Good morning, ladies and gentlemen, and welcome to the Oracle Power Q3 2022 Q&A investor session. Throughout this recorded session, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time using the Q&A tab situated on the right-hand side of your screen. Just simply type in your questions at any time and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Before we begin, we would like to submit the following poll, and your participation, I'm sure, will be warmly welcomed by the company. I'd now like to hand over to CEO Naheed Memon. Good morning.
Good morning, Mark. Thank you. I am glad to be doing this. We've received a number of questions. I'd also like to introduce my colleague, who is director of the company, David Hutchins. He also has a very rich background in the gold universe. He's a member of the FTSE Gold Committee and was also the chairman. Plus, he has a very good understanding and experience of the mining industry and gold generally in Australia. He's joining us today as well. Thank you, David for being with us today.
Thanks, Naheed. Pleasure.
Mark, over to you.
Yeah. Thank you very much indeed. Well, look, as we said on the onset, you did receive a number of pre-submitted questions. Firstly, if I may just thank everybody for your engagement and any questions that come in, obviously. Naheed, we'll address those as we go through. Let's maybe start off with the first one, which reads as follows: Why is the share price critically low, and what are you going to do quickly to get it back to where it should be? Maybe we could start off with that ball.
Well, that is the main question, isn't it really? The share price obviously is also reacting to the global capital market scenario in general. Of course, we have also been hit as have other companies. Having said that, operationally, we are going from strength to strength. Our recent partnership with Thyssenkrupp I believe, is a huge milestone, true milestone event. It will put our project on the radar of international buyers for green hydrogen as the world transitions to new global energy sources. I do believe that this development of our green hydrogen project along with you know, the sort of further advancement of our other projects, should prompt a significant re-rating of our share price soon.
We do really continue to work hard at communicating our value proposition and which I have said previously as well, we are undervalued, and it's really important for us to be able to communicate the true value in our projects and you know where we are going with them. We continue to do that, and I hope that we can you know see a sort of a revaluation soon.
That's great. Thank you. I guess as part of that, obviously you've got a shareholder register that has all different component parts. In particular, now, how are you gonna get, you know, institutional investors, you know, bigger investors on board and when do you see that potentially is happening?
Right. The bigger institutional investors come in when they see a compelling story and a compelling project, a compelling proposition, and they believe in that. While you've got a number of projects in the pipeline, I believe that our green hydrogen project is an extremely fantastically compelling proposition for institutional investors looking for exposure in this space, looking for exposure in a sustainable, environmentally responsible new global fuel source, so to speak. We believe that as that project moves forward, and we started the feasibility studies, and we continue to advance and we shall you know we've got milestones, and we are moving very very quickly. Those sort of movements and advancements technically de-risk that project in particular.
I'm very, very confident that that will attract, you know, the larger investors, institutional investors, and long-term equity investors as well as they see that project, and its revenue streams and its development on their horizon.
That's great. Thank you very much indeed. The next question really talks around funding, and this came from a long-term shareholder who had obviously just highlighted around, you know, capital raises and potential dilution for shareholders. You know, moving forward, I guess, you know, are you looking to progress without, I guess, tapping the market again, you know, potentially with high-profile partners, or just borrow cash rather than potentially, you know, have that dilution?
Right. We do have a high-profile partner for the development of our green hydrogen project already. As I've said this before, we would not be able to do what we're doing on ground and so very quickly if we did not have his support, and I would think that Oracle Power is benefiting from his direct support. I'm referring to the role of His Highness in the joint venture company that we've set up for the green hydrogen development. We already have that, but that's not the end of it. We are looking, and we are already in dialogue with other high sort of, you know, kind of influential players to come into that space, and we continue to do that for our other projects as well.
As soon as, for example, if I were to say we talk about the third project, if we were to sort of cross a line, in that one as well, then we could absolutely bring in a sort of, you know, a big institutional investor or a big equity investor who would then come into that project. To summarize, I would say that as we get to more advanced stages of project development for our projects and our green hydrogen project specifically at this point in time, our ability to raise money, through sort of non-dilutive methods, and that is what is being referred to essentially, those will materialize. We should be, you know, as we are able to demonstrate, commercial prospects and clarity on loan quantum and repayment horizons, those sort of investments would be forthcoming.
I mean if I can, I'd share that we're already in sort of early-stage discussions of this nature because we can see where we are headed quite soon.
That's great. Thank you very much indeed. Just maybe drilling into that a little bit more, the next question that we received was recently talking about recent interviews where you may have hinted that you're close to having boots on the ground at your hydrogen project, probably meaning that perhaps you're in the final stages of buying land. Is it right to have the assumption that once land is purchased, that we'll see boots on the ground in the very near future? I guess as we have multiple partners eagerly awaiting to go to get this project finally started. I mean, do you see boots on the ground within the next three to six months?
To sort of pick that up, yes, we hope to have boots on the ground fairly soon. It's very hard to give a timeline, but fairly soon, obviously, we are very keen. We have already commissioned our feasibility study for the green hydrogen and green ammonia. We are looking at the development of the hybrid site, et cetera. It's, you know, the different components to that project. Our main partner is on board for the technical and commercial and bankable feasibilities. You know, because we've already started doing that, we would really like to then get onto the ground and really start sort of moving on to the sort of the real development on-ground development phase as soon as possible.
To answer that, yes, we expect that to happen soon.
Thank you, Naheed. Right. Let's turn to the next question really that talks around the exporting of green hydrogen to end users. The company has a vision of exporting green hydrogen from our plant to global markets and having end users in Asia and the Middle East and Europe. Has the company had any direct talks with final end users abroad?
Whereas we would absolutely like to tap the overseas market, and I'll come to what we've done in that regard, but I would also like to add here that we are also looking at the domestic market for different molecules of hydrogen, and we are not going to at all rule out that, because it is important that the domestic market is also robust and, you know, as a gas in pipelines, in a liquid form, you know, in sort of various derivatives, ethanol, methanol, et cetera. I would say the mobility sector might be premature for that, but green ammonia, fertilizers, et cetera. The domestic market is also something that we are working on.
The question is specifically asking me about the overseas market, which we are targeting, you know, the larger proportion for the overseas market because the overseas market is more ready. You know, It's a business. I would sell it to who is ready to buy now and not ready to buy slightly later. We do keep that market in mind as well. I was in Korea recently, conversations there with various big companies. I'm talking about companies which are like, you know, as big as economies at times. They're the ones who have a sort of a demand. We are in conversation with them. We are initiating conversations with some European players, et cetera. To answer the question, yes, and these sort of conversations are ongoing.
Also yes, China, I forgot to mention that, we're in conversation with some companies there. You know, as soon as there is something that is material and we think we should inform the market, and we are required to, we will, but the dialogue is open with various off-takers.
Thanks, Naheed. Let's turn to the next question, talking about Block Six. Is there any way our coal at Thar in Block Six could be used for green hydrogen project? It is possible somehow to convert coal to green hydrogen.
Well, no, you can use gasification and you can make gray hydrogen, but not green. You can make blue if you were to just capture the carbon and bury it. Blue and gray are possibilities. There are some blue hydrogen projects coming out from coal gasification in Australia, and there's some Japanese technology. Those are there, but those are fairly sort of, I mean, they're possibilities, but not making green hydrogen. Green hydrogen is made from renewable power, and there is no carbon emission at all in the process at any stage of the value chain of the production. No, we can't combine that with this.
Hydrogen, yes, and I must admit, we have considered that as well, and once we have a mine, then making blue or gray hydrogen is not a possibility that we would overlook.
Great. Thanks, Naheed. Sticking with you, if I may. In the last three or so years, coal prices have gone up by some 600%.
Mm.
Our 2.4 billion tons of coal in the ground at Block Six has obviously gone up in value considerably. Do you think it's just best to sell this asset and use the funds to develop green hydrogen project, maybe pay the remaining balance as a special dividend to shareholders? Any views that you have there?
It's 1.4 billion tons, if that's a little correction there, according to our feasibility studies. Never mind, it doesn't matter. When prices go up by 600%, it is fine. 1 billion is okay here and there. Yes, because prices have gone up so much, it becomes an even more attractive proposition to develop the mine. Those who have operational mines today are doing extremely well, and you can understand that the money that they borrowed and the investment they've made at a certain price, and now look at where the price is. Clearly they are, you know, they've got free equity now, a few times over.
Having said that, the development of the mine is based on the usage of that coal and then the quality of that coal, et cetera. Now, there is a slightly greater aversion to burning coal for power in Pakistan as well as in other potential investor countries such as China, for example. Pakistan has also suffered a big, huge climate change impact as you know, as shareholders would be aware of, that we've suffered the sort of the biggest floods in history. Even today, we've got more than one-third of the country's agriculture lost. A big, huge loss. Burning more coal for power tends to be slightly, you know, the investors tend to shy away from that.
Having said that, the government of Pakistan needs power from coal because we cannot import LNG and we cannot you know, we have a balance of payment problem and imported coal, as you've already said, and as shareholders pointed out, that's 600% more. It's hard to even import coal. It's a dilemma here. We need it, and yet we have a problem. We have to therefore think about the most responsible way of opening up this mine and then using this coal. The reason that we don't wanna do an outright sale, and the reason that we can't do this you know, one outright or only one way of development is because there are various types of development models now which have come into play.
Opening up the mine, using it for power, coal for existing power plants because now the government wants blending, using local coal as well. As I said, we can't import coal. Of course, industry. You know, putting all of that together, the usage of our coal has suddenly become more. We are now potentially a more valued, sort of proposition. We just have to, you know, get our model for development right, and that is exactly what we're working on with the government as well as with investors. Selling it right now, at this point in time is not something that we would consider, unless and until, you know, at the right price, everything is for sale.
I think that the value would be a lot more today than it was even a few years ago.
That's great. Naheed, just before I turn to David, Eric S. just put a question through on the live panel that related to a question I asked you around the buying of land boots on the ground.
Mm-hmm.
Eric S says the questioner assumed land still needed to be purchased for the green hydrogen project. Is this a fact, or does land still need to be bought?
Land is going to be the land that we will have for the project through a purchase or an award or a lease that are, you know, I mean, those are things that we will update the market, but there's a process. The land is in the wind corridor. There are two stages. One is the identification of the land, the site, et cetera, and we are in the process of doing that. Then there's a whole award and a leasing and, you know, purchasing/leasing process. We're in the process of doing all of that as well. As soon as we have those sort of ducks in a row, we shall update the market. You know, that then places us in not the front row, but there's a row in front of the front row.
We would be just there because then we would be, you know, a developer on ground for one of the largest green hydrogen projects in the region that I can say safely.
That's great. Thank you very much, Naheed. David, if I may turn to you, and I've focused purely on Naheed's thus far. Just turning to questions, I guess, around the Northern Zone and Jundee East. We did receive a number of questions all about different where you are and drilling and all sorts. Maybe if I can, David, just ask you for perhaps an update where we are and any color you can give around that.
Is that, you know, we're working on both projects at the moment, particularly in the Northern Zone. We have had some success where we have identified a large low-grade prospect with very, very good recovery rates there, which is quite exciting. The idea now is. Well, as we've indicated, we're having discussions with other potential partners and they're ongoing at the moment. When they get to a stage where there's something material, we will obviously alert the market. Until then, we'll just continue those discussions. Ideally, what we're looking for is a local player, someone on the ground that can help us there and get a synergy from economies of scale. Because the one thing that these low-grade projects need is size and scale to make them more efficient and more profitable.
That's what we're looking for, and that obviously takes a bit of time to have those discussions. You know, we've got ourselves. You know, we're in the ballpark with a good project, basically. I think the other thing that's worth mentioning is that things in Australia, particularly drilling and work in Australia is all quite slow because there's been a backlog because of COVID and no work being done for two years. That's created a lot of industry backlogs in the various labs and with drilling and everything. Nothing is happening as quickly as anyone would like, but that's totally out of our control. That's the same, you know, Jundee East. We're doing work there. We're waiting for analysis to come back.
As soon as we get those reports, we'll let shareholders know what's happening.
That's great.
Unfortunately at the moment on both projects, it's patience is the key word.
That's great, David. Thank you very much indeed. Turning to the next question really around funding. Does the company have enough funds for the foreseeable future for all three projects, coal, green hydrogen, gold? Is funds an obstacle for any of these projects?
Our green hydrogen project, as I mentioned earlier, is being funded and developed in a joint venture arrangement with His Highness Sheikh Ahmed. That puts the burden of that huge mega, most significant development on us to become just like very minimal, 30% literally. We are very comfortable with respect to that, and that is why we are able to sort of move forward so aggressively and so quickly, and which I believe that once the market starts to recognize, we'll sort of you know the sort of the value will manifest itself. That's one. With respect to the other projects, for the Thar development, as I said, we are at this point in time looking at the right model. Once that right
When I say the right model, I've mentioned a few options. Now, we've got you know the power LOI is one straight away, then developing it for other power producers is another one, then for cement other industries is another one. All of this coming together is another one. Coal gasification and liquefaction is another one. Just today I've been in conversation with you know the Pakistan petroleum companies, and we also have like an agreement with the national gas utility company, et cetera, to buy back from us, et cetera. Even those conversations are going on, and they might actually want to do a sort of a buyback very quickly. Like a confirmed buyback.
With all of that going on, once we have the right model at play, we're gonna put that out, and based on that, then we'll get, you know, larger players to come in who could then contribute to the investment kitty. For Australia, Sammy just mentioned, David, that he and that, you know, we're developing both those projects, and for the Northern Zone we are ideally trying to get into an agreement with a good JV partner. That of course, de-risks us and also reduces the burden for funding further development at Northern Zone. You know, it reduces the burden that falls on Oracle for that. Because Northern Zone is a drillable project, we certainly have to go for further drilling on that.
We just want to make sure that we can do it in a way which is less risky and also reduces the burden. That is why that strategy has also been adapted because we want to work in that way. Also for all these three projects, whereas we need funding from time to time, we have a very, very clear-cut strategy for development for all these three projects.
That's great. Thanks ever so much, Naheed. I think we've touched on, you know, the Sheikh Ahmed Dalmook Al Maktoum in terms of, potentially accessing funds. I think we've covered the funding. If I can turn to perhaps. I think we have touched on it a little bit, but maybe if you could expand a little bit further regarding Thar, you know, where we are with Thar and the gold projects, and really what can the market expect in the near term?
For the Thar project, as I said, you know, we've got a push from the government to use the coal. There are various developments which shareholders have been sort of aware of because I see the conversation. There's a railway line. There is a push to develop local coal. There's a need for power from indigenous coal, et cetera. All of that is going on and, you know, we know that. Of course there is a need for natural gas coming from coal. There's also a need for, you know, liquefaction, coal liquefaction.
With all of that going on, I'm very confident that, in the near term we will have a very, very good model to develop the mine, for this one, two, three, four, various purposes that I have just mentioned. We're looking at all of that, and I think that we should be able to update the market of a definite strategy very shortly as to how we will proceed for the development of Thar Coal. I can only share one more thing with you, and that is that we are looking at a responsible development for Thar Coal. Even that's on the cards. Whatever we do now, the fact that burning brown lignite coal for power, although needed, needs to be sort of, we need to counter that.
The overall strategy has to be such that there is compensation built in, with our development technique for the environment and, for the purpose that it is being used.
Thanks, Naheed. Just turning to the next question, which reads really as follows: "Naheed has spoken about delivering high impact news flow that would generate short-term shareholder value. You know, kind of when do you expect to release kind of more news flow, and what price does Naheed think that fair value is?
I think we should be GBP 0.10 straight away. I mean, I think we're seriously undervalued looking at our huge projects and the value of our resource, et cetera. Realistically speaking, I think that we should have a correction. The price, you know, has been impacted by the global scenario, of course, and then the fact that we are in the development stage. As our projects move on to some more advanced stages, I think there would be a correction and a revaluation. Having said that, in terms of the news flow expected, I've mentioned many different, you know, across the board, I think if one can just sort of go over the various things that have been discussed. In Australia, what are we looking for?
We're looking for a way to proceed with the drilling at Northern Zone, be it this way or that way. You know, there is obviously news that is gonna come out to which will give an idea to the shareholders as to how we're going to be proceeding. That means that we're moving towards a more mineable project in Australia. On the green hydrogen front, we already have made tremendous progress. We've got this group. We are moving on that. There'll be other news announcements and news flows coming as we move very, very fast there. Then for Thar, I've explained the dynamics. There are, you know, certain factors that are being considered. One thing that is clear is that the need and the demand for Thar coal is not going away.
Clearly there has to be a way to move forward, and those will also then be shared with the shareholders as to how we are going to move forward. That means more news flow. Overall, I think that our pipeline is sort of looking very, very good with respect to news flow and because we are actually working very hard on so many different fronts, that there will inevitably be more and more advancements to everything that we are doing.
Thanks, Naheed. Okay. Question. We were told inclusion in the IGCEP was a prerequisite to attaining an LOI for Thar. Last year's report was published in May 2021. Why are we still waiting in November, and can we expect an LOI for Thar?
The reason we're waiting is because there is a discussion ongoing within government and with the government about the demand for more power. We know that we need local coal for power, but the IGCEP basically is a demand supply graph, to put it very simply. How much power is the country producing, and how much is the supply? Then of course, the sources of supply come in as well. This mapping is something that the government itself tends to you know debate extensively because there are different ways of sort of you know finding solutions to the problems that the government itself has. As I said, balance of payments, paying.
Like, if they start buying power from us, they have to pay us or from anybody else as well. They have to have the stream, and they need to be sure that they are able to pay, et cetera. Otherwise, you have debt and circular debt and all of this in the power sector. Those are issues that the government suffers from. That's one. Having said that, they're also looking at other uses and how we can actually quickly open up the mine and start tapping into the various applications. Even that conversation is going on. Therefore, the IGCEP or the discussion around demand and supply is still ongoing, and hence we are waiting. We are also in a much more detailed conversation with the government, generally speaking, as I've tried to explain today.
Overall, not just for a 1,320 MW coal to power plant, yes, but also the fact that we have 1.4 billion tons of lignite coal, which is now really valued highly. How do we deploy that? We are still under CPEC. We have the CPEC financing available for the mine as well as for the power. Now, whether for the power or not, how keen would investors be considering the climate change impact? In Pakistan they would be. You know, there is that little bit of thing, but we are trying to work around that, and as soon as we have a solution with the government and the government has a definite plan for us, we will update the market. This is all very, actively ongoing, as we speak right now.
Naheed, thank you very much indeed. Well, look, I am mindful of time. I think we set the meeting for an hour, but I know it was only for half an hour. I know we've got questions from Ian, from Paul, from John, and from Connor, and from many others, which we'll present to you after today's meeting and give you the chance to pre-present a response. Guys, we'll email you with those responses as they are available. Naheed, I know investor feedback is important to you and to the company, and I'll shortly redirect those on the call to give you their thoughts and expectations. I wonder, before doing so, if I may, Naheed, just ask you for a few closing comments just to wrap up with, and then I'll send investors to give you their feedback.
Sure. Thank you. Thank you for this. I think this is, this is great. It allows us to sort of have to answer the questions and also gives us a chance to, perhaps, you know, Well, it's one-sided, but at least I'm able to share my thoughts and then, and we also thought that we would like, our entire team to sort of start becoming more and more visible, and that is something that we can continue to do, on an ongoing basis. I'm grateful to David as well, for being here with us today. Overall, there is a lot of work that is going on. A lot.
The company works very hard, if I can say that, and the company is very cognizant of people's trust, their money, and their expectations. I can say that I too have skin in the game, so clearly even I have expectations. Whatever happens, we will work according to our strategy. We are also very adaptable, so we don't just sort of say, "Okay, we thought of this," but we are adaptable, we are moving fast, and we will deliver on our sort of prospects. We are delivering in accordance with and we will deliver in accordance with what the market wants and what the global scenario looks like as well.
We are a company on the move, and hopefully, for all the shareholders out there who place their trust in us, patience, but not a lot of patience as well. We know that time is money, so hopefully when it's for all of us involved here, that there would be enough value for everyone to get, you know, some compensation in the near future. Once again, thank you very much.
That's great, Naheed. David, thank you very much. I normally at this point thank you for your presentation, Naheed, but John K. has just sent in a message saying thank you to you for your hard work in bringing these projects close to fruition. Ladies and gentlemen, please can I ask you not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Oracle Power PLC, we'd like to thank you for attending today's presentation. Good morning to you all.
Thank you.