Tlou Energy Ltd (AIM:TLOU, ASX:TOU, BSE:TLOU)’s proposed hydrogen project could see the company use gas that is currently being flared and develop a new market for its coal bed methane (CBM) resources.
Assuming the prototype is successful Tlou and its development partner Synergen will seek to grow a clean energy business via a joint venture throughout the Southern African Development Community (SADC) region, broker K1 Capital said in a research note.
The heads of agreement signed by the two companies also envisages Tlou’s participation in Synergen’s proposed initial public offering (IPO) scheduled for the first half of this year.
Synergen is an Australian company with previous experience with plasma technology. Tlou will supply the input gas and electricity for the prototype at no cost to Synergen. A gas price will be negotiated for later expansion. Synergen will retain ownership of the plasma technology and associated intellectual property. Hydrogen and carbon products will be owned 50:50, K1 said.
The first prototype is expected to commence field trials at Lesedi in 2022, producing hydrogen and solid carbon with near-zero CO2 emissions. The hydrogen can be used for power generation and transport fuels, with carbon supplying the carbon black market for tyre manufacture and coating applications, K1 reported.
“Tlou’s venture with Synergen creates a platform to convert CBM to hydrogen using renewable energy.
“Successful demonstration will expand Tlou’s product mix, adding hydrogen, solid carbon and technology licencing to existing gas and power options.
“Synergen’s technology can also be used in waste gasification and PFAS (firefighting foam) destruction, offering multiple value-adding options,” the broker said.
K1 has a target price for Tlou of A$0.24, versus a current price of around A$0.041.