Hazer Group Limited

Good morning, everybody, and thank you for joining Hazer Group's Q3 FY25 shareholder webinar. On the call presenting today, we have CEO and MD Glen Corey and CTO Tim Forbes, who will run through the highlights of the quarter. Following the presentation, we will have time for some Q&A. We will begin with those questions that were submitted in advance of the call today, and then we'll move on to questions from the floor. If you would like to ask a question, please do so using the Q&A button at the bottom of your screen, and we will try and answer as many as possible. So to begin, I will now hand over to you, Glenn. Thank you.

Thanks, Hannah. Good morning, everyone. Welcome to our webinar. I'm joined on the call by Tim Forbes, our Chief Technology Officer. Together, we're presenting our Q3 results, plus some other highlights, which you'll have seen in our materials that were released this morning. Hannah, if we can go to the agenda, please, on slide three. We're going to start with the highlights, then we'll provide an update on the hydrogen market. Tim will present the details of our commercial readiness and our important scale up strategy. Then we'll turn back to talk about the commercial projects in particular Canada. And then for the first time, we're going to share some details and some of the dimensions of how our customer pipeline is shaping up. Then we'll finish with a corporate update. We'll recap on our 2025 priorities and then open the call, as Hannah said, for Q&A. We can move down then jumping straight into our highlights. We had a solid quarter. We continue to advance our commercialization strategy. There were three quite important milestones during the quarter. Firstly, we confirmed the commercial readiness of our technology. Following some quite detailed evaluation of our CDP data, Tim will talk to this very shortly. You'll recall that we completed that test program back in November of last year ahead of schedule. And then since then, we've also had some external and independent verification of our process as well as our operational stability. So in a very, very good position from a technology perspective soon after our CDP. Secondly, we have made some great strides on our scale-up strategy to meet the growing demand for larger scale units. We're seeing that grow. Canada, of course, is 25 times our commercial demonstration unit. We've got a new reactor program in flight that is capable of reaching over 20,000 tons per annum to meet some of that demand that we're starting to see in the industry, as well as for our technology. Corporately, we ended the quarter with a robust and very flexible funding position. We've got no debt. We've got a very discretionary work program. We've got liquidity, as I like to say, of over $12.5 million. The cash position is $10.3 million. That was actually up on the previous quarter over $1 million. That was driven by further revenues coming in from Canada, as well as us meeting a couple of important grant milestones. So a lot of non-dilutive activities funding coming into the system to effectively put us in a very robust funding position as we go forward into the year. And of course, we kicked a few goals you will have seen on the intellectual property strategy. We secured two very important patents, one in Japan as well as one in the US. And I'll talk to those very briefly shortly. So overall, very good momentum. The last quarter, we built on the success of the CDP to position Hazer for that go to market strategy. So in terms of our strategy here on this slide, we're moving up that staircase. As you will see today, we built that solid foundation for our commercialization. The CDP, all of that follow-up evaluation and analysis has substantially de-risked this technology for commercial deployment. Graphite volumes are being shipped. They're being tested. That is going on with key stakeholders in a range of applications that we've shared in the past. And very importantly, we are developing that strong sales and customer pipeline in addition to our foundation projects. And we'll share for the first time some of the details of that very shortly. We made good progress on our commercial scale-up strategy. Canada, other projects in Japan and Korea, and we are exploring several strategic partnerships to effectively get bigger and get it faster into the market. Our target is to get this technology to market at scale as quickly as we can. Our business plan has been premised on 10 projects or 10 facilities in 10 years, and I'm confident and the team are confident that we have got everything to be successful in achieving that ambition. Moving to the hydrogen market, It's been a while since we provided an update on the market. A lot has happened in the market in the last 12 to 18 months. Look, it remains a very large market. It's set to triple, almost triple in the next 25 years. If you look at the chart on the right-hand side, today's current market is, or current demand or consumption, if you like, is 97 million tonnes per annum. It is valued at close to 200 billion US dollars. Production, as you'll see from that first bar on the left, is concentrated in three industries, refining ammonia and methanol, and a lot of attention is being now effectively deployed on the ammonia market, and a little bit of the hydrogen market is used for steelmaking, in particular direct reduced iron. The problem with this industry is that 95% of that 97 million tons is dirty hydrogen. It's produced through a carbon intensive process called steam methane reforming, which emits a massive amount of CO2. In fact, it emits 10 times the amount of hydrogen that's produced. You've heard me say that several times. So the industry emissions coming from the hydrogen industry is close to a billion tons of CO2. It's 920 million tons. So that's the market that is today that needs a solution. It's not a market in the next 10 years. It's a market today that's very large. It's very dirty and needs a solution today. And that's Hayes' disruption, as you see on the slide, to replace that dirty hydrogen with an affordable, clean hydrogen. And steam methane reforming, there's something in the order of around 2,000 plants worldwide. Our ability to switch and disrupt this market with a comparable switching cost is one of our great competitive advantages. If we move to the next slide, we're drilling down a little bit now on some of the observations that we've seen in the industry, particularly over the past 12 months. The industry is getting bigger. It's growing on average globally at about 2.5% per annum. It's getting dirtier. As I said, there's over 2,000 of these steam methane reforming plants that need replacing. Green hydrogen, which uses electrolysers to split water, that's been hampered by high costs, slowed progress. You'll have seen some of the very high profile projects worldwide that have stalled. That's an opportunity for us. The industry is shifting towards methane pyrolysis as a viable alternative. Why? You can see it there on the right-hand side. We convert gas into clean hydrogen and a graphite co-product. We bypass those CO2 emissions of grey hydrogen or SMR and the inefficiencies of green hydrogen. We integrate into existing infrastructure and existing supply chains. And of course, with that graphite co-product and zero emissions, we're very well positioned, not only as a technology, but as a company to provide a very real available now solution to industry to decarbonize. I might just hand it over to you if you've got a few words to say on anything here and perhaps then move into the commercialization or the technology slides.

Yeah, thanks, Glenn. G'day, everyone. Great to be here again today. Yeah, in terms of the shift towards methane pyrolysis, I think what we're really seeing is people waking up to the reality of the thermodynamics and the energy intensity required to split water. I think we've been saying that for some time. It is five to eight times easier to split a methane molecule than a water molecule. And what that means is the renewable energy costs associated with green are substantially higher. And as people are working through the details of their projects, they're realizing that it just doesn't quite stack up. And they're starting to see that technologies like Hazer can be clean as well as affordable. And we're also seeing the recognition that a fluid bed process is scalable. And then, of course, the upside with the graphite coproduct. So it's starting to sink in, and we're seeing a real shift. Thanks, Hannah, if you can move on to commercial readiness. So we get a lot of comments and questions about commercial readiness. So I always, when I address this, I like to talk about, first of all, a process needs to be technically ready before you can monetize it and before it's commercially ready. So the CDP test program in 2024 goes a long way to validating the process performance and the technical readiness. Building on that, independent assessments, verifying stability and data integrity of that work, further bolstering that technical readiness assessment. And so when you're at sufficient technical readiness, then you can start to look at commercial deployment and commercial readiness. So when I talk about commercial readiness, I'm specifically referring to ARENA's commercial readiness index scale. And so on that, if you go and look at that scale, it's easy to look up at CRI2. We're talking about a commercial trial or our demonstration plant trial, which we've completed last year. And then the next activities on that scale, three to five are commercial scale up, multiple applications, and then widespread spread deployment. So we're currently working on all three of those, larger scale reactor design, pursuing multiple business opportunities, which we'll talk more about. And then that will obviously lead to the widespread deployment. So at this stage, we're less focused on the numbers and really, you know, it's more about what does it take to deliver those projects? And people always come back to, it needs to be sufficiently de-risked. So we look at our IP is strong. We understand our chemistry and kinetics and our reactor performance as demonstrated by the demonstration plant program. We've shown that our reactors are constructible, understand materials selection and operability. And ultimately then people see that the business case is sound. It's economic and fluid beds are proven to be scalable and add to that the graphite upside. So really what we're saying is we are commercially ready. We're ready to go and we're seeing a lot of strong interest But substantiating that, we'll talk about shortly. So if you can go to the next slide, please, Hannah. Okay, so we are commercially ready now. What we're looking at doing is accelerating that scale up. So we want to go bigger, faster, better, cheaper, and at low risk. So what are we doing to deliver on that front? First of all, The modifications at the commercial demonstration plant are progressing well in terms of construction, engineering, installation. That is all ongoing and under control. In parallel with that, we're looking at other low-cost means to further accelerate and de-risk our scalar. And in this last couple of months, we've engaged global experts, particularly at Solids Research Institute, out of Chicago, recognized global experts, utilized by all the major oil and gas companies and many technologies in assisting them with their scale-up. So we've done a few things with them. One, we've increased our internal capability through some fairly world-class training. And we've had a workshop with them reviewing our scale-up strategy and the Resounding feedback is that it's positive. We're on the right track. We have identified a few low cost items that we want to work on to further bolster the confidence in the technology. And we've developed that work plan with PSRI and the kind of testing there we're talking about comparatively low cost work where we do larger scale cold flow testing to get a more detailed understanding of our particle fluidization behavior, and then also evaluation and upgrades to our reactor kinetic model to enhance our large-scale performance predictions. So really, by engaging these experts, we're building capability, allowing ourselves to go faster whilst making sure we're on the right track and reducing risk. Thanks. I'll hand back to Glenn to talk about the pipeline now.