Frontier Energy

Quarterly Activities/Appendix 4C Cash Flow Report

Frontier Energy Limited (ASX: FHE; OTCQB: FRHYF) (Frontier or the Company) is pleased to provide its quarterly activity report for the quarter ending 30 September 2023.


HIGHLIGHTS

  • Frontier signed a binding agreement to acquire Waroona Energy Inc. (Waroona) to create a large-scale Australian renewable energy company. Transaction is on track for completion during the December quarter
    • The transaction combines two highly synergistic projects, located adjacent to each other and in close proximity to key infrastructure
    • Combining the projects simplifies financing and applications for potential government grants
    • Upon implementation, Frontier Shareholders will hold ~67% of the Merged Group and Waroona shareholders ~33%
  • The Australian Energy Market Operator (AEMO) released its annual Electricity Statement of Opportunities Report, highlighting an urgent requirement for additional generating capacity
    • Over the next decade demand is forecast to increase by at least 78% (Expected Case), with High Case demand increasing by more than 220%
    • Meanwhile generating capacity is forecast to decline, resulting in deficits forecast for every single year over the entire forecast period
    • Wholesale electricity prices continued to increase in the quarter, up 25% Year-on-Year
  • Waroona Energy’s study assessing a 120MW Dual Fuel (Green Hydrogen) peaking plant commenced
    • Dual Fuel Peaking Plants are a mature technology and are used to supply energy to a market typically during peak periods of high demand (and pricing) for electricity
    • Given Waroona Energy’s existing connection to the South West Interconnected System (SWIS), a dual fuel peaking power plant is a clear potential first consumer of green hydrogen
  • Frontier meets key criteria for the Federal Government’s ‘Hydrogen Headstart’ program and intends submitting its Expression of Interest (EOI) in the December quarter
    • Demonstrating a clear offtake pathway, such as fuelling a peaking power plant, is a key requirement for the subsidy
  • Waroona Energy commenced a Definitive Feasibility Study (DFS) for a 120MWdc Solar Facility (Stage One) due for completion in early 2024
    • The DFS will finalise the detailed design, including capital cost estimate (accurate to ±15%), for a Stage One solar development
    • Waroona’s landholding is located closest to the nearby electricity terminal and is logically the first project to be developed
  • As at 30 September 2023, Frontier had cash of $6.9m (unaudited)
    • On implementation of the Waroona acquisition, Frontier’s cash will be supplemented by Waroona’s cash (~A$11.9m as at 30 September 2023)
    • Cash outflows in the quarter included land acquisition cost of ~$1.1m

Binding Agreement signed to acquire Waroona

Frontier signed a binding agreement with Waroona Energy Inc. (TSXV: WHE) (Waroona), whereby Frontier will acquire 100% of the shares not already held by Frontier via a Plan of Arrangement under the Business Corporations Act (British Columbia) (Share Plan), the equivalent of an Australian Scheme of Arrangement. Frontier Group currently holds ~20% of Waroona. This will create one of Australia’s largest renewable energy companies.

Waroona Shareholders will receive 1 new Frontier Share for every 4.27 Waroona Shares held on the Share Plan record date. Upon implementation of the Share Plan, Frontier will have approximately 445m Shares on issue. Current Frontier shareholders will hold approximately 67.3% of the Merged Group and Waroona Shareholders will hold approximately 32.7% of the Merged Group1.


Click here for the full ASX Release

This article includes content from Frontier Energy, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.

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