Quarterly Activities Report For The Period Ended 31 March 2023

Elixir Energy Limited (“Elixir”) has a 100% interest in the Nomgon IX CBM PSC, located proximate to the Chinese border in Mongolia’s South Gobi region. The 30,000 square kilometre PSC was executed with the Mongolian Government in September 2018 and formally commenced in 2019.

HIGHLIGHTS

• Nomgon pilot production project passed key production milestones
• Term Sheet executed for next stage of Gobi H2 project
• Daydream-2 well in Queensland on track for drilling by around year end

Last year saw Elixir progress its Nomgon CBM project to the point of gas ignition, under the first extended pilot production test in Mongolia. In the March quarter strong results from this continued, with key production milestones being passed.

We will continue to garner data from the pilot until the middle of the year and then aim to initiate a formal process with the Government to start to move to a commercial production phase. Our more regular annual CBM exploration and appraisal drilling program in the Nomgon PSC will proceed in parallel and this is due to commence very shortly.

Looking South from the Nomgon Pilot’s pond to the Chinese border

Growing interest in gas offtake from Nomgon is coming now from not only local Mongolian customers but also from within China itself. The rapid withdrawal of COVID restrictions inside China in recent months has released what appear to be strong pent up commercial animal spirits on such fronts – and this includes great interest in hydrogen as well.

A great deal of activity in the hydrogen space is occurring inside China at present, which although not much reported in Western media, is closely followed by Elixir. For instance, energy giant Sinopec recently announced plans to construct a 400 kilometre hydrogen pipeline in the Chinese province of Inner Mongolia. In the longer term we could see it being eminently logical to extend that to the nearby nation of Mongolia - where Elixir’s Gobi H2 project is leading green hydrogen developments in the country.

We were pleased in the quarter to mature the Gobi H2 project with Japan’s SB Energy (a subsidiary of SoftBank Group Corp) through the execution of a Term Sheet. This moved on from our initial Memorandum of Understanding (MOU) which we signed last year and it provides a frame-work to enter into a binding 50/50 incorporated joint venture later this year. In the normal expected terms of dealing with very large Japanese companies, this is exceptionally quick progress, which we take to be to the credit of both sides – and to the fundamental attraction of Gobi H2.

There has been quite a bit recent press coverage in Australia over strongly expressed concerns from Japanese political and business leaders as to some of the recent regulatory proposals with respect to gas developments in Australia.

We believe the Federal Government is listening closely to these – as well as the reports that its own agencies (the ACCC- see below - and AEMO) have issued in recent months. There have very clearly illustrated that there is a rapidly emerging and very large gap between East Coast gas demand and supply. As a result, we think it likely that the final policy outcomes (due to be issued shortly) will not be as negative as feared some months ago – and those who own preferentially located gas resources – such as Elixir’s Grandis Gas Project – will have great opportunities to assist in meeting this gas supply/demand shortfall.

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