Just some quick thoughts following our meeting with Stephen and Nick from Sparc. (i'll upload the recording to the site soon)

So, first off, this is obviously a VERY early stage company. They didn't (probably couldn't) commit to any timelines, but i get the sense that we're looking at at least 4 years before there's any commercialisation. Maybe even 10 years. Potentially never.

That means, unless you're looking to speculate on short term moves, this is necessarily a very long term play. And i'd expect a heap of capital raises along the way.

Also, although the tech is validated, there's always a lot of hurdles in getting it to a commercial stage where the economics are competitive. They may never get there -- tech development is just hard, with lots of unknown unknowns! So i'd consider this a very risky investment.

Not trying to be negative, and I wish them every success (for their sake and for the planet), but it's worth being candid about these things.

All that being said, if they manage to crack the technology, the upside is massive. That's for either the hydrogen or graphene side of things. This could quite literally be a 100-bagger over the next decade if everything goes their way. It just has a lot of risks, and even with the best of intentions it could all end in tears.

Personally, and this is just me, i'm usually happy to forgo some of that early upside in exchange for lower risk. I'd definitely be keen if/when they start generate some revenue and show good traction.

Anyway, that's my 2c.

This is how Sparc Technologies' process works:

Source: Ultra-Green Hydrogen – Sparc Technologies Limited

Disclosure: I do not hold SPN shares, however I do hold FMG shares, and FMG are buying into the Sparc Hydrogen JV between SPN and UoA (the University of Adelaide). After the second phase of funding, FMG and SPN will both hold 36% of that JV and UoA will hold the other 28%.

This JV is producing small quantities of Hydrogen now at UoA, so the tech does work, and with funding from FMG's FFI (Fortescue Future Industries) now secured, they believe they will be producing commercial quantities of Hydrogen within 4 years, so by 2026, and at a lower cost than many of their competitors.

04-Feb-2022: Sparc Technologies | Joshua's resilient retail pick on Ausbiz

06-Feb-2022: That Ausbiz video (recorded on Friday, 4th Feb, i.e. last Friday) starts off with Joshua Baker from Capital H Management (also BkrDzn on Strawman.com) discussing small (/micro) caps opportunities and risks at this point in time, which is interesting, followed by Nadine Blayney interviewing Sparc Technologies' (SPN's) Executive Chairman, Stephen Hunt, on the company (Sparc, SPN) and their deal announced last week that will see FMG's FFI division paying $1.8m to buy 20% of Sparc Hydrogen, then moving to 36% at stage 2 (which will see FMG lob in another $1.475m cash to earn an additional 16%, taking their stake in the JV up to 36%.)

Prior to this deal, the owners of the Sparc Hydrogen JV were Sparc Technologies (SPN) with 72% and the University of Adelaide (UoA) with 28%. After stage 2, UoA will still own 28%, with SPN and FMG both owning 36% each.

Incidentally, UoA also own 6.56% of Sparc (SPN), which makes the University of Adelaide SPN's largest shareholder currently.

FFI-to-Acquire-Interest-in-Sparc-Hydrogen.PDF

As well as their innovative and potentially cheaper Hydrogen tech, Sparc also have significant IP in Graphene, however it's unclear whether FMG's FFI division is also keen to develop that technology.

Nadine says in the video (during her introduction of Stephen Hunt) that FFI now owns 36% of Sparc (SPN), however it would appear that this is not actually the case. FFI (and their parent company FMG) will own 36% of Sparc's "Sparc Hydrogen" JV with UoA - after stage 2 funding is complete, but not 36% of Sparc (SPN), as I understand it.

I hold FMG shares (Fortescue Metals Group, who own FFI - Fortescue Future Industries) but I do not hold SPN (Sparc) shares.

I like the solid moves that FMG are making towards their "carbon neutral by 2030" goal, and the businesses and technologies that they are investing in. This latest deal comes after FMG announced on 24-Jan-2022 that they were acquiring UK-based Williams Advanced Engineering (WAE) for £164 million (approximately US$223 million). This is the same Williams that have been involved in F1 racing for decades and WAE have successfully designed, developed and installed electric motors into cars, mining trucks, boats and planes. FMG's FFI with WAE are planning to develop electric trains to replace the diesel-powered trains they currently use to haul FMG's iron ore from their various mines to Port Hedland for shipping. They have said they will make a further announcement on this early in 2022, which should be soon-ish I'm guessing.

I have posted a straw a couple of weeks back about that announcement - see here: https://strawman.com/reports/FMG/Bear77?view-straw=16343

Due to a system bug, that link won't actually take you to the straw (like it should), it will take you to my report on FMG, which starts with my rather lengthy "valuation" (or rather price target and explanation) for FMG, but if you scroll down until you get to the actual straws (below the "valuation"), that straw on the WAE acquisition should be at or near the top of my straws.