HIGHLIGHTS
• Daydream-2 well due to spud imminently
• Funding procured for Daydream-2: R&D, new equity and a debt facility
• Data Sharing Agreement signed with Santos
• Nomgon Pilot Project extended with successful drilling of Nomgon-10 well
• New CBM discoveries made in the Nomgon PSC
MANGAGING DIRECTOR’S REPORT TO SHAREHOLDERS FOR THE QUARTER
The last quarter was a period of intense activity for Elixir in both Queensland and Mongolia:
• Preparing for the now imminent spud of the Daydream-2 appraisal well – the highest impact
well in Elixir’s history.
• Expanding the Nomgon Pilot Project and adding new CBM discoveries in the Nomgon PSC.
• Procuring multiple new forms of finance – qualifying for R&D cash rebates from the Federal
Government, new equity and a debt facility (secured on the R&D rebate.
Share market conditions have been challenging in this period – not only for Elixir, but for the vast
majority of growth orientated companies globally, due to multiple factors ranging from rising interest
rate to growing geopolitical tensions. However, the successful delivery of real projects should still be
rewarding for investors and in the rest of this financial year investors in Elixir are exposed to multiple
opportunities for the significant de-risking of the Company’s gas resources.
In the last month major signs of growing support for the long term future for oil and gas emerged on
multiple commercial fronts.
Arguably most significant were major corporate takeovers announced in the USA by that country’s two
largest energy Super-Majors – Exxon’s acquisition of Pioneer Resources and Chevron’s takeover of
Hess Corporation. The total deal value in these two transactions alone is more than A$200 billion.
It is not since the consolidation of Majors into Super-Majors in the 1990s that such a consolidation
wave has hit the oil and gas sector – and there is now a widespread expectation that further mergers
will follow in America and then this will spill out to the rest of the world.
What this means for the junior end of the sector in which Elixir sits is that the transactions demonstrate
a number of things that are relevant to the energy sector as a whole:
• The expected demand for oil and gas will endure for many decades to come.
• Capital markets are increasingly recognizing that is the case and that the march to the energy
transition will require gas in particular to be funded for this extended period.
• Big players want big resources – and some degree of diversification between oil/gas and
countries.
In addition to this corporate activity, the last few months have seen a continuation of the trend we noted
in the last quarterly: LNG purchase contracts being entered into for multiple decades.
For instance, Shell recently signed a contract with Qatar for gas to be delivered to the Netherlands for
a 27 year period. This shows that real commercial dealings underpin the longer term health of our
industry.
In Australia there is some disconnect between this reality of how long term and challenging the energy
transition is versus what some politicians would like to be the case of an easy, short term and painless
change. However, in the end of the day these political strategies - that are remarkably similar to those
adopted by King Canute more than a millennium ago - will inevitably face the same drenching reality.
As we move increasingly closer to that point, Governments will have to support the development of the
material gas resources in the likes of the Taroom Trough in Queensland that will be required to meet
both domestic and international needs for decades to come.
Our imminent Daydream-2 well is therefore very well placed – in time and geographical location – to
increase and de-risk large gas resources to meet these needs.
In Mongolia, our coal bed methane pilot at Nomgon is demonstrating remarkably similar characteristics
as experienced in Australia in previous decades – the production of gas generally takes some time and
requires the applications of learnings that can only be acquired from real experience. Over the coming
months the pilot will be managed very closely to bring gas production up slowly but surely.
MONGOLIAN GAS – NOMGON CBM PSC PROJECT
Elixir Energy Limited (“Elixir”) has a 100% interest in the Nomgon IX Coal Bed Methane (CBM) Profit
Sharing Contract (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.
The PSC has a minimum ten year exploration period and a thirty year (extendable) production period.
Elixir is substantially ahead of its exploration expenditure commitments under the PSC, even
notwithstanding the force majeure event caused by COVID-19 in recent years.
During the quarter the main focus areas were as follows:
• Expanding the Nomgon Pilot Project through the successful drilling of a new pilot well: Nomgon10.
• Ongoing production testing at the Nomgon Pilot Project.
• The exploration and appraisal drilling program for calendar 2023 was largely undertaken in the
better weather conditions in the quarter, with successful CBM discoveries being made in the
Big Slope and Yangir sub-basins.
All work was undertaken safely, in accordance with local community expectations and without
environmental incident.
AUSTRALIAN GAS – GRANDIS GAS PROJECT (ATP 2044)
Elixir has a 100% interest in petroleum exploration licence ATP 2044 located in Queensland (the
Grandis Gas Project). This 1,000 square kilometre tenement is located proximate to the Wallumbilla
gas hub and can access domestic and international gas markets.
During the quarter the Company undertook all the necessary technical, legal and commercial work
required to initiate the spud of Grandis’ first well - the Daydream-2 appraisal well, which is now due
imminently.
Elixir entered into a Data Sharing Agreement with neighbouring tenement holder Santos, which
provides a framework for sharing well data and other technical cooperation.
After the end of the quarter, entered into a Term Sheet with Radium Capital under which the latter will
provide the Company with a plain vanilla debt facility secured over R&D rebates due in connection with
expenditure made in the current fiscal year.
MONGOLIAN GREEN HYDROGEN - GOBI H2 PROJECT
The Gobi H2 green hydrogen project is located in Southern Mongolia and is being progressed by Elixir
and Japanese company Terras Energy (a 85% owned subsidiary of Toyota Tsusho Corp.).
A key focus for the project in the quarter was engaging with potential hydrogen customers – in
Mongolian and China.
ENVIRONMENT, SOCIAL & GOVERNANCE (ESG)
Elixir considers stakeholder engagement – particularly with local people in the areas of operations - to
be critical for all of its projects, no matter where they are located.
In Mongolia in the quarter, Elixir continued to support tree planting operations in the Nomgon area of
the South Gobi.
In Queensland, Elixir was pleased to formally engage with the traditional owners of the Grandis area –
the Mandandanji people – whose representatives cleared the Daydream-2 site for cultural heritage
purposes. Elixir and this group expect to sign a formal Cultural Heritage Management Agreement
shortly, that provides a long term framework for engagement in the area.
CORPORATE AND FINANCIAL
Capital raising
During the quarter the Company undertook a placement that raised $7 million. A Share Purchase Plan
(SPP) was also announced, which closed after the end of the quarter, and which raised $1.7 million.
Changes in Issued Capital
During the quarter the following changes in issued capital occurred:
On 3 July 2023, 19,400,000 Performance Rights were converted into fully paid ordinary shares.
On 5 September 2023, 97,928,584 ordinary shares were issued at 7 cents per share as part of an
equity raising placement.
On 29 September 2023, 4,750,000 unlisted options expired.
On the 16 October 2023, the Company held its Annual General Meeting (AGM). The Shareholder
approved the following security issues that occurred on 17 October 2023:
• 2,071,416 ordinary shares were issued at 7 cents per share as part of an equity raising
placement.
• 24,636,515 ordinary shares were issued at 7 cents per share as part of an equity raising Share
Purchase Plan.
• 62,318,296 listed options exercise price 12 cents and expire date of 17 October 2026 that were
issued as part of the equity raising (refer to AGM notice of meeting for further details).
• 2,000,000 Performance Rights to be issued to Neil Young, expiry date 30 June 2027, no
consideration (refer to AGM notice of meeting for further details).
• 9,000,000 Incentive Options with an exercise price 15 cents expiry date 17 October 2026, to
Non-Executive Directors (refer to AGM notice of meeting for further details).
Financial
Elixir’s cash reserves as at 30 September 2023 were $11.3 million. The Company has no debt.
During the quarter, the Company spent $3.9 million on exploration activities, primarily on long lead
items, etc, for the Daydream-2 well and the Nomgon PSC drilling campaign.
Board and Management
No changes to Board and Management occurred in the quarter.
