exr.jpg

Elixir Energy

ASX:EXR

Last Price:

$0.175

Our Investment Summary

Date of Initial Coverage

11-Jul-19

Initial Entry Price

$0.041

Returns from Initial Entry

327%


Our Big Bet for EXR

EXR to achieve a $1BN market cap through successfully advancing one or more of its three projects: its Mongolia gas project, Mongolia green hydrogen project, and/or its Queensland gas project.

Investment Memo: Elixir Energy (ASX:EXR) - LIVE

Opened: 10-Mar-2022

Shares Held at Open: 3,500,000


What does EXR do?

Elixir Energy (ASX:EXR) is looking to build out a clean-energy producing hub consisting of Coal Seam Gas and Green Hydrogen in southern Mongolia, bordering China.

What is the macro theme?

Decarbonisation via natural gas energy production and green hydrogen technology. As the world looks to cut greenhouse gas emissions, gas and green hydrogen may prove to be major building blocks towards a net zero economy.

Why did we invest in EXR?

Strategic location in Mongolia

EXR's project is on the border of the clean-energy hungry China, seeking transitions to cleaner, nearby energy sources.

Strong board & management team

A history of success in coal seam gas.

Green-Hydrogen potential

A research report indicated a strong base for a potential Green-Hydrogen project over EXR’s Nomgon PSC.

Fully funded exploration

Drilling planned across giant landholding seeking to open up new sub-basins and add to existing prospective gas resource.

Strong balance sheet

EXR’s $28.4M in cash (at 31/12/2021) can fund its existing business lines for the indefinite future, plus allows for potential acquisitions.

What do we expect EXR to deliver?

Objective #1: Pilot production program at the gas project

Design, costings, and permitting leading to a maiden pilot production program this year.

Objective #2: Exploration drilling

In addition to the pilot production program, Elixir will continue its exploration program across the Nomgon PSC, with ~20 wells planned for 2022.

Objective #3: Evaluate the Commercial Viability of a Hydrogen Project

  • Updates on MOUs signed with the government, and other stakeholders, exploring the potential for a Green Hydrogen project over the project area.
  • Other key 'studies' undertaken including legal, environmental, and commercial evaluation of the project.

What could go wrong?

Production risk

EXR is drilling for “Coal Seam Gas”. There is a risk that while there are gas shows, they may not be commercially extractable. CSG gas is more complex in nature as compared to conventional gas deposits.

Commercial risk

Green hydrogen project economics depend on governments putting in place mechanisms to support net zero goals.

Geographic risk

There is country-risk. Any political instability might put the production sharing contract at risk.

What is our investment plan?

We have been holding EXR since 2019, while we free carried and took profit during 2020 and 2021, we recently added to our position on market at 16.5c.

Our plan with EXR is to hold to see the company achieve our 2022 objectives, but will look to de-risk our position by selling 20% if the share price significantly re-rates on achieving our 2022 objectives OR based on the strong macro theme of global gas shortages and green energy.


Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 3,500,000 EXR shares at the time of publication. S3 Consortium Pty Ltd has been engaged by EXR to share our commentary and opinion on the progress of our investment in EXR over time.


Investment Milestones for EXR

✅ Initial Investment: @4.2c
✅ Top Slice
✅ Free Carry
✅ Increase Investment: @2.6c
✅ Free Carry
✅ Increase Investment: @13c
✅ Free Carry
✅ Increase Investment: @16.5c
✅ Free Carry
✅ Take Profit

Price increases 300% from initial entry
Price increases 500% from initial entry
Price increases 1000% from initial entry
✅ 12 Month Capital Gain Discount
✅ Free Carry
✅ Take Some Profit

Hold remaining Position for next 2+ years

Our Past Commentary on Elixir Energy

Date Title
11-Nov-2022 $ EXR to drill for gas in Queensland - Next Door to Shell and Santos
31-Aug-2022 $ Clean energy and natural gas in the Gobi desert
27-Jun-2022 $ 0.135 Market Mood Swings, Price Discovery & Enterprise Value
20-Jun-2022 $ EXR Inks Green Hydrogen MoU with a SoftBank Subsidiary
20-Jun-2022 $ EXR Inks Green Hydrogen MoU with a SoftBank Subsidiary
18-Jun-2022 $ 0.000 Raising cash in a rough market and what to watch out for
07-May-2022 $ 0.160 Natural gas and the clean energy transition
31-Mar-2022 $ New sub-basin discovered
31-Mar-2022 $ New sub-basin discovered
15-Mar-2022 $ Why we invested in EXR and what we want to see in 2022.
12-Mar-2022 $ 0.150 Nickel, the War and Under Investment in Exploration
10-Mar-2022 $ Why we invested in EXR and what we want to see in 2022.
05-Mar-2022 $ 0.155 Mainstream Media Catching on to the Commodities Supercycle
21-Feb-2022 $ 0.165 Why we invest in Oil & Gas and Precious Metals
05-Feb-2022 $ 0.185 The "Lesser Kown" Energy Transition Metals: Copper, Aluminium, Graphite, Helium, Rare Earths
22-Jan-2022 $ 0.160 Our Investment Approach, Energy Cold War, Ukraine, Supply Chain Crisis
08-Jan-2022 $ 0.180 Early-year trading indicates market is set for an up-and-down year
11-Dec-2021 $ 0.205 ASX rests pre-Christmas as the market trades on very low volumes
27-Nov-2021 $ 0.240 New COVID strain, Santa Rally, Market Thoughts
06-Nov-2021 $ 0.260 COP26, Battery Metals, Green Energy
30-Oct-2021 $ 0.260 The fallout from the VUL short attack explained
16-Oct-2021 $ 0.325 Mainstream media casts a big spotlight on Green Hydrogen
14-Oct-2021 $ EXR Signs Hydrogen MoU with Mongolian Ministry of Energy while Three Drill Rigs Continue Gas Search
02-Oct-2021 $ 0.255 Evergrand, Gold and Traditional Energy
30-Sep-2021 $ Watch Now: EXR reveals hydrogen plans at International New Energy Summit
18-Sep-2021 $ 0.255 Why uranium stocks are soaring, one good movie recommendation
28-Aug-2021 $ 0.225 Recap of the KNI IPO and share price run
07-Aug-2021 $ 0.240 Market swings back up as small caps scramble towards the end of the year
24-Jul-2021 $ 0.210 Why stocks go into "Quiet Execution Mode", how to spot a cap raise, stock "Confession Season"
26-Jun-2021 $ 0.260 June tax loss selling is behind us, KNI IPO expected in August
05-Jun-2021 $ 0.335 What did our investmensts do this week? BPM, VN8, IVZ, and more...
04-Jun-2021 $ 0.290 EXR Emerging from Post Placement Price Pressure
04-Jun-2021 $ 12 months on, a de-risked EXR continues to deliver
07-May-2021 $ 0.390 EXR Just Started Drilling Cracker-1S Well - Results Coming in Weeks
30-Apr-2021 $ 0.355 EXR Accelerates 2021 Drilling with $10M and Announces Hydrogen Plans
27-Apr-2021 $ 0.395 Our Portfolio Performance from January 1st to March 31st 2021
14-Apr-2021 $ 0.440 EXR’s 2021 Mongolia Drilling Program is Well Underway
26-Feb-2021 $ 0.220 Why is The EXR Share Price is Running?
18-Feb-2021 $ 0.180 We Just Invested More in this Stock ... ... plus what's happening with VUL and EXR?
07-Jan-2021 $ 0.165 Our Stock Picks for 2021
09-Dec-2020 $ 0.105 EXR Doubles its Gas Resource on China's Doorstep
05-Dec-2020 $ 0.100 This Week’s News Makers are Riding High
23-Nov-2020 $ 0.130 Big Gets Bigger - New Sub-Basin Discovered
23-Oct-2020 $ 0.110 Could EXR Unlock a New Sub Basin at its Mongolian Gas Project?
20-Aug-2020 $ 0.115 EXR’s Nomgon-2 Gas Well Exceeds Expectations
29-Jul-2020 $ 0.093 EXR Strikes Exceptionally Thick Coal Seam: Gas Content Results Imminent
10-Jul-2020 $ 0.044 Elixir Spuds CSG Well - A Follow up on Mongolia’s First Gas Discovery
26-Jun-2020 $ 0.036 EXR Now Days Away from Multi-Well Gas Drilling Campaign in Mongolia
05-Jun-2020 $ Mongolia’s First Gas Discovery
26-May-2020 $ 0.024 We Have Doubled our Holding in EXR – Mongolian Gas Exploration to Accelerate
26-Feb-2020 $ 0.041 Mongolia’s First Gas Discovery, The First of Many for Elixir Energy?
05-Feb-2020 $ 0.031 Gas Bubbles Highlight Excellent Results from EXR’s Second Core-Hole
11-Oct-2019 $ 0.048 Our Top Pick of 2019: Elixir Energy (ASX: EXR) Drilling This Weekend
11-Jul-2019 $ 0.042 Introducing Our Top ASX Energy Pick of 2019



Gas flared from pilot production well

ASX:EXR  

Nov 18, 2022

Announcement

Investment Memo: EXR IM-2022
Objective 1 : Pilot production program at the gas project


Our energy Investment Elixir Energy (ASX:EXR) today announced that pumping has commenced at the Nomgon pilot project with gas breakthroughs that is already being flared — a first for Mongolia.

We consider this a big achievement as getting the maiden pilot production program up and running this year was a key objective that we wanted to see EXR achieve, as we explained in our 2022 EXR Investment Memo.

Having completed the Nomgon-8 and Nomgon-9 pilot wells last month, the pumping related down-hole and surface facilities were installed before commencing the pumping of fluid from these two wells earlier this week.

The early breakthrough of gas supports EXR’s interpretation that the coal is close to 100% gas saturated.

EXR’s aim for the project in the months to come is to establish a commercial flow rate, and when the gas rates stabilises over the coming days, the measurement of the rate can begin.

Meanwhile, appraisal drilling with the Big Slope-3 and Big Slope-4 wells is ongoing. To date, the wells have intersected 21.4 and 38 metres of gassy coal, respectively, and are expected to reach their target depths within the next week or so.

Gas contents measured from these wells have followed up successfully on the high figures measured in Big Slope-2 with Big Slope-3, the highest so far within the Nomgon IX PSC (a peak of 9.2m3/t raw gas basis).

EXR today also released a new presentation for its 2022 AGM and its AGM Chairman's address.

Gas pilot production program update

ASX:EXR  

Sep 29, 2022

Announcement

Investment Memo: EXR IM-2022
Objective 1 : Pilot production program at the gas project


Yesterday morning our 2019 Energy Pick Of The Year Elixir Energy (ASX: EXR) put out an update on its pilot production program at its Mongolian coalbed methane (CBM) gas project.

EXR confirmed the following:

  1. The first (Nomgon-9) production well has been drilled and completed.
  2. The second (Nomgon-8) production well is expected to be spudded later this week.

The first production well intercepted ~55 metres of coal inside the primary target zone that EXR drilled into.

That same rig will now drill the second well and EXR expects to have both wells operational and pumping fluids in around a month.

This comes as welcome news to us as the maiden pilot production program was a key objective that we wanted to see EXR achieve this year, as per our Investment Memo.

The pilot production test is expected to run for up to six months after commencement and is ultimately aiming to provide a proof of concept for the commercial development of EXR’s project.

To see more on the project, check out EXR’s latest investor presentation by clicking on the image below.

Gas production testing commenced

ASX:EXR  

Sep 12, 2022

Announcement

Investment Memo: EXR IM-2022
Objective 1 : Pilot production program at the gas project
Objective 2 : Exploration drilling


Following COVID-related and other logistical delays Elixir Energy (ASX:EXR) has commenced operations on its Nomgon pilot production program, spudding its first coalbed methane (CBM) gas well, the Nomgon-8 well, on Saturday.

The two well (Nomgon-8 and Nomgon-9) drilling program is expected to take less than 30 days, with pilot production testing operations to begin within weeks of the wells being completed.

The two pilot wells will be drilled by Major Drilling and will each reach a total depth of ~600m with well planning and casing sizes similar to that of most Australian CBM wells.

This is the first such test in the sub-basin so the timetable is uncertain. But as is the norm with CBM wells, water will initially be produced until the reservoir pressure is lowered and gas can be desorbed and flow. The gas will be flared during the production test.

This comes as welcome news to us as the maiden pilot production project was a key objective that we wanted to see EXR achieve this year, as per our Investment Memo.

Exploration continues

Alongside its production testing in the Nomgon sub-basin, EXR’s exploration program across its giant landholding in Mongolia continues, now utilising three local drilling rigs.

EXR publicly tendered for an additional and more technically advanced drilling rig to join the exploration campaign to improve drilling performance. That tender has now been awarded to Major Drilling, who will introduce a larger mineral-style rig at a cost effective price. EXR expects drilling using this new rig to commence within the next few weeks.

EXR also reports that since its last CBM operations update in July, it has drilled the Bulag Suuj-2, Yangir-5, Orio-1 and Big Slope-1 wells.

  • Bulag Suuj-2 well determined that the coals intersected at Bulag Suuj-1 were deeper than 1,000m at this down-dip step-out location.
  • The Orio-1 and Yangir-5 wells failed to reach their target depths due to various drilling problems.
  • Big Slope-1 is still drilling, having already cored ~10 metres of coal. Visible gas was seen associated with the coals and appears to represent a new CBM discovery for EXR (subject to final logging).

Update on MOU with Softbank’s energy subsidiary

ASX:EXR  

Aug 24, 2022

Announcement

Investment Memo: EXR IM-2022
Objective 3 : Evaluate the Commercial Viability of a Hydrogen Project


This morning our 2019 energy Pick Of The Year, Elixir Energy (ASX: EXR) put out an update on its MOU with a subsidiary of Japanese Conglomerate Softbank - SB Energy Corp (SBE).

Below are some of the key takeaways from the update:

  • SBE is investigating potential sources of Japanese Government fiscal support - Earlier today, we put out another Quick Take about the Japanese plans for Mongolia, which ties in nicely with this point.
  • Data acquisition ongoing - SBE and EXR are progressing data acquisition (water/renewable energy) to put out some details on potential project scale/economics.
  • Pre-feasibility study (PFS) for the pilot plant commenced.
  • Customer discussions ongoing - SBE is leading talks with potential hydrogen customers in China and Mongolia.
  • The site location for the pilot plant is currently being evaluated.

We especially like that the update shows both partners are working towards the same goal. Whilst EXR is busy on the ground gathering data, SBE is busy progressing the project at the corporate level.

We are particularly interested in whatever comes from the investigations into potential financial support from the Japanese Government, especially after doing a deep dive on the idea of an Asian super grid (see our Quick Take here).

Power from the Gobi desert to for an Asian supergrid?

ASX:EXR  

Aug 24, 2022

Investment Memo: EXR IM-2022
Investment Thesis 1 : Strategic location in Mongolia
Investment Thesis 3 : Green-Hydrogen potential


This morning we noticed the following video from Bloomberg, which discusses the idea of continental supergrid's to solve future energy crises.

Of particular interest was the commentary in the video around the potential development of a super grid that ties together countries in Asia and how the Gobi desert in Mongolia fits into all of this.

The video provides context for our 2019 energy Pick Of The Year Elixir Energy's (ASX: EXR) regional ambitions.

EXR holds ground in the Gobi desert in Mongolia, where it is preparing to run a long-term production test across its coal bed methane gas project.

Alongside this, the company is also looking to develop wind & solar projects to ultimately power a green hydrogen project.

Ultimately, EXR is looking to develop an energy hub in a strategically important location from both a natural resource perspective and geographic perspective (bordering energy hungry China).

Watch from 10:54 onwards. Alternatively, here are our key takeaways:

  • Japan's renewable energy institute has come up with a plan to link up the grids of some of the region's biggest economies. Enter the concept of an 'Asian super grid'.
  • Mongolia is at the centre of the grid because it has "the best renewable energy potential in the area, that will benefit all Asian countries".
  • The wind and solar energy from Mongolia's Gobi desert (where EXR's projects are located) could potentially produce ~2.6 Terrawatts of electricity, which is more than twice the capacity of the US.
  • This power could then be connected to the Asian super grid capable of powering countries that produce more than 1/3rd of the world's carbon emissions with affordable renewable energy.

Green hydrogen project update

ASX:EXR  

Aug 24, 2022

Announcement

Investment Memo: EXR IM-2022
Objective 3 : Evaluate the Commercial Viability of a Hydrogen Project


This morning our 2019 energy Pick Of The Year, Elixir Energy (ASX: EXR) put out an update on its Gobi green hydrogen project.

Specifically, the update covered the renewable energy and water components required to produce green hydrogen.

Key takeaways for the wind resource data:

  • Data collected to date show a 38-39% capacity factor, comparable with some of Australia's top-performing wind projects.
  • EXR has already installed two new wind resource measurement tools (SODARS) across a ~100km strike to gather more data.

Key takeaways for the water resource:

  • EXR drilled three water exploration wells, with one flowing at 0.5 litres per second which is half of what is required for the planned pilot project.
  • Interestingly, EXR mentions in the announcement that despite being landlocked, Mongolia's Gobi desert has an abundance of groundwater resources.
  • EXR detailed this by referencing the Rio Tino Oyu Tolgoi's copper/gold project, which uses multiples of the amount of water that EXR's green hydrogen project would need.
  • More specifically, Oyu Tolgoi is permitted to draw upon ~ 1,000 litres per second of water – around six times more than a multi giga-watt scale green hydrogen project producing 500,000 tonnes of green hydrogen per annum.

To summarise, the data gathered so far looks good enough to take the proposed pilot project into a pre-feasibility study (PFS).

Next, we want to see EXR continue to gather data so that it can clear up the forward plan for what we can expect its green hydrogen project to look like and some clarity on project economics.

Pilot production program commencing soon

ASX:EXR  

Jul 29, 2022

Announcement

Investment Memo: EXR IM-2022
Objective 1 : Pilot production program at the gas project


This morning, our 2019 Energy Pick of the Year Elixir Energy (ASX: EXR) put out an update on its upcoming pilot production program for its coal bed methane (CBM) gas project in Mongolia.

EXR report that all of the equipment required for drilling, completion and testing of the two production wells is now in Mongolia, and the extended pilot production program is on track to start towards the end of August.

EXR has engaged the same group of drilling contractors who worked for Rio Tinto on its Oyu Tolgoi mine, located with EXR’s landholding in Mongolia, which we hope will translate into an efficient work program.

EXR expects completing and producing these wells “within weeks of drilling being completed”, with the commercial viability of the wells to be assessed over months by measuring gas flow rates.

This should mean that by early 2023 we will know whether EXR’s wells can commercially produce gas.

The pilot production program is key objective #1 in our 2022 EXR Investment Memo, so today’s news shows that the company is making progress towards starting and completing something we have been patiently waiting for.

To see all the other key objectives we set that we wanted EXR to achieve this year, check out our 2022 EXR Investment Memo here.

New coal bearing sub-basin discovered

ASX:EXR  

Jul 29, 2022

Announcement

Investment Memo: EXR IM-2022
Objective 2 : Exploration drilling


This morning, we also got an exploration update from our 2019 Energy Pick of the Year, Elixir Energy (ASX: EXR).

The highlight of today’s announcement was that EXR discovered yet another coal bearing sub-basin at its “Venetian-1” exploration well.

The positive for us here is that EXR continues to discover new sub-basins at parts of its project where we have set no expectations. We see these sub-basin discoveries as almost like free options at growing the size of EXR’s project and make for unexpected positive newsflow.

A bit of a dampener on the positive update today was the mechanical issues EXR is having with its drill rigs, which is, in turn, slowing down the progress of the 2022 exploration program.

EU Parliament to consider gas a "Green" energy source

Jul 07, 2022

Macro: Natural Gas


Overnight, EU lawmakers voted in favour of labelling gas and nuclear power as “green” as part of the continent’s plan to transition away from fossil fuels.

We’ve long been of the view that gas is the natural transitional fuel that can bridge the gap between fossil fuels and cleaner energy sources.

Burning gas to produce power has a far lower carbon footprint compared to coal and oil, with the added benefit of having all of the infrastructure in place to produce and consume it.

We think that the world is ready to embrace it as part of the energy mix for the next decade and potentially beyond that. As a result, we hold several Investments in companies looking to supply gas to energy hungry parts of the world.

The following Reuters article provides an overview of the proposed EU legislation:

Read the full article here.

Our key takeaways:

  • On Wednesday the European parliament backed EU rules labelling investments in gas and nuclear power plants as climate-friendly.
  • The vote in favour of the proposal means the EU can now look to pass the proposal into law. The only risk facing the proposal is if 20 of the EU’s 27 member states oppose the move.
  • The new rules will add gas and nuclear power plants to the EU "taxonomy" rulebook from 2023, enabling investors to label and market investments in them as green.
  • EU Financial Services Chief Mairead McGuinness said "The Complementary Delegated Act is a pragmatic proposal to ensure that private investments in gas and nuclear, needed for our energy transition, meet strict criteria".
  • Slovakian Prime Minister Eduard Heger said the vote result was good for energy security and emissions-cutting targets

To see the Investment Memos for these companies click on the links below:

Elixir Energy (ASX: EXR)

  • Exploration stage, coal bed methane gas, Mongolia

Invictus Energy (ASX: IVZ)

  • Exploration stage, gas, Zimbabwe

Top End Energy (ASX: TEE)

  • Exploration stage, gas, Northern Territory

Bill Gates backs start-up for hydrogen storage & transportation

Jul 06, 2022

Macro: Hydrogen


The following Bloomberg article looks at a Bill Gates backed investment in the hydrogen mobility space.

Read the full article here.

Below are our key takeaways from the article:

  • A key part of having hydrogen form part of the global energy mix is to find a way to store and transport it effectively.
  • Spanish startup H2Site is aiming to do this and just secured €12.5M in investments from Bill Gates-led Breakthrough Energy Ventures, French utility Engie SA and Norwegian oil giant Equinor ASA.
  • Current existing methods to store and transport hydrogen are expensive, especially when compared to gas storage/transportation.
  • H2Site aims to find technological solutions to use existing natural-gas pipelines to move hydrogen by diluting natural gas with ~30% hydrogen before being recovered using H2SITE’s filter where it needs to be consumed. The process would use a palladium alloy with the aim of filtering hydrogen at 99.9% purity from a pipe carrying between 5% and 30% hydrogen.
  • Another technology being focused on is transportation via ships within ammonia and methanol. The aim being that projects like the ones in Australia where hydrogen is converted into ammonia then transported using ships could then have hydrogen recovered by undoing the chemical reaction after shipping is completed.

In summary, the article speaks to the volume of capital pouring into the downstream technologies that are required to build up a sound and efficient hydrogen supply chain.

For hydrogen to become a part of the energy mix the infrastructure required to produce, transport and then consume it all needs to be developed to the standards of current energy technologies.

With institutional capital and big names like Bill Gates now making investments into the hydrogen space we think it is a matter of WHEN not IF for the hydrogen sector.

Historically, our best performing Investments have come from industries where we have Invested well ahead of institutional capital arriving on the scene. Our Investments in the green hydrogen space are no different.

The following companies held in our Portfolio provide exposure to an industry that we think is on the cusp of exponential growth:

Province Resources (ASX: PRL)

  • Feasibility stage, green hydrogen, WA (Australia)

Elixir Energy (ASX: EXR)

  • Scoping stage, green hydrogen, Mongolia

Minbos Resources (ASX: MNB)

  • Scoping stage, green hydrogen/ammonia, Angola

Gas shortage the catalyst for a global recession

Jul 06, 2022

Macro: Natural Gas


The following Bloomberg article shines a spotlight on the ripple effects high gas prices have on the global economy.

Read the full article here.

Our key takeaways:

  • Natural gas is the hottest commodity in the world right now. It’s a key driver of global inflation. Prices are up some 700% in Europe since the start of last year raising fears of a continent wide energy induced recession.

  • Russia is cutting back on pipeline deliveries to Europe, the scramble to fill that gap is turning into a worldwide shortage.

  • Germany says gas shortfalls could trigger a Lehman Brothers-like collapse, as Europe’s economic powerhouse faces the unprecedented prospect of businesses and consumers running out of power.

  • The German government is in talks to bail out utilities which are losing some €30 million a day because it has to cover the missing Russian gas at soaring spot-market prices.

  • Deutsche Bank cited growing risks of an “imminent German recession on the back of energy rationing,” and pointed to soaring power prices in Italy and France too. Morgan Stanley also predict that the whole of Europe will be in a downturn by year-end.

The Bloomberg article focuses on the repercussions gas shortages are having on the EU and the German economy in particular.

The German economy is one of the key pillars of the EU region, with a strong manufacturing industry making it an exporting powerhouse. The country is therefore heavily reliant on reliable energy supplies to keep this part of its economy functioning.

The fear that the Bloomberg article highlights is how a shortage in gas supplies or heightened prices could force shutdowns and lead to a recession.

We think this applies not only to the German economy and the EU but to the rest of the world also. With gas likely to become a more important part of the energy mix as the world transitions away from coal and oil we think investment into new supply will need to accelerate.

As a result we hold the following companies as Investment exposures to natural gas. To see the Investment Memos for these companies click on the links below:

Elixir Energy (ASX: EXR)

  • Exploration stage, coal bed methane gas, Mongolia

Invictus Energy (ASX: IVZ)

  • Exploration stage, gas, Zimbabwe

Top End Energy (ASX: TEE)

  • Exploration stage, gas, Northern Territory

Bill Gates “Green hydrogen would be massive for clean energy”

Jul 04, 2022

Macro: Hydrogen


Investment Memo: PRL 2022, EXR 2022, MNB 2022

General: Macro


The following LinkedIn post from Bill Gates shines the spotlight on green hydrogen as a technology solution for a transition towards cleaner fuel sources.

Read the LinkedIn post here.

When major investors start to talk up a particular technology it is generally a leading indicator for massive institutional capital flows into the sector. And Gates is not just a commentator, but an investor in renewable energy and the transition towards lower emission fuel sources.

(Here is an article on one of Gates’ latest ventures in the space: Bill Gates-Led Fund Backs Startup With Cheaper Way to Move Hydrogen)

For a long time institutional investors have avoided making large scale investments into the green hydrogen space, but that now looks to be changing extremely rapidly.

Historically, our best performing Investments have come from industries where we have Invested well ahead of institutional capital arriving on the scene.

Our Investments in the green hydrogen space are no different. We tend to agree with Bill Gates, that green hydrogen has a place in the transition towards clean energy technologies.

The following companies held in our Portfolio provide exposure to an industry that we think is on the cusp of exponential growth:

Province Resources (ASX: PRL)

  • Feasibility stage, green hydrogen, WA (Australia)

Elixir Energy (ASX: EXR)

  • Scoping stage, green hydrogen, Mongolia

Minbos Resources (ASX: MNB)

  • Scoping stage, green hydrogen/ammonia, Angola

Extended pilot production program planned for August 2022.

ASX:EXR  

Jun 22, 2022

Announcement


Investment Memo: EXR 2022

Key Objective #1: Pilot production program at the gas project


In today’s operations update our 2019 Energy Pick of the Year Elixir Energy (ASX:EXR) also detailed what stage the extended pilot production program was at.

EXR confirmed that it has appointed experienced Mongolian contractor “Monbag LLC” to complete the civil construction works and mentioned that these works were expected to “commence shortly”.

The drilling of the first production well (of two) is expected to spud around the end of August 2022 in line with the timeframe expectations set by EXR at the start of the year.

From there, the production testing will take around 6 months, and we’ll have a better idea of the commercial flow rates of EXR’s gas project.

New coal bearing sub-basin discovered, more drilling to come

ASX:EXR  

Jun 22, 2022

Announcement


Investment Memo: EXR 2022

Key Objective #2: Exploration drilling program


Our 2019 Energy Pick of the Year Elixir Energy (ASX:EXR) just put out an operational update with respect to the exploration works happening across its coal bed methane (CBM) gas project in Mongolia.

In the update EXR confirmed the discovery of an entirely NEW coal bearing sub-basin with an intercept returning ~21m of coals.

Importantly the intercept now opens up an entirely new sub-basin inside EXR’s project area which could be prospective for coal bed methane (CBM) gas and more significantly is a sign of how much exploration potential EXR’s project still has.

EXR also confirmed that it plans to follow up this discovery with an appraisal well at a location ~four kilometres away.

Investor presentation - A tale of two energy solutions

ASX:EXR  

Jun 15, 2022

Announcement


Investment Memo: EXR 2022

General: Investor presentation


Yesterday our 2019 Energy Pick of the Year Elixir Energy (ASX:EXR) put out an updated slide deck which it presented at the Queensland Petroleum and Exploration association (QUPEX) conference.

The presentation lays out in detail EXR’s forward plan and where the company is at with both its coal bed methane (CBM) gas and green hydrogen project in Mongolia at a time where energy security has become a major talking point in financial markets.

With the long awaited long term pilot production program at its CBM gas project due to start soon and the optionality from the company’s hydrogen project we think there will be a lot more news flow coming from EXR and expect to see the market take an interest in the company later this year.

To read the presentation in full, click on the image below.

Multiple rigs drilling now

ASX:EXR  

May 06, 2022

Announcement


Elixir Energy Ltd (ASX:EXR) has provided an update on the coal bed methane (CBM) exploration/appraisal program underway across its 100% owned Nomgon IX Coal CBM Production Sharing Contract (PSC).

With the arrival of the Mongolian spring season, EXR has been able to accelerate its multiple well program for 2022 and now has two rigs operating.

EXR reported that it recently finished drilling the Tim-2 appraisal well – a follow on from the successful Tim-1S exploration well drilled earlier this year that opened up a new sub-basin for EXR.

Tim-2 was drilled to a total depth of 1,020 metres – the deepest well EXR has drilled in Mongolia to date — logging 3 metres of coal and 5 metres of silty coal. There was a decrease in coal thickness from the initial Tim-1 well to this Tim-2 well, attributed to localised faulting.

EXR will now integrate the Tim-2 results with geological mapping, age dating, and potentially new seismic to better define this coal bearing sub-basin.

The location of Tim-2 (right on the Tavan Tolgoi border) can be seen on the map below, as can the recently spudded Yangir-4 appraisal well, and the Bulag Suuj-1S exploration well that is due to be spudded imminently.

The Top Diamond Drilling LLC rig, which drilled Tim-2, has now mobilised to a new potential sub-basin in the west of the PSC. Here it is due to spud the Bulag Suuj -1 well later this week.

The Yangir-4 appraisal well, in the previously identified coal bearing Yangir sub-basin, can also be seen within EXR’s giant landholding. Yangir-4 was recently spudded by EXR’s newly hired drilling contractor, Ellecohr LLC.

These wells are part of the ~20 wells that we said that we wanted to see EXR drill throughout 2022, a key objective in our EXR Investment Memo.

EXR also notes that the extended pilot production testing that’s planned for mid-year continues to progress. This initial pilot program, the first in the country, is on track to meet its mid-year target. A commercial flow rate would be a significant event for EXR and its shareholders and given the relatively low costs involved in Mongolian, that hurdle shouldn’t be too high.

EXR explained that the tendering process for the program's civil works is well advanced, and a contractor is expected to be hired shortly.

This is promising news as pilot production program was the #1 key objective that we wanted to see EXR achieve this year at the Nomgon PSC, as per our EXR Investment Memo.

EXR also reported that its 2022 2D seismic acquisition program is proceeding as planned, with 223 kilometres (out of a total of 322 kilometres) acquired to date.

New coal bearing sub-basin identified, more drilling to come

ASX:EXR  

Mar 31, 2022

Announcement


This morning EXR confirmed that it has discovered a new coal bearing sub-basin.

The company has completed the first well for the 2022 exploration program, reaching a total depth of 804m and logging ~46 metres of coals and leading to another sub-basin being confirmed as coal-bearing to the south of its project area.

Today’s news now confirms that EXR has already started working towards completing its 2022 exploration program, which we set as objective #2 in our 2022 Investment Memo, and that the all-important long term pilot production program is being procured, which we set as objective #1.

EXR has already started drilling a second well ~200m downdip of this well and will be testing for extensions to the coal bearing formations.

Drilling contracting had been completed for the remainder of the 2022 exploration program, whilst works have begun on the 2022 2D seismic acquisition program with the first 47km completed from a targeted ~322km.

EXR also confirmed that it has commenced discussions with drilling contractors to finalise the terms and conditions for the drilling/long term pilot production program scheduled for ~mid year.

What’s next: We want to see EXR continue its exploration efforts and lock in a drilling contractor to drill and complete the long term pilot production wells or progress on its green energy project.

Gas exploration program expanded + hydrogen progress made

ASX:EXR  

Mar 25, 2022

Announcement


We caught up with Neil Young, the head of our energy investment Elixir Energy (EXR), following his presentation on Wednesday at the Brisbane Mining and Energy Conference.

EXR is our 2019 Energy Pick of the Year, and has been making steady progress with its flagship Nomgon coal bed methane project in Mongolia, near the Chinese border.

This year, our #1 objective for EXR to achieve is to deliver its maiden pilot production program at Nomgon.

Neil provided an update, expanding the program to a planned ~24 wells, which should both grow and de-risk the gas resources in place.

We’re also pleased to see progress with EXR’s Hydrogen project.

Given the EXR’s team’s track record (Chairman Richard Cottee built QGC from a CSG junior capped at $20M to $5.7B takeover acquisition, Neil was formerly an executive within Santos’ coal seam gas division), as well as first mover advantage within an energy hungry region, we continue to have confidence in EXR’s capability to execute on its vision.

We found the EXR video on its H2 project useful to understand the importance of EXR's strategic location:

2022 Drilling program kicks off

ASX:EXR  

Feb 28, 2022


Today EXR announced that it had started drilling the first of a total 24 well drilling program planned for 2022.

The first of these wells sits right on the border of the tenements that make up the Oyu Tolgoi mine owned by Rio Tinto and will be drilled to a planned total depth of ~700m.

This year, we want to see EXR complete the pilot production program off the back of last year's drilling program.

EXR confirmed that the 2 well extended pilot production program was scheduled to commence around ~mid year. With gas becoming a talking point off the back of the Russia/Ukraine conflict we are eagerly waiting to see if EXR can confirm economic flow rates at its project.

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