prl.jpg

Province Resources Ltd

ASX:PRL

Last Price:

$0.061

Our Investment Summary

Date of Initial Coverage

05-Aug-20

Initial Entry Price

$0.025

Returns from Initial Entry

142%


Investment Memo: Province Resources Ltd (ASX:PRL) - LIVE

Opened: 12-Jan-2022

Shares Held at Open: 24,000,000


What does PRL do?

Province Resources (ASX:PRL) is aiming to develop Australia's first truly Zero Carbon, Green Hydrogen project.

What is the macro theme?

Decarbonisation using the latest green hydrogen technology.

As the world looks to cut its greenhouse gas emissions, green hydrogen may prove to be a major building block of a net-zero economy.

Industrial applications and large transport (like buses and trucks), and heavy industry applications like steel mills are the most likely candidates to start using this technology in the near future.

Why did we invest in PRL?

Ideal location for the project

PRL's project is located in the Gascoyne region of WA, next to the town of Carnarvon. Gascoyne is a particularly sunny and windy area (ideal for green energy support) and coastal (important to build a hydrogen plant to undertake hydrolysis). The town of Carnarvon also has a gas pipeline.

Australia is aiming for net zero emissions by 2050

With particular targeted investments in hydrogen and we think PRL can be part of the solution.

Joint Venture Possibility

PRL has a pathway to financing through their potential joint venture partner Total Eren.

An Experienced Team

Project set up by the people behind Vulcan Energy Resources (one of our most successful investments)

What do we expect PRL to deliver?

Objective #1: Scoping study

Deliver scoping study to better determine the commerciality of PRL’s project.

Milestones

Deliver scoping study

Objective #2: Secure key stakeholder support

Secure land tenure and key stakeholder support for the project, including a Heritage Agreement, Environmental Impact Assessment and other necessary permits so that the project can proceed.

Objective #3: Begin Pre-Feasibility Study (PFS)

With a Scoping Study, land tenure and stakeholder support, the start of the PFS would enable PRL to get to work on understanding the specific factors needed in development to deliver an economic green hydrogen project in WA.

Objective #4: Solidify commitment from Total Eren

With PRL announcing the completion of the scoping study on 2nd March 2022, we next want to see PRL solidify its commitment from Total Eren to further develop the project.

What could go wrong?

Project Development Risk

Total Eren decides that after the Scoping Study has been completed that the project is not economically viable, and as such, chooses to abandon the project.

Hydrogen Market Risk

Hydrogen is a very new technology, and there are currently limited uses. Hydrogen is not easily transportable, it is extremely flammable and has also not been adopted on a large scale. If the hydrogen market doesn't materialise, PRL may struggle to secure financing for its project - and sell its hydrogen at a commercial scale.

Regulatory Risk

If PRL can't secure the key permits for the project to go ahead (including heritage agreement, environmental impact assessment and the new development permit). This risk is increased for PRL because there are no regulations that exist for hydrogen projects, and governments will need to update laws to fit this emerging market.

What is our investment plan?

PRL is our second biggest holding behind Vulcan Energy Resources (ASX:VUL). PRL has delivered several impressive announcements since February and is up over 500% since we first invested over 12 months ago in August 2020.

After PRL delivered a number of material announcements and rose over 500%, we sold a portion of our holding to recoup our investment outlays.

We intend to hold our position now until the results of the Scoping Study are announced and re-evaluate our investment plan from there.


Disclosure: The authors of this investment memo and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 24,000,000 PRL shares at the time of publication.


PRL Investment Milestones

✅ Initial Investment: @ 2.52c
✅ Top Slice
✅ Free Carry
✅ Increase Investment: @ 0.8c
✅ Free Carry
✅ Increase Investment: @ 1.5c
✅ Free Carry
✅ Increase Investment: @ 13.9c
✅ Free Carry
✅ Increase Investment: @ 15c
✅ 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
🔲 Hold remaining Position for next 2+ years

Our Past Commentary on Province Resources Ltd

Date Title
31-Aug-2022 $ 0.110 Crisis or Opportunity? Governments to take action on energy supply shortages
25-Aug-2022 $ PRL and Total Eren announce Key Binding Terms.
09-Jul-2022 $ 0.094 Markets showing life after June tax loss selling
06-Jul-2022 $ PRL Secures Native Title Consent for HyEnergy Project Land Access
23-Apr-2022 $ 0.096 What exactly is a share price catalyst?
20-Apr-2022 $ All the latest on PRL’s WA green hydrogen project - two major catalysts on the horizon
15-Mar-2022 $ PRL Announces Scoping Study, 550kt per annum of Green Hydrogen
05-Mar-2022 $ 0.100 Mainstream Media Catching on to the Commodities Supercycle
02-Mar-2022 $ PRL Announces Scoping Study, 550t per annum of Green Hydrogen
22-Jan-2022 $ 0.145 Our Investment Approach, Energy Cold War, Ukraine, Supply Chain Crisis
20-Dec-2021 $ PRL’s Green Hydrogen Project awarded ‘Lead Agency Status’ by WA Government
18-Dec-2021 $ 0.140 Investing 101: Taking Stock of your Stocks and Diversification
27-Nov-2021 $ 0.160 New COVID strain, Santa Rally, Market Thoughts
20-Nov-2021 $ 0.175 Australia bets big on Hydrogen at COP26, investment in companies that solve problems
18-Nov-2021 $ New Laws Proposed in WA Unlocks Green Hydrogen Project for PRL
06-Nov-2021 $ 0.155 COP26, Battery Metals, Green Energy
16-Oct-2021 $ 0.160 Mainstream media casts a big spotlight on Green Hydrogen
11-Sep-2021 $ 0.165 The thematics we are investing in right now
10-Sep-2021 $ 0.155 Key Milestone: First licence arrives for PRL’s Green Hydrogen Project
21-Aug-2021 $ 0.145 Market fluctuations and portfolio news and quick takes
13-Aug-2021 $ 0.175 PRL provides Green Hydrogen update as world realises sudden urgency to switch to clean energy
09-Aug-2021 $ A New Market for PRL’s Hydrogen
06-Aug-2021 $ 0.150 Reporting back from the WA Green hydrogen conference panel...
04-Aug-2021 $ 0.130 Total Eren MD to speak at WA Hydrogen Conference
31-Jul-2021 $ 0.135 Quarterly Reporting Season and other news from our portfolio stocks
27-Jul-2021 $ 0.135 Dream Team: Key Ministers now on PRL Speed Dial?
10-Jul-2021 $ 0.145 Breaking News: Stellantis signs offtake MoU with VUL
06-Jul-2021 $ 0.150 Australia’s Richest Man Grabs Outrageous Amount of Land Surrounding PRL
03-Jul-2021 $ 0.130 End of Financial Year, and what happened to 88E's share price?
02-Jul-2021 $ 0.130 An Update on PRL: Our 2021 Small Cap Pick of the Year
26-Jun-2021 $ 0.135 June tax loss selling is behind us, KNI IPO expected in August
19-Jun-2021 $ 0.135 What is Tax Loss Selling?
15-Jun-2021 $ PRL the Early Mover in Green Hydrogen
04-May-2021 $ 0.210 PRL signs MoU with Shire of Carnarvon
27-Apr-2021 $ 0.230 Our Portfolio Performance from January 1st to March 31st 2021
22-Apr-2021 $ PRL Signs Binding MoU with Total Eren to Develop Green Hydrogen Project
20-Apr-2021 $ 0.180 PRL’s Binding MoU with Total Eren may actually be WAY BETTER than we first thought…
19-Apr-2021 $ 0.180 It’s Official - Our 2021 ASX Small Cap Pick of the Year
08-Apr-2021 $ 0.140 PRL Doubles Land Holding in Green Hydrogen Push
23-Mar-2021 $ 0.145 TRIPLE DOWN ALERT - Plus 6 Hot Stocks
10-Mar-2021 $ 0.083 Why is Fortescue Pegging Ground Near PRL?
02-Mar-2021 $ 0.079 PRL’s Zero Carbon Green Hydrogen Strategy - A First for the ASX
02-Mar-2021 $ 0.079 PRL - Now Detecting Heat and Movement
21-Feb-2021 $ 0.081 PRL is on the Start of a Long Journey
17-Feb-2021 $ Wise-Owl is now Free Forever - Here is Our First Stock Pick
17-Feb-2021 $ 0.050 Zero Carbon Hydrogen™ has Just Arrived on the ASX.
17-Feb-2021 $ Province Resources Leads Australia into a Green Hydrogen Era
07-Jan-2021 $ 0.013 Our Stock Picks for 2021
05-Aug-2020 $ 0.012 Our WA Gold Pick: Wedged Between $1BN Greatland Gold Discovery & 32Moz. Telfer Mine



25% more land under licence for PRL's green hydrogen project

ASX:PRL  

Oct 25, 2022

Announcement

Investment Memo: PRL IM-2022
Objective 2 : Secure key stakeholder support


Today, our green hydrogen Investment Province Resources (ASX:PRL) announced that it had secured an additional 1,035 square kilometres of land south of Carnarvon, WA.

That’s equivalent to a roughly 25% increase in the company’s licenced land area, bringing PRL to a total of 4,162 square kilometres under licence.

We think it adds further momentum behind the proposed HyEnergy® green hydrogen project in WA as PRL negotiates the shareholders agreement with Total Eren.

In our last note on PRL, we argued that the scale of PRL’s project is akin to the $34BN North West Shelf Joint Venture which made Woodside what it is today - a $67BN market capped company.

Obviously there’s a long way to go for the $100M capped PRL and a number of risks, some of which we outline in our PRL Investment Memo.

But we’re hoping with history as a guide, PRL can go on to play a major role in Australia's energy transition.

What’s next for PRL? Convert the binding key terms from late August into a comprehensive legal document that will govern the running of the new joint venture entity

Australia - “the new Saudi Arabia of green energy and minerals"?

ASX:PRL  

Jul 22, 2022

Investment Memo: PRL IM-2022
Investment Thesis 1 : Ideal location for the project


One thing that stands out from the following AFR article is the singling out of Australia as a potential future energy superpower.

For some context, Australia represents 0.32% of the world's population and ranks 13th when measured by gross domestic product (GDP) - the point being Australia is tiny on the world stage.

For the COO (Mr Patrick Lammers) of a European utility company to publicly say that Australia has the potential to be a future global superpower in the energy industry and "the richest country in the world" is big praise if you ask us.

Mr Lammers comments specifically touch on the potential for Australia to produce and then export green hydrogen to the world.

We have long held the view that Australia's access to abundant natural renewable energy resources, including solar and wind power, uniquely positions it to produce the cleanest form of hydrogen - green hydrogen.

Mr Lammers agrees with us, saying Australia is "one of the best geographical places, geopolitical places" to produce green hydrogen.

We are Invested in Province Resources (ASX: PRL), which is looking to develop Australia's first truly zero carbon, green hydrogen project.

To see why we are Invested in PRL, the key objectives we want to see the company achieve in 2022 and the key risks to our Investment thesis, check out our 2022 PRL Investment Memo here.

Below are our key takeaways:

  • Chief Operating Officer of European utility E.ON (Patrick Lammers) thinks Australia has the potential to be "the new Saudi Arabia" of green energy and minerals.
  • Mr Lammers said, "Australia if it really gets their act together ... could be the powerhouse of green hydrogen for the world because it's actually one of the best geographical places, geopolitical places to do this".
  • He also said, "Australia could be the new Saudi Arabia, but then not only having the energy exports, you also export the new minerals in a very green way. This makes you the front-runner, and you could be the richest country in the world".
  • Europe, particularly Germany, is facing a crisis in energy supply, exacerbated by the war in Ukraine as Russia reduces pipeline gas flows to the region.
  • With Europe's dependence on Russian gas reaching boiling point, Mr Lammers said, "Green hydrogen we see has a pivotal role to keep industry in Europe,".

To read the full AFR full article, click here.

Australian PM: “we see enormous potential in hydrogen”

ASX:PRL  

Jul 12, 2022

Investment Memo: PRL IM-2022
Investment Thesis 2 : Australia is aiming for net zero emissions by 2050


This morning Prime Minister Anthony Albanese addressed the Sydney Energy Forum with a 26-minute speech about the future of the energy industry in Australia.

One thing that stood out to us was his remarks concerning the hydrogen industry. As you can see in the clip below, he said that the Australian government “see enormous potential in hydrogen”.

He added that “Australia has all of the ingredients needed to become a major hydrogen producer and exporter [...] with over 91% of hydrogen production planned being green hydrogen”.

He also stated, “we have plans to establish hydrogen refuelling infrastructure to support the next generation of heavy vehicles right around the country”.

Clearly, the Australian government is taking the hydrogen industry seriously and has big ambitions to make Australia a hydrogen superpower on the world stage.

We have long held the view that Australia’s access to abundant natural renewable energy resources, including solar and wind power, uniquely positions it to produce the cleanest form of hydrogen - green hydrogen.

As a result, we are Invested in Province Resources (ASX: PRL), which is looking to develop Australia's first truly zero-carbon, green hydrogen project.

To see why we are Invested in PRL, the key objectives we want to see the company achieve in 2022 and the key risks to our Investment thesis, check out our 2022 PRL Investment Memo here.

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

Traditional owner consents secured for green hydrogen project

ASX:PRL  

Jul 05, 2022

Announcement

Investment Memo: PRL IM-2022
Objective 2 : Secure key stakeholder support


This morning our green hydrogen investment, Province Resources (ASX: PRL) announced progress with respect to securing key stakeholder support for its green hydrogen project in WA.

PRL announced that it has secured land access consent from native title groups covering ~870 square kilometres of land.

Importantly, these consents are a prerequisite for the WA Government to issue Section 91 licences, giving PRL the access it needs to start feasibility study works. So far PRL has secured two Section 91 licences.

PRL also confirmed that it is “continuing discussions with pastoralists, local government and other stakeholders to finalise tenure for the project”.

Securing land access arrangements can be a big hurdle to overcome given the large land footprint a project as big as PRL’s would be situated on. Effectively, without the support of key stakeholder groups, there would be no project to develop.

What’s next: We are watching to see PRL execute its Joint Development Agreement (JDA) with Total Eren which is now due by 31 July 2022.

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

Twiggy pens multi-billion dollar green hydrogen deal

ASX:PRL  

Mar 31, 2022


In a sign of growing momentum behind green hydrogen companies, like our investment in Province Resources (ASX:PRL), Twiggy Forrest’s Fortescue Future Industries has signed a major green hydrogen deal in Europe.

The deal between Fortescue’s renewable energy arm and E.ON, Germany’s largest energy group, is for five million tonnes per annum of Australian green hydrogen.

The hydrogen would be produced in Australia and then shipped to Germany - part of the country’s rapid shift to renewables amid an energy squeeze brought on by the country’s reliance on Russian gas.

Forrest flagged that the project would be “a minimum $50 billion expenditure.

Given the large numbers involved in projects of this scope, there’s a vibrant debate around whether green hydrogen is viable.

We’re of the view that green hydrogen IS a viable part of the energy mix going forward, particularly as electrolyser costs come down.

Electrolysers are a type of equipment that uses electricity to split water into hydrogen and oxygen.

In the context of this technological progress, we’re pleased that PRL has delivered the scoping study we wanted to see so far this year:

Here’s why we invested in PRL.

What’s next: We want to see PRL’s partnership with Total Eren solidified in the form of a Joint Development Agreement.

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