Staged funding and the gates between stages

Three stages, and the first is deliberately small against the $32.37M the first phase would cost.

The gates below are set at the values that hold the project at its 13% Go bar, not at the 8% No-Go floor. Setting a release gate at the floor would license a build the brief's own bands call unattractive, which is the opposite of what a gate is for.

Stage one funds the four first-stage tests and the people to run them, and nothing else. No land, no engineering beyond what a quotation needs, no commitment to a hub site. It releases to stage two only on four answers together: take-or-pay at or above 89%, a Thai wheeling charge at or below $2.87/MMBtu with cross-border injection accepted in writing, upgrading quotations materially below the published benchmark, and a census showing enough clusters of four within about 15 km to fill 100 tonnes a day. Any one failing ends it, and the money already spent is the cost of finding out.

Stage two funds development on a first phase of 100 tonnes a day, not 200: feedstock term sheets, front-end engineering, permitting and the certification pre-check. It releases to construction on signed feedstock sufficient for 100 tonnes a day, a signed offtake carrying the stage-one take-or-pay, and a certification determination.

Stage three funds the build. Expansion to 200 tonnes a day is a separate decision taken later against operating data. The reason that carries weight is that the 200 tonne target needs 32 of the 42 Southern mills that have a digester, which is a contracting problem the first phase will have measured rather than assumed. The apparent absence of a unit-cost benefit at the larger scale is not a second reason, because it follows from how the capital was scaled rather than from anything observed, and the same vendor quotations that settle the first phase will settle it.

Two things that are not staged. The carbon dioxide stream is a separate investment decision with its own capital and its own customer, and it should be taken on its own merits once a netback is quoted, not bundled into a gate. And the mill cooperative structure, if it is used, has to be settled before feedstock term sheets are signed, because it changes what a mill is being offered.