Nuclear power Spac: Sam Altman, AI king, seeks to split atoms

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Reverse mergers for electric vehicle start-ups have disappointed investors. Perhaps a nuclear electric investment vehicle can do better. On Tuesday, atomic energy start-up Oklo announced that it would list shares in the US at an $850mn valuation.

It will do so by merging with a special purpose acquisition company backed by the tech and AI entrepreneur Sam Altman, along with financier Michael Klein. Altman is also the chair of Oklo.

In the 2020-21 Spac heyday, emerging companies needed to pitch aggressive financial projections to attract investors. Revenues would start off near zero but accelerated quickly. But many have failed or will do so soon when their cash dissipates.

Oklo dispenses with even that style of disclosure convention, only offering conceptual nuclear plant economics that could pay off over a 40-year life. It may be a viable project. But that such a speculative venture can get a hearing in the public marketplace today is surprising.

Oklo’s model is modular nuclear power generation, similar to solar or wind farms. Rather than building a 1,000 megawatt plant, typical for a decent-sized town, Oklo’s multiple plants are just 15MW to 50MW in capacity each. 

The capital cost for a smaller plant that takes up less than two acres should be about $60mn for construction and the initial fuel outlay. Oklo projects that in a steady state, a 50MW plant generates $29mn of annual cash flow on $36mn of revenue. Even after the capital costs for refuelling, over a 40-year life about $1bn of cumulative cash flow can be realised.

The company claims the $850mn valuation is cheap when compared to other start-up nuclear and natural gas projects on a capacity basis.

Oklo’s initial facility in Idaho is not forecast to come online until 2026 at the earliest. Before then, it must perfect its technology and get requisite government approvals. The toughest test may be convincing those Spac investors who are entitled to ask for their money back to hang on.