My take on a current investment in GEV:
Global Energy Ventures (ASX: GEV)
Corporate:
| No of Shares on issue | 456m |
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| 1 | Market Cap | $38m (based on $0.083 share price) |
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| 2 | Cash on Hand1 | $7m (including $300k govt grant) |
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| 3 | Enterprise Value | $31m |
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| 4 | Options on issue | 97m (expiring May 2023, exercisable @ $0.12) |
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| 5 | Top 20 | ~40% of share register |
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| 6 | Performance Rights3 | Management has 15m performance rights |
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| 7 | Directors & Management2 | Very experienced in energy + business/finance |
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| 8 | Shareholding of Management | 13% (aligned with company success) |
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- Raised $6.3m in February 2021 @ $0.10 – currently trading below that which may represent a good time for entry now
- Director Salaries are ~$1m per annum – slightly concerning, but reflects the skill set
- Only vest if the share price goes above $0.45 and $0.55 for 30 days – this is good
Business/Projects:
Integrated business model covering the value chain forregional marine transport projects – I like this because it generates sustainable recurring revenue in the future
- Compressed Natural Gas LNG ship
- Commercialisation ready, scoping study completed in 2019 proved their commercial scale
- Lower emissions ship
- Ship design enables the storage of more LNG for shipment
- Had several MOUs in place, but with the move away from fossil fuels, the LNG project is on the back burner now
- Compressed Hydrogen ship
- Commenced October 2020 as a “world first”
- Following the global mega trend for green hydrogen
- Signed multiple MOUs between October 2020 until August 2021 to develop various projects
i.Most significant is the MOU with PRL in August 2021 for a feasibility study to export from the HyEnergy project to Asia-Pacific
ii.Has received a $300k government grant to progress the feasibility study
iii.GEV anticipates completing the feasibility study in H1 2022
- Another significant MOU is with Ballard Power Systems
i.Working together to develop a hydrogen fuel cell to power the ship from hydrogen in the ships storage tanks
ii.If successful will be a zero emission transport solution
iii.MOU expires December 2022
- Scoping Study completed in March 2021 proving their concept is very competitive for Australia to Singapore and reasonably competitive for Australia to Japan, South Korea and China routes
- Technology really simplifies the transportation problem and high costs previously associated with hydrogen
Broad Timeline:
| Sep 2021 | June 2022 | August 2022 | December 2022 | March 2023 | December 2026 |
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| 1 | In principle approval for 430t hydrogen ship | Completion of HyEnergy feasibility study | Will need to raise more cash (hopefully at higher SP) | Full approval for 430t hydrogen ship | Commence construction of 430t hydrogen ship | First operations/shipment of hydrogen |
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My View:
- Speculative buy, smaller investment now, increase investment if the company progresses feasibility study with the HyEnergy Project
- Plenty going on with the company and they are throwing everything into the shipping transportation of hydrogen
- I like that they have plans to build an integrated business
- Hydrogen is where all the investment money is pouring into, generally that is a good theme to follow
- They will need to raise loads more cash in the future to progress their operations
- Once they get to the ship construction phase, the company would need to have an offtake agreement in place so they can secure project finance (i.e. debt rather than equity)
- For $0.083 ($38m market cap) vs a potential future trillion dollar industry, GEV is worth a speculative investment if you are willing to wait 5 years
Major Risks:
- If HyEnergy project is not viable the company will be back to square one
- Future capital raisings
- Project delays
All IMO and not investment advice.
Wolf
