Discl: Held IRL 2.32% and in SM
SUMMARY
Good Appendix 4C update - operating cost base remains low with cash burn of ($2.4m) offset by good injection of $5.6m funding from R&D grants of $4.6m and Share Proceeds $1.1m.
Cash balance is a healthy $14.8m, $2.4m of grant funding is in the pipeline.
Positive news on graphite being well suited as a functional filler in cement and as a carbon additive in steelmaking, both of which have the capacity to absorb substantial volumes of graphite which is produced as a by product of the HZR process.
Planets continue to align from all directions - it is now about being patient while HZR focuses on progresing opportunities in commercial delivery.
APPENDIX 4C
No surprises.
Quarterly operational Cash burn was ($2.4m) - R&D payments halved to ($0.4m), Staff Costs fell from ($1.8m) to ($1.5m), Admin & Corp was flat at ($0.7m), Payments for the CDP was ($0.09m).
This low operating cost base looks very much in control.
Good injection of $5.6m funding Quarter - $4.6m from R&D Grants and $1.1m from Issue of Shares.
Cash Balance is a healthy $14.8m, with a further $2.4m of grant funding from WA’s Dept of Energy and Economic Diversification which has yet to be earned.
HIGHLIGHTS OF THE QUARTER
Have not seen this previously - this is good news in terms of demand uptake for graphite.
The news flow from HZR management has been excellent, so no surprises. This was a good summary from Glenn.
Discl: Held IRL 0.67% and in SM
Part 1 of a few parts as I deep dived on HZR.
SUMMARY
HZR owns the IP to the Hazer Process and is developing and commercialising this technology
The Hazer process is a low-emission method for producing hydrogen and graphite from natural gas or biogas. It uses a low-cost iron ore catalyst to crack methane into hydrogen gas and solid, high-quality graphite. This process offers a cleaner alternative to traditional hydrogen production by capturing the carbon as a valuable solid product instead of releasing it as carbon dioxide.
There are significant benefits to the Hazer Process vs the current dominant Steam Methane Reforming (SMR) method of producing hydrogen - zero carbon emission, low energy requirement, no requirement for carbon capture storage, valuable carbon graphite co-product which can be monetised
The Hazer Process is categorised as a “methane pyrolysis” method of producing hydrogen
Other companies have developed variations of the methane pyrolysis method, but the Hazer process is differentiated by the following advantages: (1) the use of Iron Ore as a catalyst (2) creates high quality Graphite Carbon as a co-product (3) avoids need for carbon capture storage (4) low electricity cost
The choice of which methane pyrolysis methods for a given plant/site will depend on several factors, including (1) energy source & footprint (2) scale & deployment model (3) carbon product quality
The focus in the past few years has been to build the Commercial Demonstration Plant (CDP) in Munster, WA, which has been fully operational since Nov 2024 - this was a key milestone to demonstrate the commercial readiness of the Hazer Process technology
WHAT IS ATTRACTIVE
The Hazer process has huge technology advantages over current methods of producing hydrogen, including other alternative methane-pyrolysis approaches
Hard yards to scale up and prove the Hazer process has already been done - the technology appears to be ready for scale-up and commercialisation
This is feeling very much like C79, minus the Capex spend on the Photon Assay machines - the Hazer technology is set to disrupt the current dirty method of producing hydrogen by offering a more efficient and clean approach, with the economic benefit of high quality carbon graphite as a co-product which can be monetised
A. BUSINESS MODEL
Has IP rights to a technology developed a The University of Western Australia which allows the production of hydrogen gas from methane (natural gas) with negligible carbon dioxide emissions and the co-production of a high purity graphite product (the “Hazer Process”)
Business model is focused on scaling-up and commercialising the Hazer Process so as to supply hydrogen gas and high purity bulk graphite to the significant global hydrogen and graphite markets.
B. HAZER’S MISSION
Our mission is to play a significant role across three multi-billion dollar global markets. Hazer Group’s technology can potentially provide an innovative solution for the global industrial hydrogen market, by producing hydrogen at lower cost than alternative options, while also reducing users’ CO2 footprint.
The low-emissions associated with the HAZER Process also potentially provides a gateway for hydrogen to more effectively penetrate the sustainable energy market for both vehicle fuel and stationary power applications. Hazer is also looking to provide high quality synthetic graphite for energy storage and other large global graphite applications.
C. THE HAZER PROCESS
The Hazer process is a low-emission method for producing hydrogen and graphite from natural gas or biogas.
It uses a low-cost iron ore catalyst to crack methane into hydrogen gas and solid, high-quality graphite.
This process offers a cleaner alternative to traditional hydrogen production by capturing the carbon as a valuable solid product instead of releasing it as carbon dioxide.
HAZER’S DISRUPTIVE ADVANTAGE - METHANE PYROLYSIS METHOD vs INCUMBENT SMR TECHNOLOGY
The Methane Pyrolysis technology method has very clear economic benefits over the current Steam Methane Reforming (SMR) method BUT HZR is not the only company with technology in the Methane Pyrolysis space.
Discl: Held IRL and Pending in SM
I like it when I gain immediate conviction on analysing a new company. And so it is with HZR this morning.
I will deep dive in the next 1-2 days, but I read the Q1FY26 Preso released this morning, had a look at what the Hazer technology is and does, and pulled the position open trigger 10 minutes into the webinar at $0.52. More detail to follow.
High-Level Position Opening Thesis
- Technology is affordable, scalable and available now - ready to disrupt, after 17 years of developing the technology into an advanced state - $130m development capex cost is now in the past
- IP Owner, licensing model, so capital light
- Global alliance with KBR - big engineering tick to advance commercial scale-up and go-to-market strategy
- End Products of the Hazer Process - Clean Hydrogen and Graphite - huge market demand for both products. Market is aligning to the Hazer technology benefits and technology availability
- Graphite Market dominated by China (80% of processing and supply) - tightened export controls - HZR offers a local, high purity, low emmissions altenative - this is a significant differentiator from other clean hydrogen processes, geo-political developments mean planets are aligning for Graphite
- Global sales pipeline looks impressive - management is focused on "quality over quantity"
- Financials are growing nicely - $20m of funding available, low operating cost base with a focus on continued cost discipline
CHART
The HZR price is in a nice support resistance zone of $0.51 to $0.555. It feels like this is a fair price and entry point given the technology de-risking that has occurred in the past year, and the potential commercial scale up that occurs from here.
Immediate downside support is $0.45 - if my deep dive confirms this initial feel, will be topping up, up to these levels. Given where the company is at the moment, the technology de-risking, the opportunities, this feels like a very defendable floor.
