Elixir Energy Ltd (ASX:EXR) has achieved progress on multiple fronts for its Mongolian-based green hydrogen project – Gobi H2 – including the signing of a memorandum of understanding (MoU) to support project finance.
The company has executed an MoU with the Mongolia Green Finance Corporate, a joint-public-private sector body, and procured expert water advisory services, with potential water sources for the project identified.
It has also submitted a detailed analysis of the legal issues surrounding a potential green hydrogen project in Mongolia to the Ministry of Energy, which states that no new major legislation is needed for the development of green hydrogen projects in the country.
Elixir Energy is also in the process of confirming the bankability of the renewable power inputs.
First mover advantage
Elixir managing director Neil Young said: “All the work we are doing on our Gobi H2 project serves to reinforce our original starting concept: the country is a potential tier-one location for large-scale hydrogen exports.
“Elixir’s first-mover advantages are being progressively locked in and it is fantastic to see the rapidly growing interest in this future-facing industry from multiple local and international stakeholders.”
Shares have been as much as 19% higher this morning to $0.19.
Gobi H2 trademark
Elixir Energy has named the green hydrogen project the ‘Gobi H2’ project and is applying for a Mongolian trademark for the name.
Project finance
Under the MoU executed, the parties will cooperate on the following:
➢ Identify Mongolian carbon offset opportunities at the household level. Elixir’s aim is to reduce its current exploration/appraisal stage scope 1 and 2 carbon emissions by such means;
➢ Develop larger-scale forestry/nature-related offsets in Mongolia. These are increasingly sought by international oil and gas companies to offset emissions in the production stage of operations; and
➢ Work with International Financial Institutions (IFIs) over the project financing of Elixir’s proposed green hydrogen pilot production plant. A number of IFIs are present in Ulaanbaatar and Elixir has developed relationships with them.
The MGFC was established to facilitate the financing of Mongolian projects that will assist the global energy transition to a net-zero carbon future.
'No new major legislation needed'
As part of the MoU with Mongolia’s Ministry of Energy on the cooperation over various hydrogen-related matters, a key initial deliverable - a detailed analysis of the legal issues surrounding a potential green hydrogen project in Mongolia – has been delivered to the ministry.
Elixir had procured a baseline analysis of the green hydrogen legal environment in the mature jurisdiction of Western Australia from global experts PriceWaterhouse (PwC).
The comparative position in Mongolia was then evaluated by leading Ulaanbaatar-based law firm MahoneyLiotta (ML).
A key conclusion of ML’s analysis is: “It is our view that in general, the existing Mongolian legal regime supports the development of green hydrogen projects in Mongolia without the need for any major new legislation.”
Copies of the legal reports have also been provided to:
- Various Ulaanbaatar-based IFIs who have expressed interest in hydrogen projects in the country; and
- The Future Energy – Mongolian Hydrogen Council. Elixir’s Neil Young serves as the deputy chairman of this recently established body.
Expert water advisory services
Elixir has worked with Mongolian drilling company ErdeneDrilling LLC for a number of years on the CBM drilling front.
Although water is not a large part of the cost structures of producing green hydrogen, it is a vital input and the social issues surrounding it are a key priority.
Elixir’s CBM business, where producing water is a necessary part of gas production from coal seams, provides complementary areas of expertise and even potential H2O feedstock for the Gobi H2 project.
Elixir and Erdene have recently formalised their relationship over procuring water for hydrogen through an agreement for the provision of water advisory services.
The parties are planning field-based water exploration and appraisal activities for later in the year.
Renewable resources
Other than water, the other key input for a green hydrogen project is a high-quality renewable power source, which desktop analysis indicates are of globally very high quality in the Gobi region.
On this front, Elixir is currently:
➢ Measuring wind and solar resources to a bankable standard through its Australian sourced SODAR unit imported to the country last year and deployed in the South Gobi region; and
➢ Importing a solar-focused measurement tool (from the same Australian firm who supplied the SODAR – Fulcrum3D) to be deployed at its recently acquired Solar Ilch solar farm.
Elixir’s SODAR deployed in the Gobi close to the main transmission line from China.