Ann: Metgasco to acquire renewable hydrogen production technology, page-54

And I’m not sure they will need government grants

It's a bit early to say either way, however, Patriot themselves are stating (in an indirect way) that the process is currently not commercially viable in terms of electricity production vs diesel generator, and won't be viable for some time:


Perhaps the inclusion of biochar and carbon credit sales will make each unit commercially viable sooner (?). However, reading further:



So I may be wrong but it seems they currently can't produce electricity. That just leaves the sale of biochar, syngas/hydrogen, and carbon credits to make the project commercially viable. Stage three of the proposed acquisition requires diesel replacement (with syngas?) and power (= electricity?) generation to be commercially viable prior to our vote, and the vote is prior to the end of this year (if I am not mistaken), so I am not sure how they are going to get this over the line if they can't produce power, and diesel replacement won't be profitable until 2025. On the other hand, MEL specifically mentions power delivery in stage three of the acquisition, so that seems contradictory to what Patriot are saying.

It also seems they are not selling these Patriot units to KCE, they're remaining owner/operator and will simply sell power to the customer via a PPA. That leaves all the commercial and operational risk (manufacturing these units and running them profitably, including maintenance) falling on MEL, and it also suggests each unit produced will have to be paid for by shareholders or loans before they are deployed and start generating an income stream. Personally I don't think this capital-intensive financial model is appropriate for a small company like MEL. Selling units outright at a profit would be fine, because that provides the funding for the next unit's manufacture, but dept/equity funding each new unit and then having to pay for operation and maintenance, and in return receiving a small income stream over x-years?? I've already been a shareholder in a company that used this model (RNE, biogas assets) and it was an abject failure and a very costly mistake for shareholders. In fact it almost bankrupted the company.

Sorry to say that at this stage there are too many unanswered questions for me to be able to support this acquisition. Perhaps MEL will release more details of the plan prior to the meeting.