Q4 2021 Fusion Fuel Green PLC Earnings Call
Thanks Brent.
Good afternoon, or good morning, as the case might be.
I'm Jeffrey Schwarz chairman of fusion and fuel Green, we're about to begin an investor presentation, where we will walk you through a summary of our financial results for the company's first full year of operation and then update you on business developments as we pursue our plan to build fusion fuel into a global player in the developing green hydrogen business.
In that regard this may seem like business as usual.
Make no mistake it is anything but.
Our thoughts are with the Ukrainian people.
Russia's unprovoked invasion of Ukraine is an appalling violation of international law, resulting in the tragic loss of life and even if there would be a best case outcome will trigger a humanitarian crisis.
As a medieval Iberian poet and philosopher road.
I am at the edge of the West, but my heart is in the east.
Before I turn it over to Frederico pig, whereas if chavez fusion CFO I'd like to offer a couple of observations on the company's first full year of operations.
As I've said in past calls my experience based on more than 40 years as an investor in public and private companies is.
Is that a few we're serving the right market with the right people and the right product and technology you have a recipe for great success.
Well 2021 confirmed for me that fusion possesses those three attributes.
While green hydrogen is still a nascent market interest and it accelerated throughout the year as evidenced by the pace of inquiry incoming inquiries from potential purchasers of technology to produce green hydrogen or alternatively to purchase the green hydrogen itself.
We were and continue to be successful at building out our team with talented and experienced individuals and so doing strengthening our R&D production and business development functions. While also establishing a presence in Australia and North America.
<unk> being among the most attractive potential markets for our he both solar technology.
Test results at our first hydrogen farm in Evora, Portugal confirmed levels of production modestly in excess of what we had expected. Our R&D team continues to innovate with a goal to constantly be bringing down costs and increasing performance or the heber.
And the volatility in energy markets, which resulted in spikes in both natural gas and electricity prices in Europe demonstrated the unique value value proposition of our off grid solution for producing green hydrogen.
While one could be forgiven for wondering given all that why the disappointing share price performance.
I'll simply quote Ben Graham the father of value investing and.
In the short run the market is a voting machine, but in the long run it is a weighing machine.
Our goal with fusion fuel is to capitalize on our early mover advantage to build a heavyweight in the green hydrogen business.
With that taken away frederico.
Yeah.
No.
Alright.
Thank you very much.
Hi.
Thank you all for joining us today.
I look forward to updating you on our progress.
As always before we get into the niche of the presentation.
To recap for any new Joiners award season fueled has all the bells.
And the next step.
We aim to deliver clinical types of clean hydrogen solutions we.
We do this through our proprietary miniaturized Electrolyze us combined with our concentrated photovoltaic panel.
This allows those swap for a fully integrated off grid hydrogen solution.
So this is a market leading cost of green hydrogen production.
Okay.
Before going into.
The details of a company update.
I'd like to touch upon the hydrogen market overall.
Jeff had mentioned the tragic events in the Ukraine have a direct impact on both the energy and hydrogen molecule.
The continued increase in the cost of natural gas has a direct impact on the cost of great nitrogen now reaching values of around $4 per kilo without including the <unk> intelligence.
Due to the ongoing uncertainty in the market.
This is a commodity that may continue to experience significant volatility and high prices.
This is generating interest in green hydrogen.
<unk> industries.
So were previously reluctance on making the shift from <unk> agree.
However, with energy prices also hovering at very high rates any solution that requires energy from the electrical grid.
I will not commercially viable.
Using tools off grid integrated solution is perfectly suited for the current market conditions and we have been seeing continued increased interest in <unk>.
On the hybrid market overall, we've also been seeing increased interest in the mobility sector and hydrogen which is very exciting for this market seems to be taking shape, even faster than we initially expected.
Yeah.
Illinois, We will update you on some other company financials. The main events that happened in Q4 as well as more recent developments that we've also been announcing.
As we will dive into some of these items here later in the presentation I'll briefly focus on the items that are not outlines this wrong.
Firstly, we continue to add significant talent to our team and most notably at some very senior level, we added Terry adjustments wallboard, bringing with a wealth of experience in product development production management and renewable energy.
We also closed on three new Executive Committee members with David in Australia, and Xylem, Jason in the U S. All three bringing substantial knowledge and experience towards exiting.
And they highlight our ambition for significant growth in those markets.
Both the U S and Australian regions presented enormous opportunity for our technology.
James and Jason has the experience to not only open up these markets for us, but also to help us across several strategic projects. We have in the company more broadly we're very happy to have him on board and then we're already having an impact.
In the company.
Yes.
On the financials, we will provide more granular detail on when we submit our audited financials as part of the 20th in April .
We continue to now for the quarterly just to the sort of financial flash.
In the fourth quarter, we recorded negative operating cost positive P&L impact of 11 points 1 million euros. This was significantly driven by the release of previously recorded share based payments.
As a noncash expense or in this case noncash release.
The release is due to the forfeiture of the contingent capital consideration by three of the four policies involved in the 2020 business combination agreement.
This was driven by a desire to remove a conflict of interest the structure created between executives and shareholders.
Overall beneficial for the company.
This resulted in a robust <unk> of $19 6 million euros, which when netted with a Q4 share based payment charges leaves us with a net negative share based payment.
Payment charge of $14 7 million euros as outlined on the slide.
In terms of actual cash expenses in the fourth quarter, we saw an increase of $4 7 million quarter on quarter. This increase was driven by large expenses during the year that were booked in Q4.
These include it's around half of it is related to various ordering accounting and grown to advisory services.
Higher recruiting costs related to several senior and specialist function hires.
And the booking of several large yearly administration costs, such as transportation rent travel and business expenses, which fell in the fourth quarter.
Going forward, we will be.
And that throughout the year and so that one off impacts will not be seen in 2022.
In addition in Q4, we also welcomed 50, new hires in the quarter.
Including some senior managers, which also increased our personnel costs.
So guidance for future quarters, we expect our operating cost quarterly run rates to vary.
<unk> from around $2 3 million.
To $3 million per quarter as the year progresses, and as we continue to grow the team.
In Q4, we also we recorded a pretax profit of 24 million euros.
And as much as I'd like to take credit for that.
This was also driven by another very large positive noncash impacts.
And it's mainly driven by accounting practices and standards.
As mentioned in previous quarters, we need to recognize fair value movements on outstanding warrants with.
With a negative market developments at year end.
We need we needed to book a release of 13 million euros and the fair market value of these instruments.
In terms of cash we closed the fourth quarter with around 35 million euros in cash or other liquidity instruments.
And the main drivers of the 7 million cash drawdown in Q4 is comprised of the $3 65 billion operating costs I mentioned earlier and another roughly $3 5 million euros enrolled materials and Capex investments.
Okay.
Now for our outstanding shares and warrants remained unchanged from the third quarter as outlined in the third quarter, we introduced an employee incentive plan to both incentivize and retain personnel.
And ensure their alignment with shareholders, but also as a form to attract talent.
So this is reflected in the very last line here on this table. This is the restricted stock units.
We believe these are the critical instruments to help us deliver the growth potential to us and these restricted stock instruments.
Will vest over several years so they form.
The form of.
Let's say low cost for some of our key employees as well.
Yes.
Now going into the business update us on the more try and sort of technical part of the presentation. We're excited to show you. What we're working on we're teaching fuel is today and where we are already being a pioneer in the green hydrogen markets.
I'll start by sharing a five.
Key milestones for 2022.
Youll remember from last year, we had this slide each quarter outlining what the priorities for the year was our intention is to do the same in 2022.
So our five key priorities.
As thoughts with production. This is the go live of all been invented facility.
So the <unk> facility is critical for our growth is critical to.
To deliver not only the increased production capacity, but also the reduction in unit cost of the <unk>.
And also on the securing the grants and financing for this facility.
And then secondly is to.
So continuing to close both hydrogen purchase agreements in tech sales contracts to serve all of 2022 and 2023 targets.
And importantly for that has all sorts of secure grants for projects in development. So theres enormous amounts of granta and programs available for clean hydrogen and green hydrogen solutions and we want to make sure that we.
Heavily participating in these.
Okay.
Although this is critical we continue to evolve our evo in Hippo solar technology, but at the heart of.
Our company is at.
Large technology components are we in.
Intend to keep innovating keep staying on the forefront of the technology piece of the business.
Throughout the year, we will be launching different generations of the people solar.
These will either improve on the performance over the improved and the cost of these of the products. So this will be continuously ongoing process not only in 2022, but also in 2023.
We also want to introduce.
Green oxygen capturing capabilities to our solutions. So our solution does produce oxygen with no emissions. So we want to.
Have the ability to capture it.
And we want to continue to innovate and develop further products.
So.
Over time, we want to not only have the people solar.
We'd like to continue to work on new product development.
Very important is the.
Project developments. So this is our ability.
To deliver and execute some projects and slides will touch upon a few of those in a moment.
Also kick off and start the construction of some of the subsequent projects that we've already announced that we will.
We're already approved.
And importantly to secure the licenses for fusion fuels multiyear project portfolio.
This is a challenging one because the licensing environment changes country by country and it's a very new wells, but this is a core priority for us to make sure that we're able to deploy our units into the brown.
Last spring.
Most Christmas Eve.
We wanted to ensure that we have a robust safety culture across all areas of the company, we have hydrogen to start producing facilities, we have most of our production plants.
Safety is going to be.
Principal pillar of the culture and DNA of this company.
I want to start with that <unk> very pleased to inform you that.
We have secured just under 10 million euros and financing support for the development of the <unk> production pumps.
Ah represents around 25% of the total investments expected in that part of the coming two to three years.
Where we then plans will have a production capacity of around 500 megawatts to get.
Installation as I mentioned is at the heart of our growth plans and the financial support that we obtain from Portugal as trade and investment agency highlights Portugal's commitments to its heightened suites announced hydrogen ambitions.
We will continue to provide updates on the <unk> facility and development, albeit in the coming quarters.
Now a quick update on everyone. So everyone as Jeffrey mentioned continues to produce hydrogen and received visitors to size. This was a critical and most important function of this demonstrates.
Science.
It also as jeopardy referred to continues to perform between 5% to 10% better than was expected depending on radiation, which is absolutely fantastic.
We continue to us through the licensing steps required for full commissioning with significant progress already made we hope to finally.
To fully go live in the coming months.
<unk> is a trail a true Trailblazing project, it's the first solar to hydrogen projects in Iberia.
As a further projects that use hydrogen as energy storage to feed into the electrical grid.
And so while everyone is talking about the in hydrogen we are the only ones currently delivering clean hydrogen from renewable energy source through to the electric buzzer through to the end storage.
The challenge is that we are also forcing the developments of new standards in licensing frameworks as part of being in the forefront of this market.
Overtime, we expect that the framework to become more straightforward with subsequent projects.
I will now pass homes as well so our pace on some of the upcoming projects we have.
Credit income.
We are very happy to announce that our Eagle store project rebuilding equivalents electrolysis capacity of two five megawatts as contracted normally cost ramps from wholesale funding program. The project is located in the south of Portugal, more precisely in the CNS area and constantly stop installation.
178 equals solid units, which after commissioning will produce around 418 tons of green hydrogen per year contingent day and night production portion of which will be used to produce green ammonia and the remaining will be mixed into the natural gas fleets and our barcode.
For industrial uses as well as looking at the global capital investment will be around 18 million euros and the project will receive $4 3 million euros from deposit funding.
The construction period currently the project is under the licensing process with the local authorities and National Environmental Agency and we are waiting for the final licenses to stop construction. These projects will have a strong worldwide visibility and we will have an important role and will be more savings.
Economical use of our green hydrogen in several different options such as getting ammonia production blending natural gas monetization of the certificates of authority and supply hydrogen refueling stations.
We entered the wholesale into an agreement with <unk> energy to install that green hydrogen plants in the same region upstream is designed as seamless green H two solid one which also contracted warmed across brands from Boston. We were funding program. The project consists of.
Installation of 62 equals solid units totaling at global capacity of one two megawatts, which will for those 77 tonnes of green hydrogen per year also considering data and not production.
We'll be bottles for industrial uses in the <unk> community and also mobility the global requirements investments will be around 250 far near the nearest the project is on the licensed seat process with local authorities and National Environmental agency and care maintenance.
Waiting for the final licensees to start construction. This project is expected to be and that's contributed 14 grassroots decarbonization targets laid by the Portuguese government talking Basel and heavy transportation sectors.
The 12 months ended.
As we did in Q3 will also provide an update on our activities regarding funding programs for projects in Portugal.
As mentioned several times that just now.
We are involved in three wholesale projects that were approved.
But also during Q4, we are also involved in three submissions to the components by program of <unk>, but we expect to hear the results in September of this year.
More recently, we submitted.
We were involved in the submission of two projects to the <unk> components.
The PRL program with a total of 10 megawatts <unk> capacity for those projects.
And we will continue to develop and submit projects. These programs as they open up.
Incredibly active in this space and so far.
We've been quite successful in securing the grants for all our projects.
As mentioned before we sign a contract with Exxonmobil and leave that European fuel logistics and storage provider to develop solar to hydrogen plant to supply green hydrogen and we added machines.
First incentive patent spend of evil solid technology, which will produce and supply green hydrogen to one <unk> hundred percent getting hydrogen refueling station. The excellent project imaging, it's positive self installation of 21 equal solar at units to produce more than 40 tons of green.
My vision for the year.
<unk> thousand tons.
Producing daytime buybacks highest completions conversion of solar radiation ink to green hydrogen and the additional 20 tonnes getting nighttime using electricity outsource the project agenda licensing profit, but already received authorization to stop site preparation and cleaning we got.
Alrighty manufacturing being able to sell our units and if everything goes according to the planning we will start construction in May we began to fully commission the plant until the end of quarter. Three Dcs. These projects is very important to demonstrate the enormous advantage of our PV solar technology.
And consolidate our packaging spine, which includes the development of more than one gigawatt of electrolysis capacity in the next five years.
We entered into a very important collaboration agreement with <unk>.
A leading Spanish industrial engineering service companies and by EMEA and the recapitalization of industrial energy that will focus on the substitution of Martin 500000 tons of hybrid hydrogen consumed annually by industry today in spine and promote the transition.
To hydrogen fueled vehicles for logistics and haulage fleet as well as if we kind of organization of power generation and industrial people choosing <unk> actively developing recapitalization projects with major industrial clients, who are well positioned to benefit from the recently.
Announced capex subsidy programs aimed at simplifying BMO vantage use of green hydrogen technology across the industry value chain by jointly going to mark to market confusion and I answer together form the leading etch from either of 70 low cost getting.
Hydrogen solutions for the cargo night, Decarbonize industrial processes caramel NSE as well.
Commercial vehicles.
We also entered into a strategic framework with high energy at Big tissue renewable energy developers, who asked throughout Spain.
Portfolio of around three Gigawatts projects Green hydrogen and green ammonia production currently under development to supply that growing demand market and that this agreement we will supply our diesel solid technology to high balance sheet, who will develop and build a green hydrogen production.
Plant in an exclusive <unk>.
I'll, let <unk> supplied.
The project has a target annual production capacity of some 7500 tonnes of green hydrogen.
<unk> is currently in use and at least.
Processing sites with just these projects will be of such steps on the relative to a very significant portfolio of Giants green hydrogen generation plants with high <unk> and spine.
Sure.
So as for Portugal.
We are already very active.
And engaging with a very strong programs in Spain.
And the fusion fuel team future fuel stadium team.
Unstoppable going after these and the moves programs.
Five projects.
Totaling more than 15 megawatts has been submitted using fusion fuels technology and other projects already being worked on but when the next programs open.
Open up.
Now I'll comment on some of the new markets for fusion fuel.
We've mentioned before we have our partnership with with ample I'll say this.
Transport to leader.
We will look we will create the pilot ponds and Brisbane to supply hydrogen refueling stations.
The project site development and licensing has kicked off.
Hyatt are ample counterparts come and visit us in Portugal recently, and we're all extremely excited between partnership between the two companies.
In the U S. Even though the team has only just started.
<unk> hit the road running.
The U S associated another key future market for us and it's one that's starting to take shape quickly.
We started to take our first steps into this market with a project at the University of California, Irvine for solar to hydrogen facility.
We submitted an LOI to one of the Dod's programs for those projects and we're already actively looking into potential submissions for larger programs that are part of the infrastructure investments and jobs Act.
So this is exciting early days for fusion fuel in the U S.
It's been a while since we've set an overview of our pipeline. We hope this provides a good idea of where we stand now.
Haven't included all markets, we are in discussions with.
If you will recall from a year ago, we had.
Things like that in Chile, and so on discussions in other markets continue to be ongoing but we've only included the projects that are have a bit more shape to them at this stage.
So we currently have over 3000 hectares of reserves for our projects and the pipeline for perspective hydro purchase agreements with tech sales projects number 36 different projects 10 of which are already in the licensing space.
We've included on the rights the respective megawatts electrolyze it capacity to be more easily compared to other players in the industry. We always think about this in tons of hydrogen virtually every announcements in the industry comes with megawatts. So we've decided to clarify what the.
Pipeline actually includes and you will have noticed maybe.
That is a different project slides, we've been as much as possible, including the megawatts electrolyze it capacity for clarity as well.
Although these two four gigawatts of potential projects include non committed projects.
We're extremely excited at the level of interest and engagement in our solution.
As the Australian and U S operations takes shape, we expect this to grow further.
Okay.
No.
Before we go into Q&A I'd like to recap on the core milestones.
This is a little bit.
Stable.
We showed the slide twice every time.
So as a reminder, production facility one of our key priorities moving the existing pipeline to close contracts continued check evolution in new product developments.
Projects construction and licensing and a overall.
Safety culture across the firm.
We truly are pioneering the green hydrogen market might be area, and we will keep being at the forefront of this emerging megatrend industry.
Jeffery opened.
Today's updates with a quote from Benjamin Graham and highlighted how we aim to build a heavy weights in the green hydrogen business.
In closing I would like to reference a quote from a heavyweight champion the patches, how we will make this happen.
And its Mohamad Ali.
Finalize the box clients seem to be with small we're nimble we're agile.
Innovative and with <unk> we.
We develop our own projects and we control their destiny and we intend to fully disrupt this industry.
So with that.
Thank you and we'll open up with Q&A.
Okay.
Great. Thanks, Puerto Rico, So we'll start with some key.
Question three received over E mail.
This is a question for now regarding M&A project.
Is there an expectation that the hydrogen produced from the one two megawatt <unk> project with the exported.
No.
Hey.
Equivalent to transform to a flex park hydrogen is very complex and so.
Green hydrogen.
We use in the commodity and the community of signature and at the same time part of it would be used for.
For hydrogen refueling stations at the concept is always for the community of the Phoenix City.
Thanks, Eric.
We continue to look ahead towards a more robust record export market do you have a perspective on what forms of prejudice look most economically promising whether thats.
With regard or create ammonia or something else entirely.
Yes.
Today.
The numbers established that have been published and.
The Korean notes back the cheapest way to transport hydrogen.
Got it.
By converting to hydrogen to ammonia and Dan <unk>, who will be spend on yet.
Again getting hydration.
To be use the costs also liquid.
Hydrogen is today very expensive, it's only today one boat.
On the Japanese company.
<unk> Calif I can make.
Transportation.
With <unk> getting <unk> hydrogen and the cost today is still very expensive.
That's also.
One additional possibility.
Arity States' website and which is.
Richard organic carrier, but today, it's still doing such specs. So we cannot assuming thats a reality.
This is a question for anybody so.
We received a question about the maturity of the Heber solar product and whether there are any future improvements to the product that are expected could you talk about that.
So I'll take that one.
As I mentioned in our priorities.
There is suddenly.
Evolution of the Tivo solar generations.
We consider the products mature.
In terms of what we can put into the ground. This is why we are going to be delivering it to epsilon.
In a few months, but that said we do have a.
Significant pipeline of.
Generations to come of the product, we will look to increase.
The performance of the product, we will look to decrease the cost of the units.
That doesn't mean that the.
Units, we have today and not mature. So this is just.
Different generations.
So we will be deploying.
Thanks ill pass it back to Joe.
The next question is about the process of commissioning a plant how long that process typically takes a more of a possible roadblocks.
The commissioning of our plants.
We have to separate the commissioning I think developing processes and really the commissioning the technical commissioning of the plant so commissioning.
So stop.
<unk> ethylene hydrogen it's a process that we of course, depending on the on the dimension of the plants can take that in two weeks at two one months at the commission and start producing I think the question is related to pharmacy and the piloting of a proper licensing process of our plants at some times depending on the answer.
The land that we are using.
Equity cultural Lance on each industrial it can take.
We're very fast and again, depending on the dimension of the project can be done in six to nine months, but it can also mean for our biggest launch it can.
One two.
Two 1 million in the half.
Knowing that this process takes longer.
Scott.
Some of our projects one year ago. So today, we can say that we have some projects already in advanced stage of permitting but they will most probably can take six to nine months.
April two installed technologies.
Finally for the large projects that future with looking to develop how does that rollout work is the addition of new Heber solar two existing installation expected to run smoothly.
Pardon me it blocks, we will install additional quantity of evil solvers.
Small plant RMB bank.
It has to do with the quantity of the is the number of Eagle Salt left that we will be installed across this plant will go will need defense equipments, depending of course on the output of that in hydrogen for this it will need different.
Equipment for compression for qualification and startup cost offset in hydrogen from this.
Excellent that's it Federico now so in the current ticked up to two four gigawatts of project backlog or pipeline can you quantify what those figures mean in terms of potential revenue or EBITDA margin.
Okay.
So I'll try to be very cautious here.
My answer.
<unk>.
But effectively I want to note that that.
That pipeline includes hydro purchase agreements and type sales.
We will look to to do.
The projects.
<unk> achieved a sort of maximum return to shareholders. So this could be projects with high net present value for the ones, we own or high gross margins. So it's hard.
To quantify it.
Exactly.
<unk>.
Rule of thumb, if they were to be sort of all sales.
100, <unk> and southern months 30000 euros Thats, a 3 billion pipeline on a very back of the envelope calculation.
The EBITDA margin doesn't change significantly.
The short term if youre doing HPA is or <unk> doing.
<unk> Tec sales or the proportion of those so I'm going to.
Although definitely sidestepped that question.
And it puts into perspective, the pipeline that does not necessarily mean that we can do a pipeline the size of actually executing on it but this is just the size of the pipeline with all the caveats.
Essentially have a level.
Thanks <unk>.
The pipeline obviously the go live of the benefit the facility.
It is critical too.
Achieving it.
Covenant or you are in the mid 2020 to date.
For the factory to be up and running.
So it's a note.
We initially said that we.
It would have the.
Last year, we gave guidance that the study would be up and running during Q3.
Actually we expect the first activities already take place.
In the next quarter in Q2.
With further rollout in different lines in Q3.
And then some of the longer lease lines essentially during Q4.
We do expect to have activity in <unk>.
In the coming months.
Great. How are you thinking about production capacity has been a bit David here.
Sure.
The production capacity in the guidance, we gave last year was to target around two <unk>.
People service.
So that continues to be a potential targets for us with production capacity that said I want to I want to notice one point, which is we will produce what we need for the projects that we can deploy.
Producing for just the purpose of keeping in stock.
It has two issues the first is that.
It does each cigna cigna.
Significant amounts of capital and the second is that as we have evolutions of the.
Give us all the technologies, we don't want to be.
Keeping staff.
So the previous generation of Pima solar so that is the production capacity to two to 2000.
That's what we hope to be able to deliver on this year. The production volume will depend on the licensing of projects from what we can deploy into into the field.
Okay.
Okay. So we received a question about the auction capture system. While it's still early is there any additional detail you can provide on key milestones or projections.
Yes, I'd love to share those with you that is a.
Key targets for this year it would be.
Too early to.
To put outlet.
Figures on that piece I just want to note.
Of course.
Whatever we produce in hydrogen the rough calculation of what we produce and oxygen is <unk> eight times.
So that gives us an.
An indicator of the potential volume of oxygen that we're talking about is when he goes home that are producing.
One tonne of hydrogen.
Around eight tons of <unk>.
Tons of oxygen potentially being created as well so.
Probably I will stop there on the guidance.
Thanks for your questions earn the Heber solar.
If possible can you provide some additional information on performance.
So as we mentioned.
The highlights.
In August we should.
The initial performance hopefully.
<unk> was around.
A little bit north of 10% better than we had initially expected. So if you think that it was.
One Tom placebo.
Which was about $1, one or one two tons per <unk>.
Of course, we saw the strong performance of the summer months with high solar radiation now that we've seen.
Different months, we're actually closing in on some.
Somewhere between 5% to 10% increase in performance so.
From one to.
10817, or so on.
Improvement in sight.
In production.
Great.
Some of the.
Increases in raw materials costs over over the course of 2021.
Appreciate the question.
Expected manufacturing cost per kilo silver.
This year.
So the zebra solar manufacturing cost for this year, we'll spend which generation is we have several generations coming through.
Given that some of these are tech sales. Some of these are one project developments, we're not disclosing.
This stage duplex cost of production also even though we are in contract negotiations.
Do want to note that.
Yes.
While we communicated about the target production cost of hydrogen in 2023, we still hope to to be delivering.
At those cost levels.
Probably in the later half of 2023.
<unk>.
Part of the.
Increased production costs and raw material costs have been offset by grants that we have been able to secure and that we've mentioned before that his presentation, allowing us to still keep that targets.
Thanks, you alluded to the cost of hydro production.
Are you able to share what the cost reduction we are at currently.
For per ton or $1 per kilogram basis for Europe .
But currently it.
We'd probably be north of.
At around four four years.
But kilograms as you say.
As I mentioned before our commitment, which we mentioned before was leased stabilized cost of hydrogen production cost, especially the second half for later in 2023 to be to euros.
At the cost of production.
Final cost of the IPO will depend on the use case, depending if it's mixing.
It's full calls buses or trucks or so forth that will change depending on the compression certification.
Charges, but from a pure cost of production.
Given the brands that can offset some of the price increases we continue to still be having that targets.
Thanks, I'll pass it back to Jeremy for a moment are there any issues with the ever plants and if not why it's taking so long to receive full commissioning.
Second fact, what happens with the Abra project and with the permitting process is that.
The projects that the government business.
Organizations of all the production of bronchitis and sell steam methane reforming enrollment we started developing the real rubber in Portugal to develop green hydrogen projects. We can suddenly we were caught in the legislations that didn't exist so our process.
Next let constant dollar production of Green hydrogen was considered as the production off of great High touch on pharmacy methane reforming in fact, what happens is if you'll go according to the actual legislation and regulations and simplification we have to go through a process much complex.
Which products, which includes our sparkling soft.
<unk> mission of pollution emissions, and which all of US we know that.
There is no positions at all from electrolysis.
Electrolysis of water to produce green hydrogen, which is the reason why that would be able to project financing process is taking more time than expected all of us are local authorities.
Mental agencies.
We are working together to try to make it more simple as they all assumed back because the complexity of getting hydrogen is completely different from the complexity often can a hydrogen and so we truly believe that in the next coming months it will be solved and so we will get the license fees.
Finished the financing of the other projects and will open in new and new and faster way to for the financing of the future projects.
This happens in Portugal.
It's the same thing exactly inspiring in Australia. So this is a process that takes time, but 11 process, which you'll be able to impact the coming projects will be much much faster.
I would like to add to <unk> as mentioned before this is part of the cost of being pioneers in the green hydrogen markets, we're really opening up the green hydrogen markets right.
And this is one we're also facing us.
Second one just to answer a specific point that.
None of the delays on commissioning are due to issues with our system.
Issues with our system are not causing these latest business a permitting issue.
Great. Thanks.
Given the size of fusion's own production capacity versus pipeline, how are you thinking about.
Production going forward are you considering developing additional production capacity, where potentially pursuing it outsourcing strategy.
Simple answer is yes.
Addition to that it's also looking at.
Potential strategic partnerships, whether it makes sense.
Of course, one of the things Andre.
At the scene looking into is the ease of production of the of the product.
Outsourcing production essentially move into assembly all the way to the full outsource option. So these are all things that are sort of.
Strategic discussions.
And also activities that we count on and this is one that I mentioned at the beginning very happy to have.
Turning science, Jason on board bring in that additional expertise to help us with a strategic hub often andre.
Strategic assessments of our way forward.
Okay.
Yes go ahead, one moment, Puerto Rico.
You mentioned are the <unk>.
<unk> capacity for 2022.
As various production lines will only be coming off.
Yes.
And to operate during the course pointing to perhaps you could also offer what productive capacity of the <unk> facility.
Would be in 'twenty three without any additional capacity.
Expansion.
Sure absolutely so.
The 2023 production capacity percent between 120 to 200 megawatt.
Megawatts.
<unk>.
Five to 8000.
Tivo solar units.
We will have to in a few months' time make a decision on exactly what number we close four for that.
So that additional capacity, but that is the current target for the <unk>.
As to the.
The production capacity of the mine and in 2024.
Sure.
We increased further.
The 200 to 400 megawatts.
The production capacity going into 2025, reaching the 500 again, the 2023 and 2024, it's not a question of design. It will be a question on decision of how much we want to install and this will be.
Driven by what we believe will be the projects, we will be able to install in 2023 and 2024.
Thanks, Cyclically, Puerto Rico, what is the current cash burn and how is the company thinking about its cash position.
Potential sources of additional capital.
Sure.
On the on the customer and as I mentioned for the guidance being given the on the operating costs between $2 three.
The mid <unk> per quarter, all the way to sort of $3 million per quarter.
Sort of development throughout the year as a guidance with all the caveats becomes with giving guidance.
Things can change throughout the year.
<unk> two.
To that sort of normal operating costs, we do have some significant investments that we expect to make.
And then some of the hydrogen pumps.
This will be the cash burn will also depend on the.
The ability to secure some of the financing and debt.
Solutions for both of those Capex investments were in advanced discussions on that front.
So we will provide a <unk>.
More detailed analysis on our customers' cash burn specifically on the Capex side likely in the next quarter or so.
Now on how we think on the on the capital piece of sorry, the second piece of the question apologies.
First of all there is.
And one of the ways to preserve capsule is to produce really what is required into the projects that can go lives rather than just producing for storage. So that allows us to at the point that we produce we're able to put them into the field. We're also able to secure the.
The cash from the grants that are available.
This is why it's important also time that correctly.
<unk>.
In terms of.
Potential capital raising in the future.
Something.
As we discussed on the board of <unk>.
Abilities are.
So we do.
Will it lead to a strategic strategic capital raise with you an optimistic subsidiary. So we do want a tool as we go with that these are still all competitions on the board.
Of course, as we mentioned before.
Sure.
What we want to make sure that we can.
Deliver upon the growth potential that we see in the industry now.
So that could take many shapes and forms including strategic partnerships as well.
I will stop on that one there unless you want to add.
Yes, I just want to offer.
At a high level, we have lots of different levers to pull and people should understand that.
Among those levers would be.
A shift in the percentage of business that we do between tech sales and our own hydrogen farms. So packaging for arms require a capital investment over.
Where the payback is over an extended period of time.
We'll do those to the extent that they provide attractive returns on capital.
And.
The returns on capital there will be dependent on things like what amount of debt financing, we can get what amount of grants we can receive.
We have been approached by too many.
To account.
<unk>.
Potential investors folks, who have said we want to partner with you on projects.
Firms that potentially have a lower cost of capital than we do and there are lots of different ways to slice and dice how to structure a.
The capital investment required for for hydrogen farm, where the return would come over overtime within HBA Alright. There is project financed potentially available there are ways of structuring mezzanine.
Type of upward earnings for targeted towards infrastructure funds.
Looking for safe and secure returns over time.
Or we could bring in people to be our partners in those projects at the equity level. So between the different ways that we might be able to finance hydrogen farms and the ability to shift between.
Between <unk> and.
Hydrogen purchase agreements, we have lots of lots of ability to.
Manage our capital needs understanding that that at the bottom what we are interested in is generating the best returns for our shareholders. So we are not going to look to dilute our shareholders.
<unk>.
With raising equity unless we believe that the equity can be put to work at very attractive rates of return.
Great. Thanks, just a few more questions here as we get to the company our a couple of questions on commodity inflation.
Our increases in prices for raw materials, and key components impacting product profitability.
Are you able to pass through some of those increases to potential customers.
So.
I'll take that.
At the moment as I mentioned, we're able to at least pass through some of those cost increases with the grants programs available that's actually been probably the largest source of.
Of support for that cost cost increases of course it has helped.
Yes.
As mentioned for both the market for Green hydrogen, but also the market for green and Blue hydrogen has suddenly become more expensive allows for.
The difficult commercial discussion when.
Adjusting for Justin.
Some of our prices I will note on the price of raw materials. There are some prices of raw materials, but we.
We do suffer as everyone else element in being.
One of them.
But we have also seen huge decreases.
Some of the components as the markets also mature.
Will it used an example of the membranes.
With security secured a price or a quarter.
We were paying a year ago.
So even though that we do feel.
Some raw material upward pressure and some components. So you just see.
Ongoing developments of the Hudson Wells in general.
<unk> is also providing some relief.
And other components.
Once again I just wanted to jump in here for a moment.
To make two points. The first is that the green hydrogen market is very young it is still developing and and the sources of demand are developing so some amount of demand comes from traditional consumers of hydrogen.
Who have been consuming great hydrogen who are looking for ways to reduce their carbon footprint.
You have to think about how much more they are willing to pay for green hydrogen over great hydrogen.
Federico said the cost of great hydrogen is a moving target.
And then they need to decide how much of a premium they are willing to pay some portion of that may be attributable to.
Commitments that they have made to shareholders or more broadly.
To their customers.
De carbonization commitments, but at the same time knew there are markets that are developing for green hydrogen.
I think we have mentioned in the presentation. The mobility market is one that is developing more quickly than we had expected.
Mobility market is a market that pays a premium for green hydrogen.
In terms of the company profitability, we need to look at a lot of different things. There is our cost of production and then there is the price at which we can be selling either green hydrogen or the technology to produce green hydrogen cannot be solved too.
Two sub sectors of the market, who look to who we are willing to pay a bigger premium for green hydrogen.
As is the case with mobility and lastly.
As also has been mentioned in thinking about cost of production.
And therefore, what our gross margins would be at this early stage of the development of the green hydrogen industry. The subsidies that are available from government and by way of grants.
<unk> represents a very significant.
Of what.
What the all in cost might be so while.
While we and NR.
Fellow competitors have have experienced.
Price increases for raw materials and some components.
That's only one portion of the of the story and I really would encourage folks.
Keeping their eye on our ability to.
Generate sales either tech sales or <unk> and higher.
Higher margins.
Portions of this market.
Keeping an eye on that as the year progresses.
See where we are able to to be signing up.
Revenue generation.
We're confident that that.
Given what is in.
In 2022.
In 2023 only developed.
We believe we'll be capacity constraints for our for our fusion fuel we will certainly look to.
To take advantage of those high margin opportunities to maximize the potential either gross margin on tech sales or realized over time via HPA.
Great. Thanks, So we've reached the top of the hour. This concludes our fourth quarter webcast. If you have additional questions. Please feel free to contact us directly at IR at fusion that fueled that EU or visit us at our website at www dot season Dash fuels that EU. Thank you for all for you.
Participation and engagement as always and we look forward to our next quarterly update.