, global renewable energy producers and industrial firms expressing interest in the Project.

The Company will assess the merits of a strategic partner, in association with debt financing, as we aim to minimise dilution. We also believe the right partner will help accelerate our future expansion opportunities, given Stage One is only about 10% of the total long-term potential generation the Project can unlock."

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