It’s been a while since I last checked in here on HotCopper and it’s good to see much of the same gang still around. Elixir Energy has had quite a year so far. It’s all systems go at the moment in Nomgon IX, in-spite of Covid.
I’ve just been getting my head around the current rig situation (useful map from the quarterly below). The Richcairn 4S on the map initially threw me off and I soon realised that we are actually about to spud a core hole at Richcairn 4 with the same high powered rig that was drilling Nomgon 6. A gas discovery here would add a third gassy basin to the mix and be a great way to finish the most productive year yet.
The rig that drilled the Richcairn strat holes has now mobilized to Bag 1S. This location has always been attractive to me due to its close proximity to Rio Tinto’s Oyu Tolgoi gold and copper mine that sits within our PSC, but is excised out of it. Indeed success here has its logistical and infrastructure benefits based on location.
I’m particularly encouraged by the third rig being deployed to Richcairn West. Success in this location would be promising for the wider Richcairn basin (a monster half graben basin that is 100km wide). Note also that Richcairn W 1S is only about 15 km north-east of Yangir where natural gas was discovered that was of sales gas specification - 99% methane (as per ASX ann on 14/04/21). A potential pilot test could take place at Yangir next year in unison with Nomgon.
The latest results from Nomgon-6 bode very well for a full blown pilot test next year followed by reserve amount bookings. It’s highly encouraging on a number of levels to have early gas flows to surface. These maiden game changing results should not be lost on investors.
Our low drilling costs also are highlighted by the last quarterly figures - 1.8 million for all that exploration and appraisal activity. There is still 31 million cash in the bank. Imagine the amount of strat holes and core holes that can be drilled with this, opening up further basins / sub-basins in the future without the need for dilution.
No doubt, Neil’s visit to Mongolia shortly will help to further strengthen ties since the new MOUs, remembering also that he is now on the board of the Business Council of Mongolia. Meeting the drilling team and stakeholders of our business would certainly have its benefits too. What other news could Neil’s visit bring us, perhaps there is something else up his sleeve..
The Australians through interests in Narinn Sukhait (Talon Energy) & Tavan Tolgoi (Jade Gas Holdings) are currently making a mark on the burgeoning CBM/CSG industry in Mongolia, Elixir Energy having the first mover advantage. The Mongolian Government has a vested interest in the development of their energy resources, leveraging Australian expertise, given the resource riches they are sitting on and the current and future gas market dynamics at play. Politically, the system is strong and stable after the mid-year Presidential elections and the solidification of the Mongolian People’s Party (MPP).
The business macro forces are strong at the moment. The current gathering of world leaders for the COP26 conference highlights the need for cleaner energy resources. Recently the Chinese government has been rationing diesel, a sign of the broader energy squeeze that will only tighten in the future for such commodities. Coal has been exported at record daily highs from Mongolia to China this year, in direct contradiction to the Chinese Government’s carbon net zero goals. Natural gas as a transition fuel from Mongolia is the answer. The ever appreciating gas spot prices (a record $56/mmBtu was recently paid for an LNG shipment) make Elixir as attractive as ever.
Elixir’s pivot to hydrogen long term and our recent MOU with the Mongolian Ministry of Energy is masterful, and incredibly logical if you think of all the factors at play for the business. The positive outcomes from the SODAR unit that has been deployed (for wind and solar) further validate this strategy.
I’m in two minds about Elixir’s operations announcements with consolidated operations information every month or so. Liquidity from short term investors is beneficial to keep the share price up. IMO they are often attracted to companies that keep them on their toes (main events reported as they happen), but as a long term holder the timing of the announcements has no overall impact on my investment.
Who else noticed Next Investor’s (S3 Consortium) omission of Richcairn West 1S in their latest mail out. It would be good to see more thorough coverage from them. The latest Crux Investor interview was great, Matt is a knowledgeable interviewer who will probe and ask the tough questions and he has done some background discussions with Mongolian Government representatives.
That all aside, I’ve actually been surprised that the share price has not appreciated more since the latest positive operations update followed by the solid quarterly and excellent AGM MD presentation. It can be a be fickle market with investors darting about a selection of mainly johnny-come-latelys and penny awfuls. Just remember holders, that Elixir is the real deal and we have the full backing from everyone that matters in Mongolia and our business is cashed up for many quarters to come. We have Mongolia’s first and second gas discoveries (with very promising early stage pilot activities for Nomgon), are near the border with China in exceptional market conditions (think right time, right place). We have a very active BOD and Management team delivering on the growth story across a large 100% operated PSC - the balance of the 2021 2D seismic, in country visit, Richcairn W strat hole, Bag 1 strat hole and Richcairn 4 core hole all in the works. And that’s just for the balance of 2021. Still holding my EXR shares strong.
(20min delay)
