Chariot Limited (CHAR) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for joining the Chariot Limited Investor webcast. Today's presenters are Adonis Pouroulis, CEO; Julian Maurice-Williams, CFO; and Duncan Wallace, Technical Director. [Operator Instructions] I will now hand over to the presenters. Please take it away, Adonis.

Thank you, Jimmy. Good morning, ladies and gentlemen. Welcome to this Chariot year-end investor webcast. We'll take you through what we've achieved over the last 12 months and split it up between Duncan and Julian. But moving on to Slide #4, if we have it there. We're speaking about the energy revolution that we're playing in and 2.5 years ago, as our shareholders know, we embarked on a new journey to embrace the changing energy world. And recently, when I attended the COP 27, was evident that this energy revolution is underway and energy security was a key topic that everyone was concerned about. And if you look at the world that Chariot plays in at the moment focused on the African continent, all of our projects are scalable, relevant and don't only provide energy, but provide clean energy for the continent itself and provide green energy solutions and clean energy solutions for the world at large. So if you move on to the next slide, and we talk about what is Chariot today. Well, Chariot has a 3-pillar strategy. It's got the gas business, it's got the renewable energy business and it's got the green hydrogen business. And I think it's important just to pause and see what we've achieved over the last 12 months. So if we take our gas business, we started the year off with a gas discovery in Morocco. And during the year, we upgraded our reserves and resources. We're about to complete our FEED study. And this morning, you would have seen, I would call it, a seminal moment in the company's history where we announced an offtake agreement, a gas sales agreement for 60 million scuff, which we will talk about a little more -- in a little more detail later. At the same time, we've been actively involved in talking to financial partners as to how to develop this project and Duncan will talk to you a little bit later on about the partnering processes that we are looking at. But from the gas business point of view, it's been a very, very busy year, and we continue to develop onshore to the point that we hope will have an FID decision in the new year -- early in the new year or the first 6 months of next year. If you look at our renewables energy business, which was always historically focused on providing renewable energy solutions to the mining industry, that's somewhat changed. But we started the year off with really installed 15-megawatt capacity at the Essakane gold mine in Burkina Faso. Since then, we announced a deal with Tharisa in South Africa 40 megawatts. We announced FQM in Zambia, and last week, we announced the Karo Platinum project in Zimbabwe. Over and above all of that, we announced that we were one of the few companies to be in a company that was awarded a energy trading license in South Africa called Etana, which is significant. On the green hydrogen side of the business, what do we achieve over the last 12 months? Well, we completed our prefeasibility study, which shows that we have a world-class project. We also managed to bring in a world-class partner to sell [indiscernible]. And in Morocco, we announced a deal with the University Mohammed VI,, whereby we'll be doing small-scale hydrogen projects with a unique electrolyzer solution. All of our projects, the 3 pillars have scale, and we've made incredible progress this year on them. So the Chariot is that, I think, can be defined as a traditional one-stop shop transitional energy business. I'd like to now hand over to Duncan, who's going to go into more detail about the gas business. Duncan?

Great. Thank you, Adonis. So Slide 6 is an introduction to the gas section shown there is a standard on drilling rig that we used for our successful drilling campaign in Morocco that concluded in January this year. And then moving on to the next slide, Slide 7. This really sets the context for Chariot Morocco portfolio. We've been an active explorer in country since around 2012, and that's been important in not only giving us some unique insights into the exploration potential of the basin, but also understanding how important this gas asset is within the context for the Moroccan energy mix. And that's really been exemplified today by the announcement on the gas sales principles. This is really important to us, of course, because it sets us on rigs to putting in place those bankable GSAs to underpin the Anchois Development. It demonstrates really clearly the important project to Morocco and the strong support it has gained from all the various authorities including our partners ONHYM and also then the power generation company ONEE. So we've been delighted to announce that this morning, and the time line has been established to finalize those terms in the new year. This, for us, is confirmation that energy security that Adonis already touched on is really, really important. And especially to Morocco, which is a country that's historically imported, most of its primary energy. As you can see on the lower chart on the slide, this has become a particular relevance because of the fluctuating commodity prices globally in the world over the last couple of years. And the chart shows a fundamental shift in commodity prices since January 2021. We've seen that the oil prices increased. It's basically doubled over that period. But on that chart, you can see the impact on the gas price and also the coal price, which is important for the Moroccan context because Morocco historically has generated around 67% of its power through coal but then recent price increases mean that it's practically quadrupled in price since the prices of early January 2021. So yes, there's been a fundamental shift in the cost of energy, but we felt even before those commodity prices change, but Anchois was strategically located to deliver. You can see the location of the Lixus and Rissana licenses and the inset map on the lower right, basically between [ 10 ] Casablanca, which is around 2/3 of Morocco's GDP and Morocco's population, but there's existing gas infrastructure. So even though it's an emerging gas market, a very major piece of gas infrastructure is there. And that's in red. That's the Maghreb–Europe gas pipeline of GME, which historically took Algerian gas supplies through Morocco up into Spain. Moroccan gas supply ended at the end of October 2021. And now there are the stranded gas assets in Morocco, the Ain Beni Mathar Tahaddart power plants, which have shown upper right chart, and it's those power plants that we're looking to supply the gas into via that GME pipeline. We're about 40 kilometers offshore to our CPF and about 40 kilometers to get access to that major gas pipeline to deliver into the domestic market, but also importantly, that pipeline is connected up into the European market via Spain. So what have we done this year? Anchois-2 appraisal and gas discovery well completed early in the year. We've been working very hard on FEED for the development projects looking towards an FID in the first half of 2023. As I say, we're very close to those established infrastructure and markets. And Morocco remains a premium investment destination and our project enjoys a world-class fiscal terms, which I'll describe in more detail in a couple of slides time. So moving on to Slide 8. This shows some further details on the Anchois development project. The development cartoon shown there shows the scope of the initial development. So in the yellow flowlines and pipelines. You can see there the Anchois-1 and Anchois-2 wells depicted, and we made a couple of important changes this year on the scope of the development. But the concept remains the same. Subsea wells tied back by a flowline and umbilical to an onshore CPF and from there to the market via the GME but we've upscaled the development. So rather than just using those 2 initial wells producers, we've added a third well that you can see on the cartoon -- and that's a reflection of the increased amount of gas that we see in the reservoir and also the increased number of reservoirs. So to ensure that we get completions across all of those resources, 3 wells, we think is the most -- is the best way to go with the initial development. We've also now upgraded the CPF predrill, we've been considering a 70 million cubic feet a day capacity. We're now looking at 105 million cubic feet a day capacity. Again, a reflection of the increased gas that we found, but also, I think the changing markets, there's larger volumetric demand and also larger price -- higher prices to be gained from the markets that we see. And so delivering as much gas as we can is obviously attractive for the project. We have high gas quality established from the samples we got from Anchois-2 and excellent reservoir properties. So we're in a really sort of low-risk subsurface environment to deliver this project. And we think that's a really important thing that underpins the development. What we've also been looking at, of course, is focused on delivering a final investment decision on the Anchois development. And lower right shows the various components that we've been working in parallel. Now regarding the development itself, we commenced FEED in the middle of the year, and technical FEED is nearing completion. That's being performed via our collaboration agreement partners at the Subsea Integration Alliance, which is one Subsea 7 and Schlumberger, that covers the scope from the trees, the flow lines, the umbilicals, the SPS and then also the CPF itself, but also in combination with our owners engineers, Exodus and onshore FEED pipeline contractor Penspen. So we've had really good progress on that project through the year. Gas sales, we've already mentioned important announcement from today. We've also seen strong interest from international offtakers as well. Should we be able to deliver surplus gas beyond domestic requirements, they could find a home potentially in international markets. Regarding the financing, we've made very good progress with our financial advisers Societe Generale. Perhaps, Joel, you can give a brief update.

Yes. Thanks, Duncan. So yes, we've been working very closely with SocGen. Indeed, they followed this project for several years. So they actually gave us an expression of interest to debt finance over 2 years ago. Being formally appointed in the first half of this year as our advisers to bring that debt consortium together, we've already been out to Morocco with them multiple times meeting with the Morocco banks, where this is seen as a project of national significance. We also have discussions with European banks as well. The view is that there is more than enough debt capacity for this project finance.

Okay. Thanks, Joel. So the other element of potential financing for the project comes through partnering. Now we haven't actually launched a formal process for partnering on the asset, but we've received very strong incoming interest. So we have been talking to some high-graded companies who are yet quite mature and then their evaluation of the opportunity. So well, where we see the potential value through partnering would be obviously, financing through to first gas assistant in that effort. But the key thing for us would also be the acceleration of growth and the upsides from the project, bringing that external financing in earlier means that we can accelerate the upsides more quickly than we can do alone. So we will look at any potential offer we receive and focus on those elements. But the really important thing for us is that any partnering effort means that we stay on the same time line. We don't want to compromise the acceleration of production from this asset. On slide 9. The next slide shows more information around the Anchois Development itself and where we are. The chart on the upper left shows the geological model for the Anchois gas field. the Anchois-1 and Anchois-2 wells are located there. And in red, the original discovered gas sands from 2009, In orange, depicted below those are the additional resources found in the C&M Sands in the Anchois-2 well and we had a midyear audit of those updated resources and those has increased to 637 Bcf of 2C contingent resource. You can see the Anchois East well in there, and that would be the third producer well for the field that we would look to start the development. Now that development drilling campaign is obviously going to be important to deliver gas from those known resources. But the important thing for us is that we see undrilled gas sands below the A.B, C and M sand. And this is in the O Sand reservoir that was derisked through the drilling of Anchois-2, and we see some seismic anomalies still remaining to be drilled. Those are 3 prospects within the O Sand underneath the existing sands. And together, there are about 754 Bcf of 2U or best estimate resources and the order to chance of success ranges between 49% and 61% for those opportunities. Those targets can be drilled in combination with development drilling. So simply by deepening those development wells, perhaps drilling a pilot hole as depicted in the case of the Anchois football, we can explore a large potential resource base for very little cost over and above the cost of development drilling. So that campaign will be a blend really of development and exploration activity. So what could that ultimately deliver? Well, the daily production profiles in the lower part of the page show the potential from the field. Even the 1C resource at 365 Bcf can deliver a 70 million cubic feet a day plateau for about 10 years. The 2C resources, 105 million cubic feet a day for approaching 15 years. But even with a modest success from those deeper O Sand, we could be on track to deliver 150 million cubic feet a day for over 15 years with some success at those levels. So what can that deliver in terms of value. Upper right shows indicative life of field economics. Now these are run -- or this example here is run on really sort of historical sort of blended price. We've seen prices between $8 and $12 per MMBtu for domestic gas historically. What you can see there is the attractive fiscal terms working. So 3.5% royalty, Taxation is 31% in Morocco, but there is a 10-year tax holiday, which really helps the economics and a very, very strong operating margins. The operating costs are relatively low and operating margins can be 85% or 90% plus that drives very attractive rates of return and NPVs for project. What we also see is that fundamental shift in gas price, which is important. So any higher price we can deliver over and above those historical prices, but obviously have a direct read-through on value. The Spain and European gas prices are shown lower right. So real rebasing from historical prices demonstrated now in the European future markets. Moving through onto Slide 10, it's really the Anchois Development to the Anchois field is the key to open sort of basin scale opportunity for us. The image shows the Anchois flow line on the red line coming through CPF and delivering gas into the GME but also depicted there in the other colors are the high-graded, other prospects within the Miocene gas play, which have the same seismic signatures, which have improved successful at the Anchois field. On key prospects from those low-risk resources, we've had those audited midyear, and those shown on the bar chart on the right-hand side. So that would be at Anchois West in the satellite area, the Anguille prospect, Macro and the MSL prospect in Rissana. And even with those high-graded prospects plus low-risk follow-on assessed internally, we have around 4 Tcf of gas within the Anchois play with lots more opportunities still in evaluation. We consider this seismic attribute play to be of low risk. We also have 2 other larger scale play systems, which are called the sub-nappe and then the for-nappe plays. These are important because individually, they have giant scale potential prospects in those plays. And they're there for the longer term and to attract larger companies to what is quite a large, diversified portfolio that we have within Morocco. Now we've built this portfolio with minimal license commitments. The next we plan is a seismic survey probably in the second half of 2023. That's a 2D seismic commitment on the Rissana acreage. But based upon some new plays that we've also identified more recently, we're assessing whether we might expand that seismic acquisition program. Now all of this exploration potential that we have need to be able to commercialize it and the infrastructure available to us allows us to do that. And you can see on the map, the connection from the GME up into Spain. That pipeline is virtually unutilized at the moment. It has a 1.2 billion cubic feet a day capacity and the Spanish market alone, it's a 3-BcF-a-day market. So for us, any gas that we can deliver that is over and above the domestic requirements can get rapidly monetized via the European markets. And for us, potentially partnering with AEP partner, bringing external finance really helps us to accelerate growth from what is a large portfolio of upsides.

Great. Thank you, Duncan. We're moving on to the transitional power side. So if we move to Slide 12, you can see the evolution of our business. As I mentioned earlier on, we started off with ONHYM GOLD's 15-megawatt project in Burkina Faso. We moved on to the recent first quantum, but if you look at the size of them, the 15 megawatts in Burkina Faso, Phase 1 in Zimbabwe, the Chariot Platinum mine at a steady megawatts over right to build up to 300 megawatts. You've got Tharisa Phase-1 40 megawatts, you've got the first quantum project in Zambia of 430 megawatts. I think what's important to see over here is how the business has changed. We've said historically that we're going to focus on providing the mining industry with renewable energy because they need it for 3 reasons. One is to be to lower their energy costs, two is to get the carbon credits and three is they need greener energy. However, what we realize now by securing the Etana trading license in South Africa, it opens up a whole new universe for us in terms of potential clients. And so the new renewable energy business will now also concentrates on corporate and industrial clients. And the new goal is to seek out up to 2 gigawatts of gross pipeline of projects. People may ask, well, how are you going to fund all of this. We have said publicly and we're in discussion with various funders. By funding Chariot renewables, CTP at the subsidiary level and not having to fund it in the listed vehicle. And those discussions are ongoing. But I just want to stress that if the Etana trading license opens up a whole new universe of opportunities for us. And if we move on to Slide #13, you start to get a flavor of why this is happening? So the South African power market is the largest electricity markets on the continent. It is also the largest energy market undergoing deregulation at the moment. We're hovering in South Africa unprecedented power crisis with daily load shedding. And the coal that -- the power that's generated comes from coal-fired power stations over 80%. And these are old and aging and will eventually be out of use in the next 15 to 20 years. What that means is that in South Africa, there's going to be 30 gigawatts of renewable energy needed by 2030. And this is where Chariot has a unique opportunity because it plays squarely into that. Having the Etana trading license allows us not only to participate in generation, but also in offering our clients unique renewable energy solutions. And that the diagram on the left that you see of Southern Africa is important because there's the South African Power Producers Association. So there's opportunity for Chariot to also trade outside of the realms of South Africa in Southern Africa. And if you move to the next slide, we'll explain to you exactly what Etana means. So if you look at that, Chariot plays in the entire value chain. If you look at the left-hand side of that slide, where the #1 is, we're a generator. We generate our own renewable power. We then act as an offtake through Etana where we buy that power and then on sell that power to the clients that you see on the right-hand side. And as I said earlier on, it's no longer just mining clients, municipalities, it's industry and it's the retail sector. But very often, what happens is at times, you can over generate power. So there's a surplus of electricity, but because of the nature of the agreements that you have with off taker, it can be a take or pay and they're therefore paid for that surplus electricity whether they're using or not. By having the Etana trading license, what it allows us to do is to then buy that surplus energy from those end clients and then re-trade it back in the grid. What that does is it allows the client to save on its energy build and drops its unit cost of energy down. And we call this a renewable energy mix solution for our clients. What that means is you can provide some of the cheapest and greenest power to clients in South Africa and in Southern Africa. And what it means for Chariot, Chariot has 3 profit centers. One makes a profit through generation. Then on sales to a trader, which Chariot is a shareholder. The trader then makes a profit on selling or a clip to the end user, the end user then has excess power. The Etana rebuys that power, re-trades it again, and there's a third revenue stream. So this is a very, very attractive business in a growing market in Southern Africa. And I cannot underestimate how quickly we can scale this business and how big the opportunity is. Again, it's providing renewable energy solutions to multiple clients, not just to the mining industry. And it's the ability to produce renewable energy, not just in the form of solar, but wind as well and tying into the grid. This also will help alleviate the current power shortages and blackouts in South Africa that we're experiencing by taking -- alleviating power pressures and providing energy to the heavy users that will not rely on Eskom alone for their power source. So it's a pretty neat solution and it's one that we think is a huge growth center for Chariot going forward. We then move on to our green hydrogen business. At the moment -- on Slide #16. At the moment, the world produces around 115 million tonnes of gray hydrogen. That is hydrogen that's produced by coal or methane. Of that, only 2% to 4% of it is what is called green hydrogen. And green hydrogen is simply using wind and solar to break up the water molecule. And if you look at it, in 2050, we are going to need around 600 million to 800 million tonnes of green hydrogen to be produced in order to achieve a carbon net zero world. And you don't get to a carbon net zero world if you don't have hydrogen as part of your energy mix. What's Chariot project and competitive advantage over here? Well, if you look at Project Nour, which is a 10 gigawatts electrolyzer projects, we will produce 1.2 million tonnes of green hydrogen. If you do the math, and we need 800 million tonnes of green hydrogen by 2050, you need over 600 project Nours to come into production. That's huge, and there's going to be a race for acreage and for good wind and solar resources. And our advantage is that we have that in Mauritania. We have -- if you move to Slide #17, you can see that our project is in Mauritania is one of the top 10 largest green hydrogen projects in the world. We have the advantage of having excellent wind characteristics, excellent solar radiation, abundance of land and access to water. And we're also very close to a huge market, which is the European market, which will be a great consumer of green hydrogen going forward. So Project Nour in Mauritania is a world-class project. And what we did during the year, we completed the pre-feasibility study but we also managed to attract the French giant, Total Eren, TotalEnergies to be our 50% partnering here. What they bring in is not only the huge financial power, their expertise in energy, their expertise in green hydrogen, but they also bring the offtake partners, which is very, very important. So when you produce all the screen hydrogen, what do you do with it? In Mauritania, there's also advantages. You don't only have to export green hydrogen in the form of ammonia. There is opportunity to possibly value-add in country by providing green hydrogen for power locally. And also, there's obviously the green steel opportunity as well that exists in Mauritania because it's a huge producer of iron ore, which currently gets exported. So what are we trying to do with our hydrogen business? Why did we get involved in it in the first place? Well, we think the hydrogen economy is very much in its infancy. No one really knows how it's going to unfold. But what we do know is going to play a fundamental role in energy going forward. So we are going to try and build a portfolio of green hydrogen projects over and above Mauritania. And that is why we entered the Moroccan market as well with a little power plant -- concept plants at the university. We will be looking for more projects and in partnership with majors because we realize these are big projects, and Total already is one of our partners. We're looking for offtake partners and financing for this is going to be quite interesting because we're going to need to leverage off that the companies that have far bigger balance sheets than Chariot to finance these projects because they're not inexpensive. Technology is key to producing hydrogen achieved costs. I mean, the consensus is that we need to bring the cost of producing green hydrogen down to between $1.5 and $2 a kilogram. That then competes with all traditional energy businesses, those making ammonia and those making steel. The production of green hydrogen and the chain that goes into it starts off with wind and solar, and that industry is well understood. Where there's a lot of room for improvement is in the electrolyzer space. That's key because the more efficient the electrolyzer is the lower the cost of your hydrogen reduction is. And we partnered with a company called Oort, which is a PEM electrolyzer. We think it's one of the most efficient electrolyzers in the world. And we're doing some test work on them in the new year with them in various projects in Africa and here in Europe to see how those electrolyzers might stack up and whether we can use them in our Project Nour in Morocco as well. I think once the electrolyzer technology is sorted out, there is no reason we can't have a world in which we produce hydrogen at around $2 a kilogram. And there is a possibility, of course, I've always said there's the 3-pillar strategy, and I believe each one of our pillars is the billion-dollar business at some stage. As these businesses grow, do you keep them under one umbrella? Or do you spin them out into various different companies? At the moment, they belong together, but we're always looking for that opportunity as they grow and mature to the next stage. Will there be more value by having them as separate entities? I'll now ask Julian to take us through what we can expect over the next year use flow and projects ahead.

Thanks, Adonis. So if you turn to the next slide, Slide 19. This shows our busy time line, which is understandable, taking out the amount of things that we've got going on. So lots of triggers there. Top half of this slide shows the gas, bottom half shows power and hydrogen. Gas first. So our absolute obsession our laser-guided focus is to get to those cash flows as quickly as possible with the associated material cash flows. On that time line, you've got all the components that are required in order to reach FID weeks, which we expect in the first half of next year with construction taking approximately 2 years, so first gas end at '24, early '25. Also within that time line is strategic partnering. And what that does is it not only allows us to color the equity share of the development, but also potentially do further contingent drilling, which allows us to access further resources. Bottom half on power, we're focused on converting further renewable projects from pipeline, 2 projects both from our traditional mining sector where we focused, but also now through our trading license in South Africa. And we're also looking forward to starting construction on the Tharisa project next year. On hydrogen, we're looking to bring in further projects to meet our vision of a vehicle with multiple world-class hydrogen projects, all partnered with majors or major industrial groups. As Adonis has said previously, we're looking to fund our power and hydrogen at the subsidiary level. And this is really important for 2 reasons. First of all, it minimizes any dilution at the pivot level but secondly, it also gives a valuation to that side of the business. And with that valuation, that should hopefully see be back up the structure and into the Chariot Limited share price. So as I said before, we're going to be exciting, we're going to be busy. We're going to be a different stock, and we're going to get that there and tell the market about it. So moving on to the next slide, Slide 20. This is the final slide. We believe we are a unique opportunity with our 3-pillar strategy to play into the energy transition space, creating value whilst delivering positive change.

Thank you, everyone. I will now go through the Q&A element of the webcast. [Operator Instructions] How many wells are being actively planned either new drill or completion of existing in the Anchois project and with a partner with them advertising funding for additional wells?

Thanks, Jimmy. Yes, so on the Anchois development, as I mentioned, there are 3 wells planned. Around those 3 wells, One of those would be essentially a redrill of Anchois-1. That was the original well drilled in 2009. We're now contemplating drilling of a new well rather than utilization of the original well. That's for several reasons. But the most important one is that we want that well also to be an exploration well. So to deepen into the Anchois South flank prospect, and we think the best way to construct that well is by drilling a new one. So that's Anchois-1, very low risk because it's going to be very close to the original well location. The second well would be a reentry of Anchois-2, which was Chariot well that we drilled. So that will be a very cost-effective way of putting a producer in the central part of the field. And then a third well in the east of the field, we would drill as the third producer for Anchois. Again, that brings exploration potential in the deeper section. In addition to those 3 wells, we're also on sort of high-grade prospects already at the early planning stage for potential additional exploration drilling. And as described earlier, it depends upon the appetite of any incoming party. But clearly, one of the things we want to deliver as well as helping with the equity finance of drilling is to accelerate growth from the upside. So an ideal situation for us would be to accelerate some of additional exploration drilling potentially as part of that development drilling campaign or potentially even earlier.

How soon after FID, will the required project long lead tangible to be ordered and would these be coming from the One sea -- OneSubsea consortium?

So we've been working with the Subsea Integration Alliance, which for a couple of years now, and they've been working on FEED for the SPS and CPF with us. One of the key things there using that consortium is to stay on a fast-track schedule towards first gas. So we do not have an exclusive relationship with them yet for the execution or EPC phase. But we are nearing the end of the FEED project. But if we can roll through to EPC with them, that would depend upon receiving attractive prices in terms of conditions that will keep us on track and on schedule for delivery of first gas. Now it is true there are some long lead items that will be key about controlling potential time line for first gas, those would normally be placed at FID or very shortly afterwards at financial close. But there is also the opportunity for us to bring some of those critical long-lead items, some sort of investment prior to FID if we saw that timing was critical on those. And the relationship with the Subsea Integration Alliance has been very strong in identifying what those long lead items are and gives us the possibility to place earning orders if we deem that's necessary.

What is the status of the Namibian and Brazilian assets?

So on Brazil, those assets were fully written down previously, and they haven't been a key part of our portfolio. However, we have taken the opportunity to extend those Brazilian licenses and recognizing that they do have low running costs and also recognizing that there have been recent announcements, in particular, by Petrobras in their strategic plan, which considers 19 exploration wells drilled along the equatorial margin. So this is extending the successful place from Guyana and Suriname eastern to the Brazilian basins. So we've given ourselves the opportunity to monetize those assets by taking those extensions, and we're currently running a process to see if we can find a potential company to come and invest in those projects or to take them over.

When will our seismic commitments start with Rissana?

So as mentioned on Rissana, we have 2D seismic acquisition commitment. We're looking at executing that probably in the second half of 2023. We're at the planning stages currently.

Will existing shareholders be allotted a shareholding dependent on their Chariot holdings in any new co renewable spin-out company?

Yes. If we decide to spin out any part of the business, pro rata, whatever Chariot shareholders hold in the current listco would mirror whatever the whole if we were, and I stress if we were to spin it in the new co.

Today's RNS talks about GSA principles. Why do we not have a signed full fat GSA with only buy now?

Okay. So the announcement today obviously said that our key principles have been agreed for 60 million scuffs per day on a take-or-pay basis for a minimum of 10 years. And the delivery point of that will be on the Maghreb Gas Pipeline and that gas will be used in Moroccan power plants. The key thing with all the GSAs and the GSA negotiations is to end up with a bankable project. And this announcement today shows that we are doing exactly that.

With all stakeholders having their own reasons for wanting to fast track Anchois, why does there appear to be a slight delay?

Well, we don't think there are any delays at the moment. We are sticking broadly to our time line with first gas coming in -- at the earliest end of '24 with beginning of '25. And at the moment, there are no material delays. And so everyone is pushing hard on getting to that point. And also, the announcement this morning is I can't say how important it was because you had 2 of the leading actors within the Moroccan context ONHYM and ONEE, pledging their support to the project and also trying to get it to FID as soon as possible. And this gas sales agreement announced this morning is a testament to that.

Would it not be financially prudent to partner with a company who may not be offering the full value of Anchois, but would set Chariot up for the next 2 years before gas revenues come on stream?

As Duncan said earlier on, we have been in discussions. There's a lot of people talking to us about partnering on the Anchois concession and in Morocco. And we're looking at all options at the moment, and we're looking at what's in the best interest of all stakeholders and the Chariot shareholder. And we're not going to be silly about it. If there's something that's compelling that allows us to further derisk the project and add value to the Chariot shareholders, we'll do it. But at the same time, we're not going to give away value on the project for free or for low value.

Are the Board concerned about current share price levels?

Concerned may be a strong word. Are we upset to where the share price is sitting, yes, we are, because we think the company is materially undervalued. And it's not just us that's saying it, various analysts that have been out, they have written their notes. And by their measures and their numbers were undervalued. But we've recently appointed a new adviser, and we're hoping now that the story goes beyond London because we think that the Chariot story is told in London, we need to start telling the story in Europe and North America. And we are going to actively be doing that in the new year. So yes, it's irritating to see all these milestones that we achieved and it's not reflected in the share price. But we believe that as we start reaching these milestones and ticking off what needs to be done to get our various projects up the value curve, the values eventually going to come in into the share price.

What impact will the total buyout of Total buyout tot Total Eren have on Chariot in the company's joint projects?

Nothing. We carry on working in the same way we work with Total Energies. And it's going to be equally as close relationship. It is at the moment. Nothing changes in terms of the strategy with regards to delivering renewable energy projects for mining clients in sub-Saharan Africa. And in our announcement of the past, whilst we have a -- we've announced that we have project partnership in Mauritania. We also said in that announcement that we will work with Total on new hydrogen projects elsewhere in the world as well. Nothing changes.

How confident are you that you will be able to secure resources that you need from the Subsea Integration Alliance given the demand in the market?

I mean that's an important statement. There is a lot of market demand at the moment. And that is one of the reasons why we wanted to start the collaboration with the subsea integration line so early, well before we even drilled Anchois-2, that relationship have commenced. And that was to ensure that we were on the radar of major EPC alliance of contractors and that we would also be penciled in on vessel schedules as we understand that there is a lot of activity in the market, vessel availability is tight and that relationship with the SIA means that we sit in a relatively privileged position compared to a company that would be needing to go out and fully tender for all services.

What is the current estimate for the Anchois CapEx?

So as described earlier, we've expanded the project from 2 to 3 wells up to 105 million cubic feet a day. Obviously, that's got a reflection in the CapEx. And also with regards to inflation, we don't have our finalized estimates because we're just getting towards the end of FEED, but around $0.5 billion is the estimated initial development CapEx for the project.

I think it's important to say that we will be around the 70:30 debt-to-equity ratio is what Julian spoke about that with regard to the financing partners with regards to the debt, it's gone very well. So...

And just one other point there, obviously, Chariot have 75% of the license. So we cover 75% of the cost, which will be 70:30 debt equity. The other 25% is ONHYM, you pay their share doing the development phase.

Green renewables side is making good progress. How will the projects be financed?

As I said in the presentation earlier on, that we've been approached by quite a few institutions, family offices, that wants to invest in Chariot but would prefer just to invest in the renewables part of the business just because they either can't invest in the gas or they don't want to invest in the gas. So we've been in discussions about funding at the subsidiary level, what we call the CTP level and bringing funding in there to fund both the renewables energy business and the green hydrogen business.

There are nearly 9.5 Tcf of prospects in the Rissana license. Will these be found out separately from Anchois if it is farmed out at all?

It depends upon any offer that we receive. The Rissana license when we originally signed that, we were able to retain the prospects that we had from our former Mohemmadia license. But since we signed the license, the information from the valuation just got better and better. The extension of the Anchois Gas players there and also we continue to unlock new plays and new opportunities. So Rissana has value for us, but I think it makes sense, if possible, for -- to have a combined partnership across the Lixus and Rissana license areas because they are related genetically to each other and to ensure there's an alignment of interest, alignment work program across those acreage if possible. They're having an equal partnership across all of the portfolio give interest but we need to make sure that we get an appropriate value for the Rissana acreage as part of any deal.

The current Anchois wells drilled through a series of gas water contacts. What steps are being taken to avoid water inflow to the main pipeline?

So yes, we do have gas water contact established in 3 of the producer zones to be developed. But we do have stacked gas sands in each of the 3 development wells. So we've looked at this carefully through the subsurface modeling and also through well design and completion design. And we're looking at being able to control any risks from water production through that. So cased hole, gravel packs and selective completions would allow us to perforate with sufficient standoff from any gas water contact in those reservoirs to delay any water production. But also in the case of water production is detected to shut that zone off to continue producing from the other zones in those wells. What I would also say is that water production risks have been extensively analyzed through all of our subsurface modeling. We see that the aquifer side connected to these gas sands is relatively low. And even with testing extreme downside scenarios, we see minimal water production through the life of the field. So we perceive it to be a very, very low risk, but we have designed our completions and production strategy so that we can mitigate any risk from -- any material risk from early water production.

What price is expected for a pipeline transport tariff to Spain as brokers' estimates have ranged from $0.50 to $2 an MCM?

No tariff has been yet established, but we do take a conservative view when doing our own economic analysis on what that tariff will be. So yes, that is subject to further negotiation and discussion. But it's worth just noting that we announced and we've signed a tie-in agreement to that Maghreb Europe Pipeline a couple of months ago.

And our partners ONHYM own that pipeline. They have a 25% stake in the project.

Will gas sold in Morocco be paid for in U.S. dollars or local currency?

The -- I can't give the details of that at the moment, but we will ensure that whatever currency is received, it is matched with the development debt.

If the Oort energy pilot study is successful, what kind of reduction in cost of hydrogen are expected? And what is the current testament of hydrogen production in Mauritania using such technology?

So the Oort electrolyzes is a PEM electrolyzer. You get the 2 types of electrolyzer, the alkaline electrolyzer and the PEM electrolyzer. The PEM electrolyzer is more efficient as it uses platinum group metals. And the key to getting those costs down is in the production of the stack. The platinum group metals up comp to 30% to 40% of the cost of that stack, and it's about using less metal and getting more efficiency out of it. And so the goal with the art electrolyzer in Morocco next year is to build the first 250 to 1 megawatt units and units have been built in the U.K. and have been tested here in labs. First step, as I said, is 250-kilowatt moving up to a megawatt. And the whole driver is to be able to produce hydrogen at $2 a kilogram and the metrics are there to get to that cost. Now the electrolyzer part is just one component of all those costs. Second part of that question was related to Mauritania?

What is the current estimate of hydrogen production in Mauritania using such technology?

Well, we're going to produce 10 gigawatts of electrolyzer capacity. So that equals to 1.2 million tonnes of hydrogen per annum. And as I said, 2050 comes along to get to carbon net zero, we need 800 million tonnes of green hydrogen.

Could you please expand upon the key terms within the GSA in Morocco and in particular, the principles that govern offtake pricing?

While we can't go into any more detail that we announced this morning. And as Joel said earlier on, the key thing is we've got a 60 million scuff a day take-or-pay for 10 years, and that underpins any financing arrangement we may need for the debt components of the development.

What is the approximate capital cost of the Karo solar project, assuming Chariot takes a material equity interest?

Chariot has a right because it's a project that was developed through the Chariot's table of companies going up to 49% equity in that project with Total having the remaining 51%. It should be circa $30 million, $35 million for that 30-megawatt solar facility. Phase 1 number can go up to 300 megawatts, as I said earlier on, as the mine and the country needs more power. That $30 million to $35 million is 70% debt financed. And along with Total, we bring that debt in. So there's about an $8 million equity component -- $7 million to $8 million equity component, of which Chariot has the right to turn up to 49%. So our maximum equity exposure there, capital exposure would be about $4 million if we took up all 49%, right, which we plan on doing modeling. And as I said, that should be funded on a CTP level separately.

What assurances can the Board give to current shareholders that there will be no further fundraisers in the near term?

Yes. So our current cash -- last reported cash position was $23 million. We have no debt and minimal license commitments, and we are well capitalized to get the project -- this project to FID. Also, what's also worth then as we touched upon, we're looking to fund our renewables and hydrogen projects at the subsidiary level, and we've also got a competitive partnering process ongoing. So we have no plans, no immediate plans for an equity rates.

I'd just like to add to what Julian said, the management directors have a significant stake in this business. And so it's -- we're looking after the equity very carefully because it also affects us. We're aligned with shareholders.

And the Board provide firm assurances that the financial returns expected from the transitional gas arm of the company will be ring-fenced to support future gas development and not be moved across to yet undisclosed funding required to develop the renewables and hydrogen and to the company.

It was too early days to talk about ring-fencing funds and things like that in the various parts of the businesses. The businesses belong together at the moment but it is the intention of management to fund the renewables and the hydrogen business separately, okay? Going forward, as we've said, we're looking at funding at the subsidiary level.

I'll just add to that as well, but it's our long-term intention to return material cash flows to shareholders as well.

So does the Board intend to initiate a share buyback scheme at any point?

Well, let's make some profits first, and then we can talk about that. But when you look at the numbers and the possible numbers that our gas project can generate in Morocco, it's looking pretty good. So let's get there, let's build the project on time and on budget, and we can take a view there. As Joel said, we do see this as a very cash-generative business.

Could you provide some color in relation to the potential farm out of Anchois and has Chariot received any offers?

What we can say is we've had strong interest and it is a competitive process that we have. We can't say anything additional to that or what to speculate at this point. Only that we will do the right deal to maximize value for all.

How will Chariot fund the equity contribution for development of the Anchois project?

So when you look at it, as Joel said earlier on, we have 75% of the project. It will be a 70:30 debt equity. So you've got 2 scenarios. If we were to go it alone, we have 75% of the equity check, which we've already had a lot of interest from a lot of people saying that if you would like that, who would like to fund that either at the holdco level or at the subsidiary level, right, at the gas level. But as Duncan has just said, is we have a lot of interest in the project. And if we were to bring a partnering, we think that, that would also alleviate any need to raise significant amounts of equity.

What outlined time scale does the company have for further exploratory drilling?

Drilling alone, we see that exploration upside can be unlocked organically through cash flows from the Anchois project. There's more than enough cash flow to pay back debt to provide returns to shareholders, but also to reinvest within what is a very exciting and low-risk portfolio. Keep one of the key things again with partnering is to accelerate some of that drilling, which could be potentially as part of an expanded development drilling campaign, for example, in 2024, control some exploration opportunities or even to accelerate and to drill earlier than that by splitting that campaign and even contemplating drilling as early as 2023. It depends on discussions with potential partners around which way it might go. But a key thing for us is accelerating that growth because we really truly believe that the exploration portfolio is low risk and extremely attractive.

I think just one other point to make is obviously the Rissana license was issued this year, the Lixus license on a couple of years old. You've got years and years to capture that further upside from those exploration prospects.

What's the management doing to add institutional investors to the register?

So we just appointed a new adviser and hopefully, we'll be -- have access to the North American market as well now and more to the European market that can help introduce us to people we've never spoken to before. But we recently justed with one of our advisers a roadshow a couple of weeks ago in the United Kingdom, and we saw some new institutions. It's first time hearing the story. And there is a lot of interest in the business.

Are the directors looking to buy more shares given the current share price?

The opportunity arises, and we're not insiders, yes, I think the directors would like to have more of this business.

Can Duncan say a few words on the seismic data set available and the undrilled seismic anomalies? Are these covered by 3D survey and has any reprocessing/inversion been done in the data set?

Yes. So the -- this might be -- I don't know if the slide is still up, we go to the appendix, Slide 25, if we can go to the appendix there that shows the resource assessment, but on the left-hand side of the map, which shows Lixus and Rissana, and it shows in the sort of pink outlining the extent of the 3D seismic data that you can see the 2 data sets that we have and the vast majority of our leading prospect portfolio is covered by our extensive 3D seismic data. The 3D in the Lixus and Rissana area was shot in 2006 and 2010. We reprocessed that one of the first things we did on license, we merged those data sets together and reprocessed PSDM and that underpins all of the resource assessments pre-drill for Anchois-2 and also then the seismic on other prospects. If we can flip to Slide 24, in the appendix, here are some examples of the seismic data. So Anchois in the central part of the slide in red, at the far offset anomalies that have been successful at the A, B, C, M and the O Sands across the Anchois-1 or 2 wells. The 3 undrilled prospects enabled 1, 2, 3 in Anchois-D. But then also those key prospects on which we have those independent assessment update midyear. So Anchois, West, Macro, MSL and Anguille, all of these have the same characteristic seismic anomalies as Anchois. So the far offset anomalies, low-frequency anomalies, various flat spots, polarity reversals, basically the full glossary of attributes you would expect in high porosity gas sands. And this all comes from reprocessed PSDM seismic data and a variety of seismic attributes.

FID was originally scheduled for Q1 2023 and has now been restated as H1 2023. What has caused this slip?

There isn't really a slip. I mean we've just been conservative. I think there's a lot of work streams that we're trying to address. And -- we're just being prudent by saying H1 2023.

Can you explain why it is not more economic to transmit the renewable electricity to where it is needed in Europe versus green hydrogen transmission?

Yes. Renewable electric assume people talking about from Africa. Yes. Well, you need huge cable lines under the sea to get it to Europe. And that is a multibillion-dollar CapEx. That's not really Chariot business model. And green hydrogen with the production and the medium of transport of green ammonia seems to be the most logical way to go, bearing in mind that recently we saw Maersk, big shipping line employ, I think, 6 to 8 ships that we're actually using green ammonia as a fuel source burning it in the same one would burn diesel except without any carbon darks have been emitted into atmosphere instead of water. So we just -- our business is to produce power on -- renewable power on the continent in terms of wind and solar for our clients. And in terms of green air and hydrogen, if we are going to produce it, and exported, it will be in the form of green ammonia.

If you don't expect to sign the FID until mid-2023 and the project then takes approximately 2 years to come online, can we still expect first gas in 2024? Or are we more likely looking at 2025 now?

We're thinking, first of all, there's some assumptions over there. We're still aiming for first gas at the earliest end of 2024 at beginning of '25. And bearing in mind that, as Duncan mentioned earlier on, some of the long lead items that we may need to order can be done with some confident enough before you actually get to that final FID decision.

Sales relationship have a good -- sorry does Chariot have a good relationship with the tax authority in Morocco?

Yes?

Those are all the questions that we have so far. To be handled within our allotted time. I will now hand back over to Adonis for closing remarks.

Thanks, Jimmy. To all of people attending this webcast, thank you very much for listening in. Our 2022 has been an exceptional year for Chariot where both -- sorry, all the business pillars have grown significantly. We've achieved many milestones. I think 2023 is going to be as equally busy as 2022. We thank you for your support and watch this space as we start hitting our milestones that we set out for the coming year. It leaves me to wish you all a happy festive season with your traveling be safe. Come back to safely, so you can watch your company perform even better next year. Thank you very much.