ARENA (17/2/26)

Non-market sensitive announcement by Hazer that they have received $0.5m on meeting their next milestone under the Australian Renewable Energy Agency (“ARENA”) Funding Agreement. Another $0.5m is due early CY27 to complete the funding package that was awarded in 2020.

They had A$14.8m cash at the end of Q2 but are running at $2.5-3.5m cash cost a quarter with minimal revenue expected for some time from existing customers and those likely near term customers. R&D grants will form the most significant funding source but I anticipate that they will not be FCF positive until FY29 or FY30, so additional capital will be needed.

This doesn’t lead to the conclusion of a capital raise, but I wouldn’t be surprised to see a small one if there is a price spike for some reason (would be a good idea). It is just as likely that some form of non-dilutive funding is used.

The company offers a very compelling case for grants to meet government mandates around decarbonisation and critical resource security for graphite. Failing that, as they build long term contracts which have low early year revenues they are likely to be able to borrow against much higher later year revenues, so debt financing is an option.

The half year accounts should be out in about a week so we will see if there is any other interesting developments as far as customers go, but I don’t see there being anything interesting in the accounts themselves.

Disc: I own RL+SM

Discl: Held IRL 2.23% and in SM

I had a look at the Kemira website to explore their focus areas.

While a non-binding MOU, what is different/interesting is that Kemira's focus is on Water Treatment, Wastewater/Sludge, Pulp and Packaging. This could potentially pave the way for use of the HZR technology in these areas, broadening the technology application away from the current Steel and Energy focus.

Don't recall an existing HZR project in the Nordic region of Europe, so this is likely to expand HZR's geographic reach as well.

Nice!