Execution Risks Loom as QPM Advances Isaac Power Station Funding

Capital Raising to Maintain Momentum

QPM Energy Limited (ASX, QPM) has unveiled a $30 million equity capital raising through a placement aimed at sustaining the development momentum of its Isaac Power Station (IPS), a key component of the broader Isaac Energy Hub. This capital injection is critical as the company approaches its final investment decision (FID), targeted for March 2026, with commissioning planned for mid-2027.

The placement involves the issuance of approximately 866.6 million new shares at a fixed price of $0.035 per share, representing a discount to recent trading prices. The raise is structured in two tranches, the first under existing placement capacity and the second subject to shareholder approval at an extraordinary general meeting expected in January 2026.

Robust Funding Package and Project Progress

Alongside the equity raise, QPM has secured a $113.7 million Master Lease Agreement (MLA) with Macquarie Bank, fully funding the acquisition and delivery of two GE Vernova LM6000 aeroderivative gas turbines. These turbines, contracted under fixed-price terms, provide QPM with a competitive advantage amid industry-wide supply constraints and escalating costs.

Additionally, a non-binding term sheet for a $40 million convertible note has been executed with an Australian investment company, subject to customary conditions and approvals. This layered financing approach underpins the timely delivery of the IPS, ensuring that critical long lead items such as transformers can be ordered promptly and pre-construction activities can proceed without delay.

Strategic Positioning in Queensland’s Energy Transition

The IPS, with a nameplate capacity of 112MW, is designed to operate as a low-cost, flexible gas-fired power station, targeting peak and overnight electricity dispatch. Feasibility studies highlight strong economics, including an estimated annual revenue of over $71 million and EBITDA approaching $49 million, supported by QPM’s substantial 435PJ 2P gas reserves from the Moranbah Gas Project.

QPM’s integrated model, from gas production to electricity generation, positions it well to capitalize on Queensland’s evolving energy landscape, where gas-fired generation is increasingly vital for system reliability and firming renewable energy sources. The company aims to expand its generation portfolio to 500MW, further enhancing its role in the region’s energy transition.

Risks and Next Steps

While the project is advancing on schedule, several risks remain, including the need for final regulatory approvals, completion of project financing, and potential volatility in electricity and gas markets. The convertible note investment is contingent on technical and valuation assessments, and the equity raise’s second tranche awaits shareholder approval.

QPM continues to engage with stakeholders, including Powerlink Queensland for grid connection agreements and the Northern Australia Infrastructure Facility (NAIF) for additional financing support. The company’s ability to execute on these fronts will be pivotal in delivering the IPS as planned.