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Frontier Energy Limited (ASX: FHE) – Trading Halt
Description
The securities of Frontier Energy Limited (‘FHE’) will be placed in trading halt at the request of FHE, pending it releasing an announcement. Unless ASX decides otherwise, the securities will remain in trading halt until the earlier of the commencement of normal trading on Thursday, 29 February 2024 or when the announcement is released to the market.
ASX Compliance
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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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Frontier Energy
Overview
The world is rapidly transitioning towards renewable energy. While Australia and WA have come a long way, achieving ~35 percent of electricity generated by renewables in 2023, we are still significantly short of the 2030 target of 82 percent. At the same time as the transition is happening, there is an increase in electricity consumption: the Australian Energy Market Operator (AEMO) forecasts WA’s electricity demand will increase between 78 percent and 220 percent over the next decade. This increase in demand, along with the phasing out of coal-fired power supply (which represents roughly 30 percent of current supply) to be completed by 2029, is forecast by AEMO to cause a large and growing gap in power generation capacity over the next decade.
Frontier Energy (ASX:FHE;OTCQB:FRHYF) intends to meet the WA market’s urgent requirement for renewable energy. The company’s Stage One development plan for its Waroona Renewable Energy Project will consist of a 120 MWdc solar facility with an integrated four-hour 80 MW battery. Frontier is on track to finalise a definitive feasibility study (DFS) for Stage One in February 2024 and targets FID during the first half of 2024.
Frontier is also evaluating value-add opportunities, including opportunities to develop green hydrogen production to maximise the value of energy produced. The Stirling Trunk Water Main, which is located ~3 km from the WREP, could enable procurement of water for green hydrogen electrolysis. The Dampier to Bunbury Natural Gas Pipeline, which runs adjacent to the project, could potentially allow for delivery of green hydrogen into future domestic and export markets.
Company Highlights
- Frontier Energy is developing the Waroona Renewable Energy Project (WREP), located 120 kms south of Perth in Western Australia
- Frontier believes current market conditions are very favourable for supplying renewable electricity onto the South West Interconnected System (SWIS), WA’s main electricity grid.
- Frontier enjoys a strategic location and controls 868 ha of freehold land near world-class major infrastructure, including a 330 kV Landwehr electricity terminal located less than 1 km from the WREP project site. This is on the highest capacity transmission line in the SWIS, and the company has shovel-ready solar generation of 355 MW, and access to two connections that can potentially hold >1 GW of renewable power.
- The company is focused on becoming a near-term contributor to WA and Australia’s renewable electricity generation targets, with an FID for Stage One, an integrated 120 MWdc solar farm and 80 MW four-hour battery, planned for the first half of 2024.
- Significant revenue streams include Reserve Capacity Payments, which can be fixed for five years, wholesale electricity sales that can be optimised by storing solar energy in the battery and selling at peak times, and Large Generation Certificates (akin to carbon credits) available to renewable electricity providers.
- Frontier holds significant growth opportunities beyond Stage One, which will utilise only a third of the company’s current land holdings.
Key Project
Waroona Renewable Energy Project
The Waroona Renewable Energy Project is located 120 km from Perth in the South West of Western Australia, and is on track to become one of the largest renewable energy projects in Australia.
The project’s location, close to major existing infrastructure and nearby regional towns, provides several strategic advantages. The nearby 330 kV Landwehr Electricity Terminal will allow the company to sell electricity via the South West Interconnected System (SWIS), Western Australia’s main energy grid. The Landwehr Terminal is located on one of the highest capacity transmission lines in the SWIS. Nearby towns including Waroona, Collie and Mandurah can provide a highly skilled workforce.
In December 2023, Frontier completed the acquisition of Waroona Energy (TSXV:WHE.V), combining two adjacent projects to create a large-scale Australian renewable energy company, with 868 ha of freehold land, shovel-ready solar generation of 355 MW and the potential to expand to more than 1GW.
The company is pursuing a staged development approach targeting high demand markets and future growth opportunities. Given that the WA electricity grid is facing a major supply-demand deficit, the initial development stages will focus on renewable electricity generation and storage. Stage One comprises a 120 MWdc Solar farm with an integrated 80 MW four-hour battery. Approvals, permits and grid connections are all in place.
Revenue Drivers
Reserve Capacity Mechanism (RCM)
The RCM is unique to WA, and is not available in the Eastern States/NEM. Under the RCM, generators receive annual payments per MW, based on a benchmark reserve capacity price (BRCP) determined by the Energy Regulator. New generators can lock in the BRCP for five years. BRCPs have increased strongly over the past five years, to $230,000/MW for 2026/27. Recent changes in government regulations have meant that a four-hour battery proposed for Waroona may qualify for 100 percent of the BRCP. Furthermore, when the market is in deficit, an additional 30 percent is paid, and AEMO forecasts deficits for the next decade.
For an 80 MW battery, this implies ~$24 million per annum. This can be locked in for five years and provides a fixed (increasing with CPI), guaranteed income.
Electricity sales and arbitrage enabled by integrated battery
Wholesale energy prices in WA have increased on average by 77 percent over the past two years, reflecting the increasing tightness of the supply/demand balance.
WA has the most sunlight hours in Australia and one of the highest installation rates of rooftop solar at 38 percent, expected to increase to ~50 percent by 2030. As a result, the electricity price dips during the day, when solar generation peaks, while in the afternoon/evening, demand increases while solar generation declines, causing the price to rise sharply.
The integration of a battery with Frontier Energy’s solar farm allows electricity sales to be ‘shifted’- i.e. electricity is stored in low price periods and sold in high price periods. An 80 MW battery is sized to enable substantial shift of electricity sales. As a result, Frontier’s daily revenue profile will look roughly as follows (subject to solar radiation each day):
- Solar energy sales – early morning
- Battery charge – morning to midday/early afternoon
- Battery discharge combined with solar sales – early evening (during peak electricity demand).
Management Team
Grant Davey - Executive Chair
Grant Davey is an entrepreneur with 30 years of senior management and operational experience in the development, construction and operation of global mining and energy projects. He is the chairman of Frontier Energy (ASX:FHE), a Director of Lotus Resources Limited (ASX:LOT) and Cradle Resources (ASX:CXX) and is a member of the Australian Institute of Company Directors.
Adam Kiley - Chief Executive Officer
Adam Kiley is an accomplished resources and energy executive, with 20 years’ experience. He brings significant experience in various fields, including equity capital markets, debt advisory, project development studies, and project evaluation, having previously held some senior executive positions. He was previously the managing director and CEO of Waroona Energy and is also a non-executive director of Copper Strike (ASX:CSE).
Chris Bath - Executive Director
Chris Bath is a chartered accountant and member of the Australian Institute of Company Directors, with more than 20 years of senior management experience in the energy and resources sector both in Australia and south-east Asia. Bath has broad experience including financial reporting, commercial management, project acquisition, ASX compliance and governance. He is a non-executive director of Cradle Resources and company secretary of Copper Strike.
Dixie Marshall - Non-executive Director
Dixie Marshall has 40 years’ experience in strategic communications – including crisis communications, editorial media, advertising, marketing and government communications. Currently, Marshall is the chief growth officer of Marketforce, WA’s oldest advertising agency. Marshall previously worked as the Western Australian government's director of strategic communications, as well as for the Nine Network as a senior news anchor. She is the deputy chair of the WA Football Commission and commissioner of the Australian Sports Commission and director of Lotus Resources.
Amanda Reid - Non-executive Director
Amanda Reid has a significant background in government relations providing advice to a wide cross section of companies and organisations for more than 15 years for two national government relations and corporate communications firms. This included five years as Partner at GRA Partners. She was also a senior adviser in previous WA State Governments with responsibility for managing a strategic communications unit. She has held non-executive board positions across both private companies and not-for-profit organisations and is a member of the Australian Institute of Company Directors.
Warren King - Chief Operating Officer
Warren King is an engineer with 25 years of experience, specialising in the client-side project management of the engineering, design, procurement and construction of mineral processing plants and mine infrastructure (including various gas power solutions and solar). He has worked in Africa, Indonesia and Australia and holds a Bachelor of Engineering (mechanical) and a Bachelor of Laws degree. He has implemented and managed various project execution models (such as EPC, EPCM, and EP with owner managed construction).
Amy Sullivan - ESG Manager
Amy Sullivan has almost 20 years’ experience in the mining industry across Australia, holding executive roles in approvals, environment, community and government relations. Whilst working with VHM Limited, She led the approvals and growth team for the Goschen Rare Earths and Mineral Sands project and played a key role in establishing relationships with government, local councils, and the community, as well as managing the state and commonwealth approvals strategy, including obtaining major project status. Sullivan has practiced as a sustainability and ESG consultant working with companies to implement ESG and sustainability strategies. Sullivan holds a Bachelor of Environmental Management with Honours from the University of Notre Dame.
Martin Stulpner - Corporate Development Manager
Martin Stulpner has more than 20 years’ experience in the mining and financial services industries, including in corporate development, M&A, strategic planning, and equity research (sell side). His previous senior leadership positions include GM at Aquila Resources, where he had accountability for Aquila’s stake in the West Pilbara Iron Ore Project (now under construction as the $3 billion Onslow Iron project), and for Aquila’s South African business. As Director at Macquarie, Stulpner provided equity research of Western Australian metals and mining companies to institutional investors in Australia and globally.
Catherine Anderson - Company Secretary
Catherine Anderson is a legal practitioner admitted in Western Australia and Victoria with more than 30 years’ experience in both high-level private practice and in-house roles, particularly in capital raising, corporate acquisitions, structuring and regulatory compliance. She has advised on all aspects of corporate and commercial law and brings extensive experience in a range of industries, in particular the mining and IT/cyber security sectors.
Anderson is an experienced company secretary for both listed and unlisted public companies and has served as a director of an ASX listed junior explorer. She has provided consultancy services to entities wishing to proceed to IPO and ASX listing, and has twice been nominated for the Telstra Business Woman of the Year Award.
Appendix 4C
Carbonxt Group Ltd (ASX:CG1) (“Carbonxt” or “the Company”) has released its Quarterly Cash Flow Report.
Click here for the full ASX Release
This article includes content from Carbonxt Group, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
Carbonxt Group Limited – March 2024 Quarterly Update
Carbonxt Group Ltd (ASX:CG1) (“Carbonxt” or “the Company”) has released its Appendix 4C Report for the March 2024 Quarter and provides the following update on the key areas of activity for the period -- all numbers are in A$.
Highlights
- Customer receipts for the March quarter were $3.6m – an increase of 8% on the prior quarter.
- Sales of Powdered Activated Carbon (PAC) were consistent q/q and up 56% on the prior comparative period due to increased sales in non-coal fired power station channels. This outcome has been a deliberate effort of the Company to improve manufacturing efficiencies and increase gross margins.
- Sales of Activated Carbon Pellets (ACP) were up 37% on the prior quarter.
- Construction of the flagship Activated Carbon production facility in Kentucky, USA is now focused on commissioning activities, with operations expected to commence early in Q3 CY2024.
- Post quarter-end, the US Environmental Protection Agency (EPA) released an important update on PFAS regulation, with the introduction of legally enforceable rules that limit PFAS levels to 4 parts per trillion (ppt) in US drinking water.
Carbonxt is a cleantech company that develops and manufactures environmental technologies to maintain compliance with air and water emission requirements and to remove harmful pollutants. The Company’s primary operations are in the US and include a significant R&D focus as well as manufacturing plants for activated carbon pellets and powder activated carbon. Carbonxt continues to expand its pellet product portfolio to address numerous industrial applications.
Managing Director Warren Murphy commented: “The March quarter marked another busy period for Carbonxt’s US team, as final construction activity at the flagship Kentucky facility approaches completion ahead of commissioning and first production. The new facility will provide the Company with a significantly expanded production capacity for Activated Carbon products in both granular and pellet form, marking an important step forward as part of our commitment to play a key role in the provision of market-ready products to improve the quality of US water supplies. The industry continues to enjoy strong policy and regulatory support at the federal government level, highlighted by the latest EPA announcement confirming the new legally enforceable standard for PFAS levels in US drinking water. We look forward to providing consistent updates on Kentucky in the June quarter as final construction works are completed ahead of the commencement of full production operations which are scheduled for early in the September quarter.”
Click here for the full ASX Release
This article includes content from Carbonxt Group, 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.
Cleantech Market Update: Q1 2024 in Review
The first quarter of 2024 brought a robust performance from the stock market, with the S&P 500 (INDEXSP:.INX) achieving a notable 10 percent gain — its largest Q1 advance since 2019.
Investor confidence during this period appeared to be buoyed by expectations that the US Federal Reserve will lower interest rates this year. However, reports on gross domestic product, job growth and consumer pricing indicate inflation may be persistent, contributing to Fed Chair Jerome Powell’s cautious approach to lowering interest rates.
On the cleantech side, BloombergNEF reported that clean energy investment surged 17 percent last year, and the industry’s performance in Q1 demonstrates its resilience and adaptability amid evolving economic conditions and a heightened focus on sustainability. Notably, a Ceres report from the end of March shows that a record number of climate-related shareholder resolutions had been filed in 2024 for the annual meetings of companies in North America.
“In Q1 of 2024 we saw more of the ‘new normal’ in venture and growth investing — following the explosive years of financing during the pandemic, equity financing levels have essentially leveled out, but have settled at average levels higher than the averages pre-pandemic,” said Anthony DeOrsey, research team lead at Cleantech Group.
He told the Investing News Network (INN) that the period brought investment growth in hard-to-abate sectors such as green steel and cement, and said Q1 was a successful venture quarter in hydrogen production technologies. Additionally, the year's first quarter was marked by decreased levels of investment activity in the Asia Pacific region compared to 2023, when China was the biggest market for cleantech spending, as well as growth in the European market.
At a global level, the discussions and agreements at COP28 late last year highlighted the importance of addressing climate change through a swift and just transition to renewable, sustainable energy sources. This urgency provided a backdrop for evaluating the performance of the cleantech industry in 2024's first quarter.
What trends impacted cleantech in Q1?
US supports cleantech sector with funds and policies
Government investment is key for the cleantech industry to thrive and innovate, and in February, the US Department of Energy announced it would invest US$100 million to support pilot projects and testing facilities focused on carbon dioxide (CO2) removal technologies. This funding is part of the Carbon Negative Shot Initiative, which aims to reduce the cost of capturing and storing CO2 from the atmosphere to less than US$100 per net metric ton by 2032.
The Biden administration also demonstrated its commitment to addressing climate change by allocating US$6 billion to fund 33 projects focused on decarbonizing energy-intensive industries, such as aluminum and other metals mining, cement and concrete production and iron and steel operations. The project is part of the government's Investing in American Agenda, with funding coming from the Infrastructure Law and the Inflation Reduction Act.
According to a March press release, these efforts are expected to reduce the equivalent of over 14 million metric tons of CO2 emissions annually, comparable to the emissions of 3 million gasoline-powered cars.
Also in March, the Environmental Protection Agency announced a new rule to limit tailpipe emissions on light-duty and medium-duty vehicles starting in 2027. This rule, which the Biden administration has called the “strongest ever” of its kind, is part of the Investing in America Agenda and is funded by the Infrastructure Law and Inflation Reduction Act.
Steel and cement industries getting greener
Cement and steel are two of the most-produced materials globally, and are among the world's top sources of CO2 emissions. Now, however, efforts are being made to make these markets greener.
“These traditionally hard-to-abate sectors now have enough of a slate of innovative solutions to start charting a path forward to decarbonization,” DeOrsey said about these industries.
“We are now at an interesting stage in which there are new green steel and cement production technologies that are entering the market (mostly through demonstration plants, but some at commercial scale) — a first 'tranche' of technologies is emerging while the more nascent technologies are seeing more venture support.”
Cleantech Group's take on the “tranches” of green steel and green cement development.
Chart via Cleantech Group.
For example, Brimstone received a US$189 million federal investment to build a new plant to deploy its decarbonized process for producing cement, and Sublime Systems was selected to receive US$87 million to accelerate the construction of a cement factory in Massachusetts. It will reduce carbon emissions by replacing limestone with calcium silicate, thereby producing industry-standard cement with electrochemical reactions instead of applying heat.
DeOrsey also mentioned Skyven Technologies, a California-based startup company that has received US$145 million to deploy steam-generating wind pumps to manufacturing facilities worldwide.
Overseas, H2 Green Steel and Boston Metal have recently made significant advancements in this area. Stockholm-based H2 Green Steel secured 6.5 billion euros to build the world’s first large-scale green steel plant in Europe, with contributions from institutional investors such as the Microsoft Climate Innovation Fund, Mubea and Siemens Financial Services, along with a 250 million euro grant from the EU Innovation Fund. Meanwhile, Boston Metal raised US$20 million in Series C2 funding from Marunouchi Innovation Partners, bringing the total to US$282 million, to expand its presence in Asia and further develop its platform for decarbonized steelmaking using molten oxide electrolysis.
EV market faces challenges and opportunities
The first quarter of 2024 saw notable developments in the electric vehicle (EV) industry unfold.
Tesla (NASDAQ:TSLA), facing backlash from investors after reporting Q1 sales figures that were 8.5 percent lower than the previous year, opened its North American Superchargers to Ford (NYSE:F) EVs. To improve profit margins, Tesla also chose to raise the price of its Model Y EVs by 2,000 euros in Europe and by US$1,000 in the US.
In China, EV sales growth has slowed in recent months. However, in March, Chinese EV manufacturer BYD (HKEX:1211) debuted an affordable EV model priced below US$10,000. It is currently not sold in the US, but reportedly has attracted attention from American carmakers. BYD has set an ambitious target to increase its annual sales by 20 percent, aiming to sell 3.6 million units in 2024. The company is aiming for half a million of those sales to be overseas.
Meanwhile, Waymo, a subsidiary of Alphabet (NASDAQ:GOOGL), made progress in the autonomous vehicle sector by securing approval to operate its self-driving cars at speeds of up to 65 miles per hour on highways and local streets in specific areas of Los Angeles and the Bay Area. For its part, newcomer Fisker (OTC Pink:FSRN), which launched its first EV in 2023, has encountered substantial difficulties, as demonstrated by the company’s decision to reduce the price of its Ocean SUV by 39 percent. The company was also forced to halt production, is facing a potential bankruptcy and was delisted from the New York Stock Exchange on April 22. These developments highlight the varied experiences and challenges faced by different players in the evolving EV and autonomous vehicle markets.
“An interesting pull-through effect of global EV rollout has been the opportunities it is creating for innovation and growth of new technologies in EV charging — Europe has seen consistent venture activity in this regard over the past few years,” said DeOrsey about trends he's noted in this part of the cleantech sector.
What factors will move the cleantech market in 2024?
Enhanced geothermal gaining steam
As the year continues, where should cleantech investors direct their attention?
“A space to watch is enhanced geothermal,” said DeOrsey. “Despite having significant potential to provide 24/7 firm clean power, challenging project economics have remained a barrier. New technologies in drilling and closed-loop systems have shown promise to better access the latent power potential in hot, dry rock geothermal deposits.”
Recent developments in this space include a US$17 million Series A funding round led by Chesapeake Energy (NASDAQ:CHK) to develop EarthStore, Sage Geosystems’ first commercial geopressured geothermal systems facility, in Houston in Q4 of this year. Also, geothermal energy startup Fervo Energy raised US$244 million in February to further operations at a project in Utah that is aiming to bring 400 megawatts of clean electricity to the grid by 2026.
Quaise Energy, identified by DeOrsey as another geothermal energy company to watch, raised US$21 million in a Series A1 funding round, with new investors Mitsubishi (TSE:8058) and Standard Investments joining Prelude Ventures and Safar Partners. Quaise is developing terawatt-scale geothermal energy by vaporizing rock with MIT-researched techniques that use millimeter-wave microwaves to dig deep geothermal wells.
Other cleantech developments to watch
As the EV market evolves, Tesla is facing a potentially difficult year, with analysts anticipating decreased sales. However, the success of emerging competitors like Xiaomi (HKEX:1810), whose debut of the SU7 model resulted in a 16 percent surge in share value, demonstrates that the EV landscape remains dynamic.
“The subsidies to Chinese EV manufacturers are very significant and (have) allowed for a rapid scaling of EV production and sales, both within China and Chinese-produced vehicles for export,” DeOrsey told INN.
“There is already a high 27.5 percent import tariff on Chinese-built vehicles in the US,” he continued. “The onus will now be on US manufacturers to slash costs through learning effects and use of technology."
In DeOrsey's view, western EV producers should look to leverage new technology in order to reduce expenses. While there are many variables at play, Cleantech Group sees innovation reducing cathode costs for batteries.
He is monitoring Ascend Elements’ US$162 million funding round, which will go toward the construction of North America’s first sustainable cathode precursor manufacturing facility, set to open in early 2025.
Aside from that, a recent partnership between Canada’s Heliene and Georgia-based Suniva marks an important development for US solar project developers, as it enables them to take advantage of a new federal subsidy offered under the Inflation Reduction Act. By joining forces, Heliene and Suniva will produce "Made in USA" solar panels, incorporating Suniva's US-made solar cells into Heliene's US-made solar modules.
Finally, if GE Verona (NYSE:GEV), a spinoff of General Electric (NYSE:GE) that encompasses GE Renewable Energy, GE Power and GE Digital, continues to demonstrate a strong performance on the New York Stock Exchange, it could serve as an indicator of investor confidence in the renewable energy and power sectors.
Investor takeaway
As the world increasingly embraces cleantech, investors can strategically allocate their resources by staying informed on recent and emerging trends, policies and partnerships that are shaping the renewable energy landscape.
Don’t forget to follow us @INN_Technology or real time updates!
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Tesla Delivers Highly Anticipated Q1 Results, Musk Promises Cheaper EVs
All eyes were on Tesla (NASDAQ:TSLA), a key player in the electric vehicle (EV) market, as investors awaited the much-anticipated release of its first quarter results on Tuesday (April 23).
Despite its prosperous past, Tesla has experienced a shift in fortunes over the past year. It has struggled to maintain its position among the so-called Magnificent 7, a group of high-performing tech stocks that drove the major indexes in 2023.
Amid decreased demand for EVs, higher competition among EV makers and a string of controversies that have followed the company and CEO Elon Musk throughout the years, Tesla’s share price has fallen 41.79 percent in 2024, making it one of the worst-performing stocks on the S&P 500 (INDEXSP:.INX) this year.
The release of Tesla's Q4 2023 results on January 24 provided no help, with figures reflected a 23 percent decline in gross profit and an 8 percent decrease in vehicle deliveries compared to the previous year.
Meanwhile, Chinese EV maker BYD (OTC Pink:BYDDF,HKEX:1211) achieved a record profit last year, reinforcing the notion that a growing number of formidable contenders are now challenging Tesla’s once-uncontested dominance.
Chinese multinational tech company Xiaomi (OTC Pink:XIACF,HKEX:1810) also recently ventured into the EV market with the launch of its SU7 model. Xiaomi's share price surged as much as 16 percent in the days after the release, and the company recently announced that sales are up to five times higher than expected.
Perhaps in response to competition and declining profits, Tesla has implemented price cuts on several of its models. On April 19, the company cut the price of the Model Y, Model S and Model X by US$2,000 in the US. Price cuts to Tesla models in parts of Europe, Africa, the Middle East and China were also reported on April 21.
Musk defended the price cuts as standard business practices in a post on X, formerly Twitter, saying, “Only a fool thinks the ‘MSRP’ is the real price. Tesla prices must change frequently in order to match production with demand.” The company also announced plans to lay off 10 percent of its workforce on April 15, news that sent shares down over 5 percent.
Musk has been delving into various other ventures in recent years, such as artificial intelligence (AI) research through his startup xAI; biotechnology advances with Neuralink, which achieved a significant milestone by implanting its first brain chip on January 28; and space exploration with Space X, which carried out its longest test flight on March 15 and launched 23 Starlink satellites from Florida’s Space Coast on April 23, marking the company’s 300th mission.
Meanwhile, Tesla seems to have shifted its focus from vehicle production to perfecting technology to enable fully autonomous driving. On April 6, Musk described Tesla as "an AI/robotics and sustainable energy company."
On April 5, Reuters reported that Tesla had called off the development of a US$10,000 EV model to narrow its focus on delivering a fully autonomous robotaxi. Musk has been promising to deliver an affordable EV for years, and shares fell by 6 percent once Reuters said the plan had been scrapped. Musk denied that claim, and hours later announced that his company’s robotaxi would be unveiled on August 8, sending Tesla's share price back up almost 5 percent.
Analysts have raised concerns about the company’s new trajectory. For example, on April 18, Deutsche Bank (NYSE:DB) analyst Emmanuel Rosner said, "The delay of Model 2 efforts creates the risk of no new vehicle in Tesla's consumer lineup for the foreseeable future, which would put downward pressure on its volume and pricing for many more years." The brokerage downgraded Tesla to a “hold” and reduced its price target from US$189 to US$123.
Dan Ives, managing director and senior equity research analyst at Wedbush Securities and a Tesla investor since 2018, called out the company’s perceived lack of direction in an April 12 research note. “The future of Tesla is a bit murky now… Musk needs to give the clear road map and strategic vision for the Street, with Model 2 a key component,” he wrote.
Likewise, David Baron told Bloomberg the potential 680 percent growth his company Baron Capital, a major Tesla investor, sees in the EV maker hinges on its ability to deliver an affordable car. Tesla makes up roughly 13 percent of the Baron Focused Growth Fund, which focuses on US companies with strong growth potential.
How did Tesla perform in Q1 2024?
Tesla’s Q1 results were posted just after markets closed on Tuesday.
The company reported US$2.8 billion in capital expenditures, a 34 percent increase from last year, citing new cost-saving measures to “increase operational efficiency." Tesla also expanded accessibility to its Full Self-Driving service by reducing the cost of subscription to US$99 per month or US$8,000 to purchase.
Total automotive revenue dropped 13 percent compared to last year, which the company attributed to declining demand for EVs in favor of hybrid models and increasing competition within the EV market.
Deliveries declined by 9 percent year-on-year, as did total revenue, which dropped to US$21.3 billion from US$23.3 billion. Tesla's non-GAAP earnings per share came in at US$0.45, slightly below Wall Street’s expectations of US$0.50. Operating expenses were up 37 percent from last year and 6 percent from Q3, but income from operations was 56 percent lower compared to last year and 43 percent lower compared to the previous quarter.
The company confirmed that it will be ramping up the development of autonomous driving technology, but also intends to increase efforts to develop more affordable models. Development of the Model 2 appears to be going forward, with production set to start ahead of the previously projected mid-2025.
“We have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses. Furthermore, we will manage the business such that we maintain a strong balance sheet during this uncertain period,” the outlook portion of Tesla's release states.
The market responded favorably to the Q1 results, with shares jumping almost 8 percent roughly 10 minutes after the report’s release. Tesla's share price peaked at US$158.59 about an hour later, almost 10 percent higher than its closing level, before beginning a slight descent. At the time of this writing, Tesla was trading at US$144.68.
Don't forget to follow us @INN_Technology for real-time news updates!
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Frontier Shortlists Preferred Banks as Waroona Debt Financing Process Moves into Phase Two
Frontier Energy Limited (ASX: FHE; OTCQB: FRHYF) (Frontier or the Company) is pleased to provide an update on the Company’s funding strategy for the Stage One development of its Waroona Renewable Energy Project (Waroona Project).
HIGHLIGHTS
- Frontier has commenced Phase Two of the debt financing process, shortlisting preferred banks ahead of additional due diligence to enable submission of binding, credit approved terms
- The Company anticipates credit approved terms to be provided during the next 8 to 12 weeks, assuming successful completion of due diligence
- Phase One of the Debt Financing Process generated strong interest from Australian and international banks, confirming:
- Interest in providing senior debt financing which aligns with the Definitive Feasibility Study (DFS) assumptions1
- Acceptance of the selected original equipment manufacturers
- Key due diligence requirements and the proposed third-party service providers to undertake the work to meet those requirements
- Ability of potential financiers to meet the proposed timetable
- The DFS set out the maximum debt carrying capacity and included assumptions regarding amortisation periods and interest rates
- Targeted maximum debt carrying capacity in the DFS was between 65% to 70%, which equates to a debt facility of $200 million to $225 million
- The strategic equity investor process is ongoing, with NDAs in place with a number of Australian and international groups
CEO Adam Kiley commented: “Key to the initial phase of the debt financing process was confirmation of our major funding assumptions, which assumed gearing levels of between 65% to 70%, equating to between $200 million and $225 million, equipment selection, due diligence requirements and the funding timetable.
Confirmation of these key assumptions in such a short time frame is testament to the key attributes of the Waroona Project being well understood by financiers, predominately due to its simplicity and its executability as well the strong returns it delivers.
We have now moved into the second phase of the debt financing process and will be working closely with shortlisted banks towards credit approved terms and complete due diligence requirements in a timely manner.”
Shortlisting banks for debt financing
Following the release of the DFS for Stage One of the Waroona Project in late February, the Company commenced the Debt Financing Process to assist in meeting the funding required for development at the Waroona Project. Image 1 below provides an outline of the key outcomes and indicative timing for each phase of the process.
Image 1: Waroona Project – Debt Financing Process and indicative timing
As highlighted above, Phase One of the Debt Financing Process involved the Company’s debt advisor, Leeuwin Capital Partners, seeking expressions of interest from financial institutions to participate in the Debt Process.
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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.
Procurement and EPC Contract Nearing Conclusion as Peak Energy Prices Hit Record Highs
Frontier Energy Limited (ASX: FHE; OTCQB: FRHYF) (Frontier or the Company) is pleased to provide an update regarding the procurement of key long lead items as well as advancing towards selecting an engineering, procurement and construction (EPC) contractor as part of the Company’s Waroona Renewable Energy Project (Project), located 120km south-west of Perth in Western Australia.
HIGHLIGHTS
- Procurement of key long lead items including battery, photovoltaic panels and inverters has advanced with final equipment selection and contract negotiations to be concluded during the current June quarter
- Capital cost estimates for long lead items have been in-line with, or lower than, the estimates outlined in the Definitive Feasibility Study (DFS)1
- Only tier one global suppliers have been included in the procurement process
- No delay in the delivery of key long lead items has been identified through the procurement process
- Expressions of interest by a number of highly regarded EPC contractors have been received
- Shortlisting of preferred parties will commence in the coming weeks
- A significant increase in peak energy prices (4pm – 9pm) occurred during the March quarter, increasing by 65% to $172/MWh compared to the previous year
- Western Australia peak demand reached a new record of 4.23GW in February 2024, and exceeded the record peak six times during the March quarter
- The Company’s strategy of storing solar energy generated during low price periods in the morning through to midday and dispatching this energy during the afternoon / evening peak, is aligned with a more volatile market
CEO Adam Kiley commented: “A key risk for any project is an escalation in capital costs through the procurement process. It’s pleasing that cost estimates for all major long lead items have either been in line with expectations or, in most cases, actually fallen.
Only tier one suppliers have been invited to tender. Good quality equipment supplied by reputable suppliers helps us ensure the facility will start-up and operate as expected and importantly will be reliable.
In addition, the Company is also quickly progressing our funding strategy, as both the debt financing and the potential strategic divestment process well advanced. The Company will provide a more detailed update regarding both processes in the coming weeks.”
Procurement process for key long lead items indicates a fall in estimated capital costs
As part of the financing process a key requirement is to ensure a high level of certainty with capital cost estimates. The Company can ensure this by locking in prices for key long lead items with reputable providers. This will ensure minimal risk / price movement in total capital cost estimates, while also ensuring only high-quality equipment is supplied.
The Company therefore issued a request for tender for solar panels, battery energy storage system and inverters, to a select number of trusted global providers. The combined cost of this equipment accounts for ~50% of the total project capex.
The Company has received proposals from the tender process, including updated pricing. All pricing from suppliers has either been in line with or lower than capital cost estimates in the DFS. In addition, all suppliers have indicated they can supply equipment within the specified schedule.
The Company anticipates finalising this procurement process in the coming months.
EPC process advancing towards shortlisting of preferred parties
For the development of Stage One, the EPC contractor will be responsible for integrating key equipment and delivering a complete and operable facility that will be required to pass a performance test prior to handover. Frontier will be responsible for the purchase of the equipment to be supplied to the EPC contractor.
An expression of interest process was used to identify potential EPC contractors. The Company received strong interest from multiple highly regarded and experienced contractors that have a history of developing and delivering industrial scale solar farms and other renewable energy assets.
The Company is currently assessing these proposals to ensure they have the appropriate experience, safety record, and balance sheet to execute the works.
Following this process, the Company plans to issue the tender documents to the pre-qualified contractors, receive and evaluate the submissions. The Company aims to have the EPC contract ready for execution by mid-2024.
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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