IPSA GROUP Flare of interest
The finalisation of the sale of Ipsa’s two gas turbines to a Malaysian company has sparked demand for its stock, lifting the electricity and steam producer off low market prices. The AltX-listed stock has increased to 58c, from a year low of 28c in August. At the time of writing, a total of 206 000 shares were bid at 50c/share and lower prices while offers to sell 113 300 shares ranged from a low of 59c all the way to 120c/share.
Interest has picked up on the AIM market in London as well, where Ipsa traded at 4p last week, from a year low of 2,7p in September. The value of shares traded jumped to about £850 000 during October and £400 000 in November, from an average £40 000/month for the 12 months since last December.
Ipsa said that it had sold two Siemens Westinghouse 701 DU gas turbines for US$31m (R276m) to Malaysia’s Iris Eco Power.
Ipsa will use the proceeds to settle all its debt, including the £15,5m (R220m) owed to Standard Bank and TurboCare.
Executive director Peter Earl says the London-based company will expand its Newcastle electricity plant with the remaining £2,8m cash.
Ipsa initially acquired the turbines to generate 500 MW from a gas-fired power station that was to be built at Coega in 2007, but the deal fell through.
Earl, CEO at the time, says: “Those turbines would serve SA very well now, but we couldn’t keep them for that long.”
With virtually no debt, the company can now position itself as an independent power producer. Ipsa already has a contract to supply Eskom with electricity from its gas-fed 18 MW combined heat and power plant in Newcastle until March 2015. Electricity and steam sales contributed £2,5m to revenue in the six months to September, enabling it to halve its 2011 net loss to £1,3m. Ipsa sold 22% more electricity, totalling 25,2m kWh, to Eskom under the contract.
Ipsa CEO Phil Metcalf said in August that the company’s intention in increasing capacity at the Newcastle plant was for it to operate profitably after depreciation costs had been factored in. Construction will commence early next year, upgrading it to a 68 MW facility from the current 18 MW.