Good morning, ladies and gentlemen. Thank you for joining the Chariot Limited Investor Webcast. Today's presenters are Adonis Pouroulis, CEO, Julian Maurice-Williams, CFO, and Duncan Wallace, Technical Director. There will be a question and answer session at the end of the presentation. Please submit any questions you might have via the webcast platform. We will do our best to answer them in the time available. I will now hand over to the presenters. Please take it away, Adonis.
Thank you, Jimmy. Good morning, ladies and gentlemen. Welcome to this Chariot year-end investor webcast. We'll take you through what we've achieved over the last 12 months and split it up between Duncan and Julian. Moving on to slide number four, if you have it there. We're speaking about the energy revolution that we're playing in. Two and a half years ago, as our shareholders know, we embarked on a new journey to embrace the changing energy world. Recently, when I attended the COP27, it was evident that this energy revolution is underway and energy security was a key topic that everyone was concerned about.
If you look at the world that Chariot plays in at the moment, focused on the African continent, all of our projects are scalable, relevant, and don't only provide energy, but provide clean energy for the continent itself and provide green energy solutions and clean energy solutions for the world at large. If you move on to the next slide, and we talk about what is Chariot today. Well, Chariot really has a three-pillar strategy. It's got the gas business, it's got the renewables energy business, and it's got the green hydrogen business. I think it's important just to pause and see what we've achieved over the last 12 months. If we take our gas business, we started the year off with a gas discovery in Morocco, and during the year, we upgraded our reserves and resources. We're about to complete our FID study.
This morning you would have seen, I would call it a seminal moment in the company's history, where we announced an offtake agreement, a gas sales agreement, for 60 million scf a day, which we'll talk about a little more, in a little more detail later. At the same time, we've been actively involved in talking to financial partners as to how to develop this project, Duncan will talk to you a little bit later on about the partnering processes that we are looking at. From the gas business point of view, it's been a very, very busy year, and we continue to develop Anchois to the point that we hope we'll have an FEED decision in the new year, early in the new year or the first six months of next year.
Look at our renewables energy business, which was always historically focused on providing renewable energy solutions to the mining industry. That somewhat changed. We started the year off with really installed 15 MW capacity at the Essakane gold mine in Burkina Faso. Since then, we announced a deal with Tharisa in South Africa, 40 MW. We announced FQM in Zambia. Last week we announced the Karo Platinum Project in Zimbabwe. Over and above all of that, we announced that we were one of the few companies to be in a company that was awarded a energy trading license in South Africa called Etana, which is significant. On the green hydrogen side of the business, what did we achieve over the last 12 months? Well, we completed our pre-feasibility study, which shows that we have a world-class project.
We also managed to bring in a world-class partner, Total Eren. In Morocco, we announced a deal with the University Mohammed VI, whereby we'll be doing small scale hydrogen projects with a unique electrolyzer solution. All of our projects, the three pillars, have scale, and we've made incredible progress this year on them. Chariot is I think can be defined as a traditional one-stop shop transitional energy business. I'd like to now hand over to Duncan, who's gonna go into more detail about the gas business. Duncan?
Great. Thank you, Adonis. Slide six is the introduction to the gas section. Shown there is the Stena Don drilling rig that we used for our successful drilling campaign in Morocco that concluded in January this year. Moving on to the next slide seven. This really sets the context for Chariot's Morocco portfolio. We've been an active explorer in country since around 2012, and that's been important in not only giving us, you know, some unique insights into the exploration potential of the basin, but also understanding how important this gas asset is within the context for the Moroccan energy mix. That's really been exemplified today by the announcement on the gas sales principles.
This is really important to us, of course, because it sets us on routes to putting in place those bankable GSAs to underpin the Anchois development. It demonstrates, you know, really clearly the importance of the project to Morocco and the strong support it has gained from all the various authorities, including our partners, ONHYM, and also then the power generation company, ONEE. We've been delighted to announce that this morning, and the timeline has been established to final those terms in the new year.
This for us, you know, is confirmation that, you know, energy security that Adonis Pouroulis already touched on is really, really important and especially to Morocco, which is a country that's historically imported most of its primary energy. As you can see, on the lower chart on the slide, this has become a particular relevance because of the fluctuating energy commodity prices globally in the world over the last couple of years. The chart shows a fundamental shift in commodity prices since January 2021. We've seen that the oil price has increased. It's basically doubled over that period. On that chart, you can see the impact on the gas price and also the coal price, which is important for the Moroccan context, because Morocco historically has generated around 67% of its power through coal.
Recent price increases mean it's practically quadrupled in price since the prices of early January 2021. There's been a fundamental shift in the cost of energy. We felt already or even before those commodity prices changed that Anchois was strategically located to deliver. You can see the location of the Lixus and Rissana licenses in the inset map on the lower right, basically between Tangier and Casablanca, which is around 2/3 of Morocco's GDP and Morocco's population. There's existing gas infrastructure. Even though it's an emerging gas market, a very major piece of gas infrastructure is there, and that's in red. That's the Maghreb-Europe Gas Pipeline, GME, which historically took Algerian gas supplies through Morocco up into Spain. That gas supply ended at the end of October 2021.
Now there are the stranded gas assets in Morocco, the Ain Beni Mathar and Tahaddart power plants, which are shown upper right on the chart. It's those power plants that we're looking to supply the gas into via that GME pipeline. We're about 40 kilometers offshore to our CPF and then about 40 kilometers to get access to that major gas pipeline to deliver into the domestic market. Also importantly, that pipeline is connected up into the European market via Spain. What have we done this year? Anchois-2 appraisal and gas discovery well completed early in the year. We've been working very hard on FEED for the development project, looking towards an FID in the first half of 2023. As I say, we're very close to those established infrastructure and markets.
Morocco remains a premium investment destination. Our project enjoys world-class fiscal terms, which I'll describe in more detail in a couple of slides' time. Moving on to slide eight. This shows some further details on the Anchois development project. The development cartoon shown there shows the scope of the initial development, so in the yellow flow lines and pipelines. You can see there the Anchois-1 and Anchois-2 wells depicted. We made a couple of important changes this year on the scope of the development. The concept remains the same, subsea wells tied back via a flow line and umbilical to an onshore CPF, and from there to the markets via the GME. We've upscaled the development. Rather than just using those two initial wells as producers, we've added a third well that you can see on the cartoon.
That's a reflection of the increased amount of gas that we see in the reservoir and also the increased number of reservoirs. To ensure that we get completions across all of those resources, three wells, we think is the best way to go for the initial development. We've also now upgraded the CPF. Pre-drill, we'd been considering a 70 million cu ft a day capacity. We're now looking at a 105 million cu ft a day capacity. Again, a reflection of the increased gas that we found, but also I think the changing markets. There's larger volumetric demand and also higher prices to be gained from the markets that we see. Delivering as much gas as we can, is obviously attractive for the project.
We have high gas quality established from the samples we got from Anchois-2 and excellent reservoir properties. We're in a really sort of low risk subsurface environment to deliver this project. We think that's a really important thing that underpins the development. What we've also been looking at, of course, is focused on delivering a final investment decision on the Anchois development. Lower right shows the various components that we've been working in parallel. Now, regarding the development itself, we commenced FEED in the middle of the year, and technical FEED is nearing completion. That's being performed via our collaboration agreement partners, so the Subsea Integration Alliance, which is OneSubsea, Subsea7, and Schlumberger.
That covers the scope from the trees, the flow lines, the umbilicals, the SPS, and then also the CPF itself, but also in combination with our owners, engineers, Exodus, and onshore FEED pipeline contractor, Penspen. We've had really good progress on that project through the year. Gas sales, we've already mentioned, important announcement from today. We've also seen, you know, strong interest from international offtakers as well. Should we be able to, you know, deliver surplus gas beyond domestic requirements, they could find a home potentially in international markets. Regarding the financing, we've made very good progress with our financial advisors at Société Générale. Perhaps, Jules, you can give a brief update.
Yeah. Thanks, Duncan. Yeah, we've been working very closely with SocGen. Indeed, they followed this project for several years. They actually gave us an expression of interest to debt finance over two years ago.
They were formally appointed in the first half of this year as our advisors to bring that debt consortium together. We've already been out to Morocco with them multiple times, meeting with the Moroccan banks, where this is seen as a project of national significance. We also have discussions with European banks as well. The view is that there is more than enough debt capacity for this project to project finance it.
Okay. Thanks, Jules. The other element of potential financing for the project comes through partnering. Now, we haven't actually launched a formal process for partnering on the asset, but we've received very strong incoming interest. We have been talking to some high-graded companies who are, you know, getting quite mature in their evaluation of the opportunity.
Well, where we see the potential value through partnering would be obviously financing through to first gas. It would assist in that effort. Key thing for us would also be the acceleration of growth and the upsides from the project. Bringing that external financing in earlier means that we can accelerate the upsides more quickly than we can do alone. We will look at any potential offer we receive and, you know, focus on those elements. The really important thing for us is that any partnering effort means that we stay on the same timeline. We don't want to, you know, to compromise the acceleration of production from this asset. Slide nine. The next slide shows more information around the Anchois development itself and where we are.
The chart on the upper left shows the geological model for the Anchois gas field. The Anchois-1 and Anchois-2 wells are located there, and in red are the original discovered gas sands from 2009. In orange, depicted below those are the additional resources found in the C and M sands in the Anchois-2 well. We had a mid-year audit of those updated resources, and those increased to 637 Bcf of 2C contingent resource. You can see the Anchois East well in there, and that would be the third producer well for the field that we would look to start the development. That development drilling campaign is obviously gonna be important to deliver gas from those known resources.
The important thing for us is that we see undrilled gas sands below the A, B, C and M sands. This is in the O sand reservoir that was de-risked through the drilling of Anchois-2, and we see some seismic anomalies still remaining to be drilled. Those are 3 prospects within the O sands underneath the existing sands, and together there are about 754 Bcf of 2U or best estimate resources, and the audited chance of success ranges between 49% and 61% for those opportunities. Those targets can be drilled in combination with development drilling. Simply by deepening those development wells or perhaps drilling a pilot hole, as depicted in the case of the Anchois footwall, we can explore a large potential resource base for very little cost over and above the cost of development drilling.
That campaign will be a blend really of development and exploration activity. What could that ultimately deliver? Well, the daily production profiles in the lower part of the page show, you know, the potential from the field. Even the 1C resource of 365 Bcf can deliver a 70 million cu ft a day plateau for about 10 years. The 2C resource is 105 million cu ft a day for approaching 15 years. Even with a modest success from those deeper O sands, we could be on track to deliver 150 million cu ft a day for over 15 years with some success at those levels. What can that deliver in terms of value? Upper right shows indicative life of field economics.
Now, these are run, or this example here is run on really sort of historical, sort of blended price. We've seen prices between $8-$12 per MMBtu for domestic gas historically. What you can see there is the attractive fiscal terms working. 3.5% royalty. Taxation is 31% in Morocco, but there is a 10-year tax holiday, which really helps the economics. On very, very strong operating margins. The operating costs are relatively low, and operating margins can be, you know, 85% or 90% +. That drives very attractive rates of return and NPVs for the project. What we also see is that fundamental shift in gas price, which is important.
Any higher price we can deliver over and above those historical prices will obviously have a direct read-through on value. The Spain and European gas prices are shown lower right. Real rebasing from historical prices demonstrated now in the European future markets. Moving through onto slide 10. You know, Pre-Rif, it's really the Anchois development and the Anchois field is the key to open a sort of basin-scale opportunity for us. The image shows the Anchois flow line on the red line coming through to the CPF and delivering gas into the GME. Also depicted there in the other colors are the high-graded other prospects within the Miocene gas play, which have the same seismic signatures which have been proved successful at the Anchois field.
On key prospects from those low-risk resources. We've had those audited mid-year and they're shown on the bar chart on the right-hand side. That would be at Anchois West in the satellite area, the Enguie prospect, Macro, and the Emessal prospect in Rissana. Even with those high-graded prospects, plus low risk follow-on, assessed internally, we have around four TCF of gas within the Anchois play, with lots more opportunities, still in evaluation. We consider this seismic attribute play to be of low risk. We also have two other larger scale play systems, which are called the Sub-Nappe and then the Fore-Nappe plays.
These are important 'cause individually they have giant scale potential, prospects in those plays, and they're there for the longer term and to attract larger companies into what is, you know, quite a large diversified portfolio that we have within Morocco. We've built this portfolio with minimal license commitments. The next we plan is a seismic survey, probably in the second half of 2023. That's a 2D seismic commitment on the Rissana acreage. Based upon some new plays that we've also identified more recently, we're assessing whether we might expand that seismic acquisition program. All of this exploration potential that we have, you know, we need to be able to commercialize it. The infrastructure available to us allows us to do that. You can see on the map the connection from the GME up into Spain.
That pipeline is virtually unutilized at the moment. It has a 1.2 billion cu ft a day capacity, and the Spanish market alone is a 3 BCF a day market. For us, any gas that we can deliver that is over and above the domestic requirements can get rapidly monetized via the European markets. For us, you know, potentially partnering with an E&P partner, bringing in external finance really helps us to accelerate growth from what is a large portfolio of upsides.
Great. Thank you, Duncan. We're moving on to the transitional power side. If we move to slide 12, you can see the evolution of our business. As I mentioned earlier on, we started off with IAMGOLD's 15 MW project in Burkina Faso. We moved on to, you know, to recent First Quantum, if you look at the size of them, we've got 15 MW in Burkina Faso. Phase I in Zimbabwe at the Karo Platinum Mine is 30 MW, it's 30 MW of a right to build up to 300 MW. You've got Tharisa phase I, 40 MW. You've got the First Quantum project in Zambia of 430 MW. I think what's important to see over here is how the business has changed.
We've said historically that we're gonna focus on providing the mining industry with renewable energy because they need it. They need it for three reasons. One is to lower their energy costs. Two is to get the carbon credits, and three is they need greener energy. However, what we realize now by us securing the Etana trading license in South Africa, it opens up a whole new universe for us in terms of potential clients. The new renewable energy business will now also concentrate on corporate and industrial clients. The new goal is to seek out up to 2 GW of gross pipeline of projects.
People may ask, "Well, how are you going to fund all of this?" We have said publicly, and we're in discussion with various funders, by funding Chariot Renewables, CTP at the subsidiary level and not having to fund it in the listed vehicle, and those discussions are ongoing. I just want to stress that if the Etana trading license opens up a whole new universe of opportunities for us. If we move on to slide number 13, you start to get a flavor of why this is happening. The South African power market is the largest electricity markets on the continent. It is also the largest energy market undergoing deregulation at the moment. We're having in South Africa unprecedented power crises with daily load shedding and the coal that...
The power that's generated comes from coal-fired power stations, over 80%, these are old and aging and will eventually be out of use within the next 15-20 years. What that means is that in South Africa, there's gonna be 30 GW of renewable energy needed by 2030. This is where Chariot has a unique opportunity 'cause it plays squarely into that. Having the Etana trading license allows us not only to participate in generation, but also in offering our clients unique renewable energy solutions. The diagram on the left that you see of Southern Africa is important because there's the SAIPPA, the South African Independent Power Producers Association. There's opportunity for Chariot to also trade outside of the realms of South Africa in Southern Africa. If you move to the next slide, we'll explain to you exactly what [audio distortion] means.
If you look at that, Chariot plays in the entire value chain. If you look at the left-hand side of that slide where number one is, we're a generator. We generate our own renewable power. We then act as an offtaker through Etana, where we buy that power. Then on-sell that power to the clients that you see on the right-hand side. As I said earlier on, it's no longer just mining clients, municipalities, it's industry, and it's the retail sector. Very often what happens is, at times you can overgenerate power, so there's a surplus of electricity. Because of the nature of the agreements that you have with your offtaker, it can be a take or pay, and they therefore pay for that surplus electricity, whether they're using it or not.
By having the Etana trading license, what it allows us to do is to then buy that surplus energy from those end clients and then re-trade it back in the grid. What that does is it allows the client to save on its energy bills and drops its unit cost of energy down. We call this a renewable energy mix solution for our clients. What that means is you can provide some of the cheapest and greenest power to clients in South Africa and in Southern Africa. What it means for Chariot has three profit centers. One makes a profit through generation, then on-sells to a trader, which Chariot is a shareholder in. The trader then makes a profit on selling or a clip to the end user. The end user then has excess power.
The trader, Etana, rebuy that power and re-trades it again. There's a third revenue stream. This is a very, very attractive business in a growing market in Southern Africa, and I cannot underestimate how quickly we can scale this business and how big the opportunity is. Again, it's providing renewable energy solutions to multiple clients, not just to the mining industry. It's the ability to produce renewable energy, not just in the form of solar, but wind as well and tying into the grid. This also will help alleviate the current power shortages and blackouts in South Africa that we're experiencing by taking alleviating power pressures and providing energy to the heavy users that will not rely on Eskom alone for their power source.
It's a pretty neat solution, and it's one that we think is a huge growth center for Chariot going forward. We then move on to our green hydrogen business. Slide number 16. At the moment, the world produces around 115 million tons of gray hydrogen. That is hydrogen that's produced by coal or methane. Of that, only 2%-4% of it is what is called green hydrogen. Green hydrogen is simply using wind and solar to break up the water molecule. If you look at it, by 2050, we are going to need around 600-800 million tons of green hydrogen to be produced in order to achieve a carbon net zero world. You don't get to a carbon net zero world if you don't have hydrogen as part of your energy mix.
What's Chariot's project and competitive advantage over here? Well, if you look at Project Nour, which is a 10 GW electrolyzer project, we will produce 1.2 million tons of green hydrogen. If you do the math and we need 800 million tons of green hydrogen by 2050, you need over 600 Project Nours to come into production. That's huge, and there's gonna be a race for acreage and for good wind and solar resources. Our advantage is that we have that in Mauritania. If you move to slide number 17, you can see that our project is in Mauritania. It's one of the top 10 largest green hydrogen projects in the world. We have the advantage of having excellent wind characteristics, excellent solar irradiation, abundance of land, and access to water.
We're also very close to a huge market, which is the European market, which will be a great consumer of green hydrogen going forward. Project Nour in Mauritania is a world-class project, and what we did during the year, we completed the pre-feasibility study, but we also managed to attract the French giant Total Eren, TotalEnergies, to be our 50% partner in here. What they bring in is not only their huge financial power, their expertise in energy, their expertise in green hydrogen, but they also bring the offtake partners, which is very, very important. When you produce all this green hydrogen, what do you do with it? In Mauritania, there's also advantages. You don't only have to export green hydrogen in the form of ammonia. There is opportunity to possibly value add in country by providing green hydrogen for power locally.
Also there's obviously the green steel opportunity as well that exists in Mauritania because it's a huge producer of iron ore, which currently gets exported. What are we trying to do with our hydrogen business? Why did we get involved in it in the first place? Well, we think the hydrogen economy is very much in its infancy. No one really knows how it's going to unfold, but what we do know, it's gonna play a fundamental role in energy going forward. We are gonna try and build a portfolio of green hydrogen projects over and above Mauritania, and that is why we entered the Moroccan market as well with a little power concept plant at the university.
We will be looking for more projects and in partnership with majors, because we realize these are big projects, and Total already is one of our partners. We're looking for offtake partners, and financing for this is gonna be quite interesting because we're gonna need to leverage The companies that have far bigger balance sheets than Chariot to finance these projects because they're not inexpensive. Technology is key to producing hydrogen at cheap costs. I mean, the consensus is that we need to bring the cost of producing green hydrogen down to between $1.50-$2 a kilogram. That then competes with all traditional energy businesses, those making ammonia, and those making steel. The production of green hydrogen and the chain that goes into it starts off with wind and solar, and that industry is well understood.
Where there's a lot of room for improvement is in the electrolyzer space. That's key because the more efficient the electrolyzer is, the lower the cost of your hydrogen production is. We partnered with a company called Oort, which is a PEM electrolyzer. We think it's one of the most efficient electrolyzers in the world, and we're doing some test work on them in the new year with them in various projects in Africa and here in Europe to see how those electrolyzers might stack up and whether we can use them in our Project Nour in Morocco as well. I think once the electrolyzer technology is sorted out, there is no reason we can't have a world in which we produce hydrogen at around $2 a kilogram.
There is a possibility, of course, I've always said there's the three-pillar strategy, and I believe each one of our pillars is a billion-dollar business at some stage. As these businesses grow, do you keep them under one umbrella, or do you spin them out into various different companies? At the moment, they belong together, but we're always looking for that opportunity as they grow and mature to the next stage. Will there be more value by having them as separate entities? I'll now ask Julian to take us through what we can expect over the next year, newsflow, and projects ahead.
Thanks, Adonis. If you turn to the next slide 19, this shows our busy timeline, which is understandable taking account the amount of things that we've got going on. Lots of triggers there. Top half of this slide shows the gas, bottom half shows power and hydrogen. Gas first. Our absolute obsession, our laser-guided focus is to get to those cash flows as quickly as possible with the associated material cash flows. On that timeline, you've got all the components that are required in order to reach FID weeks, which we expect in the first half of next year, with construction taking approximately two years. First gas, end 2024, early 2025. Also within that timeline is strategic partnering.
What that does is it not only allows us to cover the equity share of the development, but also potentially do further contingent drilling, which allows us to access further resources. Bottom half on power, we're focused on converting further renewable projects from pipeline to projects, both from our traditional mining sector where we focused, but also now through our trading license in South Africa. We're also looking forward to starting construction on the Tharisa project next year. On hydrogen, we're looking to bring in further projects to meet our vision of a vehicle with multiple world-class hydrogen projects, all partnered with majors or major industrial groups. Adonis as Adonis has said previously, we're looking to fund our power and hydrogen at the subsidiary level. This is really important for two reasons. First of all, it minimizes any dilution at the parent level.
Secondly, it also gives a valuation to that side of the business. With that valuation, that should hopefully see feed back up the structure and into the Chariot Limited share price. As I said before, we're gonna be an exciting, we're gonna be a busy, we're gonna be a different stock, and we're gonna get that there and tell the market about it. Moving on to the next slide 20. This is the final slide. We believe we are a unique opportunity with our three-pillar strategy to play into the energy transition space, creating value while delivering positive change. Thank you, everyone. I will now go through the Q&A element of the webcast. Just a reminder, if you'd like to submit a question, please do so via the platform.
How many wells are being actively planned, either new drill or completion of existing in the Anchois project? Would a partner bring with them appetite in funding for additional wells?
Thanks, Jimmy. Yeah. On the Anchois development, as I mentioned, there are three wells planned. Around those three wells, one of those would be essentially a redrill of Anchois-1. That was the original well drilled in 2009. We're now contemplating drilling of a new well rather than utilization of the original well. That's for several reasons. The most important one is that we want that well also to be an exploration well. To deepen into the Anchois south flank prospect, and we think the best way to construct that well is by drilling a new one. That's Anchois-1, very low risk 'cause it's gonna be very close to the original well location. The second well would be a re-entry of Anchois-2, which was Chariot's well that we drilled.
That would be a very cost-effective way of putting a producer in the central part of the field. A third well in the east of the field, we would drill as the third producer for Anchois. That brings exploration potential in the deeper section. In addition to those three wells, we're also on sort of the high-grade prospects already at early planning stage for potential additional exploration drilling. As described earlier
You know, it depends upon the appetite of any incoming party. Clearly one of the things we want to deliver as well as helping with the equity finance of drilling is to accelerate growth from the upside. An ideal situation for us would be to accelerate some of additional exploration drilling potentially as part of that development drilling campaign or potentially even earlier.
How soon after FID will the required project long lead tangibles be ordered, and would these be coming from the OneSubsea consortium?
You know, we've been working with the Subsea Integration Alliance, which for a couple of years now, and they've been working on FEED for the SPS SURF and CPF with us. One of the key things there using that consortium is to stay on a fast-track schedule towards first gas. We do not have an exclusive relationship with them yet for the execution or EPC phase. We are nearing the end of the FEED project. If we can roll through to EPC with them, that would depend upon receiving attractive prices in terms of conditions, that will, you know, keep us on track and on schedule for delivery of first gas. It is true, there are, you know, some long lead items that will be key about controlling the potential timeline for first gas.
Those would normally be placed at FID or very shortly afterwards at financial close. There is also the opportunity for us to bring some of those critical long lead items, some sort of investment prior to FID if we saw that, you know, timing was critical on those. The relationship with the Subsea Integration Alliance has been very strong at identifying what those long lead items are and gives us the possibility to place early orders if we deem that's necessary.
What is the status of the Namibian and Brazilian assets?
On Brazil, those assets were fully written down previously. They haven't been a key part of our portfolio. However, we have taken the opportunity to extend those Brazilian licenses, recognizing that they do have low running costs, and also recognizing that there have been recent announcements, in particular by Petrobras in their strategic plan, which considers 19 exploration wells to be drilled along the equatorial margin. This is extending the successful plays from Guyana and Suriname east into the Brazilian basins. We've given ourselves the opportunity to monetize those assets by taking those extensions, and we're currently running a process to see if we can find a potential company to come and invest in those projects or to take them over.
When will our seismic commitment start at Rissana?
As mentioned on Rissana, we have 2D seismic acquisition commitment. We're looking at executing that probably in the second half of 2023. We're at planning stages currently.
Will existing shareholders be allotted a shareholding dependent on their Chariot holdings in any new co-renewables spinout company?
Yeah. If we decide to spin out any part of the business, pro rata, whatever Chariot shareholders hold in the current list co would mirror whatever they hold, if we were, and I stress if we were to spin them out in the new co.
Today's RNS talks about GSA principles. Why do we not have a signed full fat GSA with ONEE by now?
Okay. The announcement today obviously said that our key principles have been agreed for 60 MMscf/d on a take or pay basis for a minimum of 10 years. The delivery point of that will be on the Maghreb Europe gas pipeline, and that gas will be used in Moroccan power plants. The key thing with all the GSAs and the GSA negotiations is to end up with a bankable project. This announcement today shows that we are doing exactly that.
With all stakeholders having their own reasons for wanting to fast-track Anchois, why does there appear to be a slight delay?
Well, we don't think there are any delays at the moment. We are sticking broadly to our timeline, with first gas coming in at the earliest the end of 2024, but beginning of 2025. At the moment, there are no material delays. So everyone is pushing hard on getting to that point. Also the announcement this morning is. I can't, you know, say how important it was because you had two of the leading actors within the Moroccan context, ONHYM and ONEE, pledging their support to the project and also trying to get it to FID as soon as possible. This gas sales agreement announcement this morning is a testament to that.
Would it not be financially prudent to partner with a company who may not be offering the full value of Anchois but would set Chariot up for the next two years before gas revenues come on stream?
As Duncan said earlier on, we have been in discussions. There's a lot of people talking to us about partnering on the Anchois concession and in Morocco. We're looking at all options at the moment, and we're looking at what's in the best interest of all stakeholders and the Chariot shareholder. We're not gonna be silly about it. If there's something that's compelling that allows us to further de-risk the project and add value to the Chariot shareholder, we'll do it. At the same time, we're not gonna give away value on the project for free or for low value.
Are the board concerned about current share price levels?
Concerned is maybe a strong word. Are we upset at where the share price is sitting? Yes, we are, 'cause we think the company is materially undervalued, and it's not just us that are saying it. Various analysts that have been out there have written their notes and, you know, by their measures and their numbers, we're undervalued. We've recently appointed a new advisor, and we're hoping now that the story goes beyond London because we think that the Chariot story is told in London. We need to start telling that story in Europe and North America, and we are going to actively be doing that in the new year. Yes, it's irritating to see all these milestones that we achieve, and it's not reflected in the share price.
We believe that as we start reaching these milestones and ticking off what needs to be done to get our various projects up the value curve, the value is eventually gonna come in, into the share price.
What impact will the TotalEnergies buyout of Total Eren have on Chariot and the company's joint projects?
Nothing. We carry on working in the same way. We work with TotalEnergies. It's gonna be equally as close relationship it is at the moment. Nothing changes in terms of the strategy with regards to delivering renewable energy projects for mining clients in Sub-Saharan Africa. In our announcement of the past, whilst we have a we've announced that we have project partnership in Mauritania, we also said in that announcement that we'll work with Total on new hydrogen projects elsewhere in the world as well. Nothing changes.
How confident are you that you will be able to secure resources that you need from the Subsea Integration Alliance, given the demand in the market?
I mean, that's an important statement. Yeah, there is a lot of market demand at the moment, and that is one of the reasons why we wanted to start the collaboration with the Subsea Integration Alliance so early. You know, well before we even drilled Anchois-2, that relationship had commenced. That was to ensure that we were on the radar of a major EPC alliance of contractors, and that we would also be penciled in on vessel schedules 'cause we understand that, you know, there is a lot of activity in the market. Vessel availability is tight, and that relationship with the SIA means that we sit in a relatively privileged position compared to a company that would be needing to go out and fully tender for all services.
What is the current estimate for the Anchois CapEx?
As described earlier, you know, we've expanded the project from two to three wells and up to 105 million cu ft a day. Obviously, that's got a reflection in the CapEx. Also, with regards to inflation, we don't have our finalized estimates because we're just getting towards the end of FEED, but around half a billion dollars is the estimated initial development CapEx for the project.
I think it's important to say that'll be, you know, around the 70/30 debt to equity ratio and is what Julian spoke about that with regards to the financing partners. With regards to debt, it's gone very well, so.
Just one other point there. Obviously, Chariot have 75% of the license. We cover 75% of the cost, which will be 70/30, debt equity. The other 25% is ONHYM, we pay their share during the development phase.
Green renewable side is making good progress. How will the projects be financed?
As I said in the presentation earlier on, that we've been approached by quite a few institutions, family offices that want to invest in Chariot but would prefer just to invest in the renewables part of the business, just because they either can't invest in the, in the gas or they don't want to invest in the gas. We've been in discussions about funding at the subsidiary level, what we call the CTP level, and bringing funding in there to fund both the renewables energy business and the green hydrogen business.
There are nearly 9.5 TCF of prospects in the Rissana license. Will these be farmed out separately from Anchois if it is farmed out at all?
It depends upon any offer that we receive. You know, the Rissana license, when we originally, you know, signed that, we were able to retain the prospects that we had from our former Mohammedia license. Since we signed the license, you know, the information from the evaluation has just got better and better. The extension of the Anchois gas play is there, and also we continue to un-unlock new plays and new opportunities. Rissana has value for us, but I think it makes sense, if possible, to have a combined partnership across the Lixus and Rissana license areas because they are, you know, they are related genetically to each other.
To ensure there's an alignment of interest, an alignment of work program across those acreage, if possible, you know, having an equal partnership across all of the portfolio would be of interest. We need to make sure that we get an appropriate value for the Rissana acreage as part of any deal.
The current Anchois wells drilled through a series of gas water contacts. What steps are being taken to avoid water inflow to the main pipeline?
Yes, we do have a gas water contact established in three of the producer zones to be developed. We do have stacked gas sands in each of the three development wells. We've looked at this carefully through the subsurface modeling and also through well design and completion design, and we're looking at, you know, being able to control any risks from water production through that. Cased hole, gravel packs, and selective completions would allow us to perforate with sufficient standoff from any gas water contact in those reservoirs to delay any water production. Also, in the case that water production is detected, to shut that zone off to continue producing from the other zones in those wells. What I would also say is that water production risks have been extensively analyzed through all of our subsurface modeling.
We see that the aquifer size connected to these gas sands is relatively low. You know, even with testing extreme downside scenarios, we see minimal water production through the life of the field. We perceive it to be a very, very low risk. We have designed our completions and production strategy so that we can mitigate any risk from any material risk from early water production.
What price is expected for a pipeline transport tariff to Spain as brokers estimates have ranged from $0.5-$2 an MCF?
No tariff has been yet established. We do take a conservative view when you're doing our own economic analysis on what that tariff will be. Yeah, that is subject to, you know, further negotiation and discussion.
It's worth just noting that we announced that we signed a tie-in agreement to that Maghreb-Europe pipeline, a couple of months ago.
Our partners ONHYM own that pipeline. They have a 25% stake in the project.
Will gas sold in Morocco be paid for in U.S. dollars or local currency?
I can't give the details of it at the moment, but we will ensure that whatever currency is received, it is matched with the development debt.
If the Oort Energy pilot study is successful, what kind of reduction in costs of hydrogen are expected, and what is the current estimate of hydrogen production in Mauritania using such technology?
The Oort electrolyzer is a PEM electrolyzer. You get the two types of electrolyzer. You have the alkaline electrolyzer and the PEM electrolyzer. The PEM electrolyzer is more efficient as it uses platinum-group metals, and the key to getting those costs down is in the production of the stack. The platinum-group metals can go up to 30%-40% of the cost of that stack, and it's about using less metal and getting more efficiency out of it. The goal with the Oort electrolyzer in Morocco next year is to build the first 250kW- 1 MW units. Units have been built in the UK and have been tested here in labs. First step, as I said, is 250 kW moving up to a megawatt.
The whole drive is to be able to produce hydrogen at $2 a kilogram, and the metrics are there to get to that cost. The electrolyzer part is just one component of all those costs. Second part of that question was? Relating to Mauritania.
What is the current estimate of hydrogen production in Mauritania using such technology?
We're gonna produce 10 GW of electrolyzer capacity, so that's equals to 1.2 million tons of hydrogen per annum. As I said, 2050 comes along to get to carbon net zero, we need 800 million tons of green hydrogen.
Could you please expand upon the key terms within the GSA in Morocco, and in particular, the principles that govern offtake pricing?
Well, we can't go into any more detail than we announced this morning. As Jules said earlier on, the key thing is we've got a 60 billion scf a day take or pay for 10 years, and that underpins any financing arrangement we may need for the debt component of the development.
What is the approximate capital cost of the Karo Solar project, assuming Chariot takes a material equity interest?
Chariot has a right because it's a project that was developed through the Chariot stable of companies to earn up to 49% equity in that project, with Total having the remaining 51%. It should be circa $30 million-$35 million for that 30 MW solar facility, phase I. Remember, it can go up to 300 MW, as I said earlier on, as the mine and the country needs more power. That $30 million-$35 million is 70% debt financed, and along with Total, we bring that debt in. There's about an $8 million equity component, $7 million-$8 million equity component of which Chariot has the right to earn up to 49%.
Our maximum equity exposure there, capital exposure would be about $4 million if we took up our full 49% right, which we plan on doing, by the way. As I said, that should be funded on a CTP level separately.
What assurances can the board give to current shareholders that there will be no further fundraisers in the near term?
Yep. Our current cash, last reported cash position was $23 million. We have no debt and minimal license commitments, and we are well capitalized to get this project to FID. What's also worth adding is, we touched upon, we're looking to fund our renewables and hydrogen projects at the subsidiary level, and we've also got a competitive partnering process ongoing. We have no plans, no immediate plans for an equity raise.
I'd just like to add to what Julian said. You know, the management, and directors have a significant stake in this business. You know, We're looking after the equity very carefully because it also affects us. We're aligned with shareholders.
Can the board provide firm assurances that the financial returns expected from the transitional gas arm of the company will be ring-fenced to support future gas development and not be moved across to the yet undisclosed funding required to develop the renewables and hydrogen arms of the company?
It's too early days to talk about ring-fencing funds and things like that in the various parts of the businesses. The businesses belong together at the moment, it is the intention of management to fund the renewables and the hydrogen business separately, okay? Going forward, as we've said, we're looking at funding at the subsidiary level.
I think I'll just add to that as well, that it's our, you know, our long-term intention to return material cash flows to shareholders as well.
Does the board intend to initiate a share buyback scheme at any point?
Well, let's make some profits first. We can talk about that. When you look at the numbers and the possible numbers that our gas project can generate in Morocco, it's looking pretty good. Let's get there. Let's build the project on time and on budget. We can take a view there. As Jules said, we do see this as a very cash-generative business.
Could you provide some color in relation to the potential farm-out of Anchois? Has Chariot received any offers?
What we can say is, we've had strong interest, and it is a competitive process that we have. You know, we can't say anything additional to that or to speculate at this point, only that we will do the right deal, to, you know, maximize value for all.
How will Chariot fund the equity contribution for development of the Anchois project?
When you look at it, as Jules said earlier on, we have 75% of the project. It'll be a 70/30 debt equity. You've got two scenarios. If we were to go it alone, we'd have 75% of the equity check, which we've already had a lot of interest from a lot of people saying that, "If you would like that, we would like to fund that either at the wholeco level or at the subsidiary level, right? At the gas level." As Duncan has just said, is we have a lot of interest in the project and, you know, if we were to bring a partner in, we think that would also alleviate any need to raise significant amounts of equity.
What outline timescale does the company have for further exploratory drilling?
Being alone, we see that, you know, exploration upsides can be unlocked organically through cash flows from the Anchois project. You know, there's more than enough cash flow to pay back debt to, you know, provide returns to shareholders, but also to reinvest within what is a very exciting and low-risk portfolio. The key, one of the key things, again, with partnering is to accelerate some of that drilling, which could be potentially as part of an expanded development drilling campaign, for example, in 2024 to drill some exploration opportunities or even to accelerate and to drill earlier than that by splitting that campaign and even contemplating drilling as early as 2023.
It depends upon discussions with potential partners around which way it might go, but a key thing for us is accelerating that growth because we really, truly believe that the exploration portfolio is low risk and extremely attractive. I think just one other point to make is obviously the Rissana license was issued this year. The Lixus license is only two years old. You've got years and years to capture that further upside from those exploration prospects.
What are management doing to add institutional investors to the register?
We've just appointed a new advisor, hopefully we'll have access to the North American market as well now and more to the European market that can help introduce us to people we've never spoken to before. We recently just did with one of our advisors a roadshow a couple of weeks ago in the United Kingdom. We saw some new institutions. It's the first time hearing the story. There is a lot of interest in the business.
Are the directors looking to buy more shares given the current share price?
If the opportunity arises, and we're not insiders. Yes, I think the directors would like to have more of this business.
Could Duncan say a few words on the seismic data set available and the undrilled seismic anomalies? Are these covered by a 3D survey, and has any reprocessing/inversion been done in the data set?
Yes. I tell you what, this might be a, I don't know if the slide is still up, we go to the appendix. Slide 25, if we can go to the appendix there. That shows the resource assessments, but on the left-hand side of the map, it shows Lixus and Rissana, and it shows in the sort of pink outline the extent of the 3D seismic data. You can see the two data sets that we have, and the vast majority of our lead and prospect portfolio is covered by extensive 3D seismic data. The 3D in the Lixus and Rissana area was shot in 2006 and 2010. We reprocessed that. One of the first things we did on license.
We merged those data sets together and reprocessed a PSDM, that underpinned all of the resource assessments pre-drilled for Anchois-2, and also the seismic on other prospects. If we can flip to slide 24 in the appendix, here are some examples of the seismic data. Anchois in the central part of the slide in red are the far offset anomalies that have been successful at the A, B, CM, and the O sands across the Anchois-1 and 2 wells. The three undrilled prospects labeled one, two, three in Anchois Deep. Also those key prospects on which we have those independent assessment updates mid-year. Anchois West, Maquereau, Emissole and Anguille. All of these have the same characteristic seismic anomalies as Anchois.
The far offset anomalies, low frequency anomalies, various flat spots, polarity reversals, basically, you know, the full.
You know, glossary of attributes you would expect in high porosity gas sands. This all comes from reprocessed PSDM seismic data and, you know, a variety of seismic attributes.
FID was originally scheduled for Q1 2023 and has now been restated as H1 2023. What has caused this slip?
There isn't really a slip. I mean, we're just being conservative. I think there's a lot of work streams that we're trying to address. We're just being prudent by saying H1 2023.
Can you explain why it is not more economic to transmit the renewable electricity to where it is needed in Europe versus green hydrogen transmission?
Yeah. Renewable electricity, I assume people are talking about from Africa. Yeah. Well, you need huge cable lines under the sea to get it to Europe, that is multi-billion dollar CapEx. That's not really Chariot's business model. Green hydrogen with the production and the medium of transport of green ammonia seems to be the most logical way to go. Bearing in mind that recently we saw, you know, Maersk, the big shipping line, employ, I think six to eight ships that were actually using green ammonia as a fuel source, burning it in the same way one would burn diesel, except, you know, without any carbon dioxide being emitted into the atmosphere, instead, water. We just. Our business is to produce renewable power on the continent in terms of wind and solar for our clients.
In terms of green hydrogen, if we are going to produce it and export it will be in the form of green ammonia.
If you don't expect to sign the FID until mid-2023, the project then takes approximately two years to come online, can we still expect first gas in 2024, or are we more likely looking at 2025 now?
We're thinking, first of all, there's some assumptions over there. We're still aiming for first gas at the earliest end of 2024, but beginning of 2025. Bearing in mind that, as Duncan mentioned earlier on, some of the long lead items that we may need to order can be done with some confidence enough before you actually get to that final FID decision.
Does Chariot have a good relationship with the tax authority in Morocco?
Yes.
Those are all the questions that we have so far, to be handled within our allotted time. I will now hand back over to Adonis for closing remarks.
Thanks, Jimmy. To all of people attending this webcast, thank you very much for listening in. 2022 has been an exceptional year for Chariot, all the business pillars have grown significantly. We've achieved many milestones. I think 2023 is gonna be as equally busy as 2022. We thank you for your support, and watch this space as we start hitting our milestones that we've set out for the coming year. Leaves me to wish you all a happy festive season. If you're traveling, be safe. Come back safely so you can watch your company perform even better next year. Thank you very much.