Hazer Group Limited

Good morning and thank you for joining us. Today we are joined by Glenn Corrie, MD of Hazer Group, and Luke Cox, Chief Commercial Officer, who will provide a brief update following the release of Hazer's June quarter results. You are in listen mode only, but feel free to submit any questions in the Q&A box. We'll attempt to address them at the end of the session.

Glenn, over to you. Thanks, Simon. Good morning, everyone. Welcome to our webinar. Joined on the call, as Simon said, by Luke. Our chief commercial officer together will present our results and some other highlights. So in terms of our agenda for today, we want to talk highlights. Obviously, our strategy update provide the latest on the global hydrogen market as well as the outlook. Luke's going to present an update on the KBR deal and all the good work that's being done there. We want to come back and talk graphite. It's the other side of our tech. There's a lot going on in the market there. And we want to provide details of Hazer's graphite as well as our marketing strategy. Then turn to progress on our commercial projects, a bit more insight into our sales and our customer pipeline. Come back and finish with a corporate update, recap on our 2025 priorities, and then open up the call for Q&A. So just jumping down then, Simon, to our highlights page, just diving straight in. Look, Q4 was a very transformational quarter for us, arguably one of our strongest and most strategic yet. It was dominated by our strategic deal with KBR, a global engineering giant to form what we believe is a very powerful alliance that supercharges our commercialization and licensing of our technology. More details very shortly on that. But I'm very confident this partnership will unlock substantial value in our company as well as our technology. I have met with very senior leaders of KBR almost at the very top of the company. They visited our site and our company in Perth. And what I can say is we're aligned on strategy. We're aligned on what success looks like for this alliance. We're aligned on what the target markets in the pipeline look like. And we're also very aligned on getting early wins and early runs on the board. So very encouraged by the early work that's being done there and very encouraged by the collaboration between the two organizations. On other highlights, you can see we worked hard on our scale-up. We partnered with PSRI, our industry leader in fluidization, to accelerate the process development. That complements a lot of the work that KBR is doing in terms of the reactor and the fluidization, in particular the scale-up to very large levels. We also achieved a very major milestone in Japan. Chubu, Chioda Corp have successfully completed their PFS or their pre-feasibility study. They've actually selected site and they have very confidently confirmed a very strong economic case. And that is very good progress for our Japanese project. And we're very excited about the pathway that that is on. Corporately, we successfully raised during the quarter, in fact, a little bit trickled over into this quarter of almost $11 million with very strong backing from strategic, institutional, as well as retail investors. Thank you to everybody that participated and supported the company through that process. We now have a very extended runway through some very significant milestones, licensing milestones, project development milestones. and technology development milestones. Our register is filling out very nicely. I think at last look, we were somewhere between 15 and 20% institutional holding. That's come a long way in two years. So we continue to see strong growth in the quality of our register and the attraction of some larger institutions. A couple of other highlights there. You can see we unlocked further government grant funding. Specifically, this was to our graphite product and our market development. Graphite's getting hot. We want to share more of that very shortly. There's a lot of dynamics going in the market that are very advantageous for Hazer. and then we kick some more goals with our IP protection strategy, which protects our first mover advantage. So overall, strong momentum as the market opens up for a very practical, low-cost hydrogen solution that can decarbonise industry today. In terms of strategy, our staircase, We remain on track. We continue to move up that staircase. We're very confident now in our commercial readiness. That follows the successful CDP test program that we've been through, all that successful and subsequent testing and modelling that Tim and the team have been doing. Our tech is market ready. Our project pipeline is building very nicely. So moving up into scale up, we're making very good progress there. We've locked in a very important strategic partnership to support us getting bigger and doing it faster. Our first revenues have been flowing now in Canada, and that's a very strong signpost of our commercial project and reinforces that low-cost licensing business model that we have developed. Of course, there's more to be done as we move towards the top step of our staircase. We're targeting commercial rollout, getting our technology to market at scale as quickly as possible. We've always said get 10 of these projects into the market over 10 years. I'm very confident we're going to exceed that and we've got everything in front of us to be successful. The size of the prize, the pipeline, the partnerships are all getting momentum. So if we move down to the next one, please, Simon, in terms of our customer pipeline, we made really good progress through the quarter on building out our pipeline. We're giving a lot more detail here in terms of where and potentially who is interested in our technology. We see our pipeline expanding rapidly. Our target markets are obviously North America, It's Europe, it's Asia Pacific and to some extent, more recently, the Middle East. Australia, as you can see, is building out very nicely. We've got seven live opportunities that are being pursued there and you can see the size of the bubble. that we have annotated there relates to the potential capacity of a Hazer facility. So the larger ones are over 80,000, the smaller ones are between 20 and 80,000. So the scale is there on the bottom left for you to reference. During the quarter, we started, in fact, we started the quarter with 45 global leads, and most of those are shown on the map across multiple industries, traditional industries of petrochem's refining ammonia, but also new industries, sustainable aviation fuel, steelmaking to some extent as well. So the majority of them, as you can see, are large scale opportunities, and that is also helping us inform the way we think about the scale up of the technology. With KBR, we potentially add hundreds of opportunities in ammonia and methanol. And from our last webinar, you may recall that there is something in the order of 450 ammonia plants worldwide. That's the green dots. And of this, 260 are facilities or ammonia facilities are KBR technology. So they today hold a dominant market share over 50% of the ammonia and the methanol market. So a very important strategic partner for our technology. So pipeline now extremely large, active with an opportunity set of potentially over 300 deals. Moving on to then the next slide. So the question then is, how do you put a value on this? What is each one of these bubbles or dots worth to Hazer? On the right hand side, you can see that we've worked the Hazer cash flows under a licensing model for a single 50,000 tonne per annum hydrogen facility. The key features of that cash flow is in the table on the left. It's a licensing model. First of all, there's no capex associated with that. You can see that it drives early revenues and free cash. Importantly, those revenues start to come in pre-FID. That's the Canada model. Canada is in year one of that model and we are receiving revenues from FortisBC. So it is our strategy in action. And then importantly, the key number there is a single plant for Hazer delivers a net present value over 20 years of $115M on licensing value alone. So every bubble on that previous chart is valued at over $100M for Hazer. With that deep pipeline of 45 active discussions, a much larger prize, potentially over 300, you can clearly see that Hazer has the potential to be a multi-billion dollar platform. And that's been the vision of the company to get this tech to market into the hands of the industrial players that need a decarbonisation solution. So 10 projects is a billion dollars, 20 projects is 2 billion and so forth. And that's relatively consistent with the analysts that have got valuations on us. I think there's one, I think the Euros Hartley's report is out there with an unrisked valuation of around $2.50 a share. And most of them seem to be coming in at that level at the moment. So moving then down into the hydrogen market. So there's a window of opportunity opening up. As we go left to right across the slide here, we've got an enormous market with an enormous problem. Green hydrogen using electrolysers to split water has failed to deliver that solution. Why? It's very energy intensive. It's about seven or eight times the energy that Hazer requires, therefore making it very costly. You've seen overnight that Fortescue, I think, have dropped two green hydrogen projects, Woodside earlier in the week and other green hydrogen projects. So we see this industry shift. that just continues to open up opportunities for Hazer's low-cost, ready-today solution. We've got a proven tech, it's viable, it's a low-cost alternative. We decarbonise gas, we plug in and we utilise existing infrastructure to deliver a very clean, affordable hydrogen solution with no CO2. but with this graphite, very valuable graphite co-product, which is substantial upside for the technology. The time is now, the market's opening up, the industry and policy in particular is shifting. We see gas coming back onto the agenda in a big way globally, and we've got that partnership in place now and enabling us to scale up with global corporations to deliver that solution today. Next one down, you'll just see again, There's never any downside in reiterating the size of the market here. The current demand top left, the consumption in the market today is 97Mt per annum. It's valued at over USD$200Bn. In context, that is approaching the size of the iron ore market. I always talk about the fact that it's third going to a half of the LNG market. It's a big market with a big problem. Production today is concentrated in three industries, as you can see on that bar chart, refining ammonia and methanol and a little bit of steelmaking. The problem for this market is that 95% of that 97 million tonnes is produced with steam methane reforming, which emits a massive amount of CO2. It's 10 times the amount of hydrogen that's produced. Every tonne is 10 tonnes of CO2. That's our disruption. Hazes target markets is disrupt, is really targeting those industries that need that replacement and that clean alternative affordable solution. And that is arguably our addressable market. So if we jumped down to the next one, how do we naturally compare then with steam methane reforming that dirty source of hydrogen? Well, actually quite well without the CO2. Steam methane reforming, basically dominates the industry. It's 95% of global production today. There is somewhere in the order of over 1500 SMR plants. So if you look at the table on the left, we're similar in energy intensity. We have the same gas feedstock. So we integrate very nicely into existing supply chains and infrastructure. But advantageously, we have no Scope 1 CO2 emissions relative to their 9 to 12. So you can see immediately that we're an amazing replacement technology without the CO2, but with a graphite co-product. So very comparable, but without the emissions footprint. Chart on the right, we've used many times before. Haze is very well positioned, very competitively um costed in fact we're cost parity with smr we're a third of the cost of blue hydrogen and we're conservatively a seventh of the cost of green i think we're being generous there we see green hydrogen projects sometimes well in excess of ten dollars a kilogram so you can just see how very cost competitive um haze technology um is To complete the market side, how does Hazer fit within the market? There are a lot of peers out there that are developing a technology in methane paralysis. We're clearly leading the pack of all of those peers. We're a front-runner in the space. We do a lot of work on competitor analysis. We've looked at plasma. As a technology, we looked at molten beds 10-years ago. We just figured out that those weren't the way to scale. We've got several X factors here that really set Hazer apart that drive our competitive edge over emerging players. Just to call out a few, low energy intensity and high value graphite co-product delivers us a very low cost pathway to clean hydrogen. But above all, scalability, that second bottom line, scalability is a absolute critical success factor for a technology. The use or our use, of a fluidized bed reactor technology is our major differentiator. It's proven industrial scalability. It's a technology that we've adopted from the refining sector and the metallurgical industry. And that enables us to go big, go more efficiently up to very large scale deployments, even on a modularized basis. So it's a very well position technology with almost all proven aspects of it incorporating the major aspects of the process. Work doesn't stop here for us. We're confident that we can see upside with energy. We've got some excess heat that we think we can use to even bring that energy intensity down further. And we're absolutely confident that we can bring down costs. We've got KBR looking at our costs and telling us that they think they can go cheaper on certain aspects of it. So there's certainly economies of scale that can be built into this. And there's also massive upside with our graphite. So we win on cost. We went on scale, we went on carbon quality, and we're leveraging this with KBR to secure important first mover advantage in key markets where we have done already with existing projects as well as new projects. Right, so Luke, I might just hand it over to you here to talk about our recent KBR deal and the progress that's being made there.

Thank you, Glenn. Good morning, everyone. Building on Glenn's previous slide, all those aspects are also the reasons why KBI chose Hazer. So we've spoken in a previous webinar about the deal. This is just a reiteration of the highlights of that deal. Important to note that KBI has committed to exclusivity with Hazer, so they will not market any of the other competitive methamphetols that technologies for the reasons that Glenn just spoke to. Those are all the key reasons why Hazer is different, why KBR chose Hazer. So exclusivity in ammonia and methanol, we have the optionality to bring other projects in the non-exclusive markets to KBR. Also important to note, I think, for investors, existing shareholders, We've carved out the existing portfolio. So all the projects that we have developed to date as Hazer, we can bring them to KBR, but we don't have to. If the client KBR and Hazer think it's a good idea, we can develop them jointly. And that's definitely adding to the momentum in our pipeline. Relevant to mention as well, scale going up, the market demand is big, as Glenn pointed out. KBI is committed to a contribution to the work program financially. So that will also help us in terms of our runway going forward, preservation of cash and spending our money wisely. Financial contribution by KBI is very important and greatly appreciated by us all. The market position, Glenn already mentioned, exclusivity ammonia and methanol, more than 50% of the current hydrogen demand. KBI has a serious position in that market, more than 50% of that 50%. So, yeah, a beautiful strategy to have access to that market with a very serious global partner. What is not on this slide and one of the terms that you can't negotiate is cultural fit. As Glenn mentioned, in the recent weeks, we've had the opportunity to engage at very senior levels with KBR and the alignment is super strong. Target markets, path to market, how Hazer fits in the KBR portfolio and in the global markets. It's really a nice and strong alignment on all those aspects. So maybe go to the next slide. I think I need to make up a little bit of time so I can go a bit faster. Technical work is in progress. The process design package for larger scale solutions is ongoing. Go-to-market strategy is being formulated. In parallel, and it maybe should be brought forward, the market engagement is ongoing. We're already talking to people together. We're exchanging leads, we're exchanging market intel on a daily basis. There's a lot. And it's really exciting to be part of a proper partnership as well. We call it a strategic alliance, and that also comes through in the day-to-day interactions. It's a proper partnership on an equal basis, equal terms. be working with that kind of partner. Maybe move on to the next one, Simon, please. On to graphite. The next slide, please. I think many of you would have been aware that there's a lot going on in the world around the supply chains. Graphite comes to the fore quite regularly. Terrorists are being considered, put in place sometimes. Graphite is a critical mineral. For many countries, it's on the critical minerals list. So what that does is that there's a heightened awareness of sovereign risk and sovereign risk around supply chains. So a lot of companies, a lot of countries are very interested in producing graphite locally rather than being dependent on international supply chains and being exposed to the economic and supply risk that those existing supply chains have with them. Maybe move on to the next one. What it all does, what it all means, to state the obvious, is that it for hydrogen, but now also for graphite. So this is a visualization of the key markets that we're focusing on in terms of key applications. A lot of work has been been done in this in this space in the last six to 12 months. In no specific order, concrete and asphalt is something that is right up there in terms of potential applications. As you may recall, with our finance, Tubu Electric and Chioda Corporation put a project in Nagoya that is one of the key focuses is to sequester the carbon. in asphalt and bitumen, not as a gas, so it's not CO2 storage, but it's sequestering the carbon in a solid form, which has many advantages, especially in jurisdictions or in countries where you don't have access to gas fields to store the CO2 as a gas. Through the haze process, you can store it and actually make economic value out of the carbon product as it comes out of our process. Another one to mention is the iron and steel making. Obviously, as many of you would be aware, we've got a partnership with POSCO in the market. The interest for steel making is in both the hydrogen as well as the graphite product that Hazer produces. We also have an ongoing partnership with Mitsui that I'll address in a second. But in steelmaking is where a lot of things come together. As you may recall, we use iron ore as a catalyst. So we have a low emissions graphite product with an inclusion of iron ore, which is very attractive for steelmaking. A lot of traction in that industry globally. Other ones to note, water treatment, PFAS removal, a very interesting topic. PFAS is quite important. It's a carcinogenic substance found in water across the world, major concern for water utilities. We've got some potential angles there and are developing a serious partnership in that space. Next slide, please. So coming to that strategy, and this is quite an important slide, I think, to focus on. So what we do in terms of our market development and product placement in the market, we're focusing on three things. We're maximizing certainty by reducing the risk around supply chains. So we have a partnership with Mitsui, as I mentioned just then. We've been working with Mitsui since 2022. specifically on the placement of graphite, haze graphite globally. For Mitsubishi, that's a scope three play. They want to help their buyers of existing commodities, petroleum, coke, naturally occurring graphite, other CO2 intensive products. They want to replace that with haze graphite, which is a low emissions product. Strong demand there. a serious pipeline leading to good positions for future off-tank deals through Mitsui and also in parallel, Hazel is also doing a direct pathway. So we've de-risked that aspect of the marketing strategy as well. Indirect and direct optionality also in terms of pricing. The other two important legs of the strategy are volumes because we're seeing significant volume demand for graphite and of course maximizing the price. The call-out box in the bottom left there is an illustration. As Glenn mentioned earlier in the presentation, if you take a nominal 50,000 tons per annum hydrogen production plant for a facility, which is where we're now focusing in terms of capacity, the market demand is there, that produces approximately 150,000 tons per annum of graphite. If you times that by a conservative price, that for one project would generate $45 million per annum for a single plant. So that's for one plant. I want to emphasize that all the numbers that Glenn has been mentioning is a single plant location projection. I think that's the most important bits of this slide. So next slide, please. Excellent. Yeah, earlier in the, or after the quarter on July 15th, we announced a partnership with Energy Pathways in the UK, referred to that announcement for further detail. What is important to note is, I think, three things. It's a very clever project in terms of the strategic positioning in the UK. It's a facility potentially of 20,000 tons per annum of a hazer production capacity for hydrogen. And what is very important is the UK policy is very explicitly supportive of methane pyrolysis. And I mention that because Europe is a bit complicated in terms of regulatory environment. A lot of focus on electrolysis. Economics aren't there. As Glenn mentioned, we see projects falling over left, right and center. That's why we think this is a potentially quite exciting partnership in the UK. Also strategically to get a foothold in the UK market as Hazen. Next slide, please. Our existing business development pipeline, we've shown this before. We've spoken about it a couple of times. Maybe just to reiterate, our existing portfolio, as Glenn mentioned, it's solid. It's been solid. It's growing every year. week or two we add a serious uh proponent to the into the pipeline um we are very selective in terms of who we speak with and who we progress with simply because there's a there's a lot of demand so we have to be selective and only work with those people that really are ready to to work with us so um so it's a good thing overall the um if you add it all up the existing portfolio adds up to just over 1 million tonnes per annum of capacity in total, which is only, it's less than a percent of the current global hydrogen demand as Glenn focused on earlier. So with our existing position, very confident that our 10 in 10 objectives or 10 plants in 10 years is realistic and achievable.