Oracle Power (LSE:ORCP) — Q4 Update and Shareholder Q&A Session

0:01 Good morning, ladies and gentlemen. Welcome to the ORACLE POWER PLC q four update and shareholder q and a session. Throughout this recorded meeting, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I would like to submit

0:33 the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Nahid Mehman. Good morning. Good morning. Thank you. Thank you for putting this together, and I'm happy to sort of get right into it and take the questions. And then perhaps in the end, we can sort of summarize, and I'd like to say a few words. If you could begin straight away.

0:59 Naheed, that's great. And perhaps just diving straight in. We had a number of pre submitted questions ahead of today's event, and the first one we have here reads as follows. It was mentioned in a response from a previous q and a session that the company would supply an income and profit projection for the green hydrogen plant so investors could see the plant's potential financial value. When is this coming forward?

1:24 Absolutely. And I think, yes, this was in one of our previous sessions that, in fact, I had, provided some idea of of how this would look. The two things, a, we are, working on the feasibility studies. And once they become available, we'll have a better sense of what the numbers are looking like with respect to cost of production primarily and what it would be, you know, what it would cost per kg to produce green hydrogen. And the second thing that we are sort of waiting to have more understand not understanding, but much more of a of a view, I would say, of our commercial contracts for green hydrogen and those who are familiar with green hydrogen, green ammonia.

2:09 The large scale commercial contracts are being sort of put together as we speak. And so that gives an idea of the revenues. So once you've got the costs and then you've got an understanding of what the sale prices are looking like in the market for both spot as well as long term contracts, then we'll be in a much better position to actually provide this this sort of estimate. However, I mean, I can, once again, with all the disclaimers and all this, you know, sort of provisions incorporated, say something to the you know, provide an idea again, which is, like, if you look at the cost of producing green hydrogen today, I mean, our target is $2 per kg, whereas it could be currently and, you know, the prices are expected to come down. So today, it could be anything between 3 to say, 4, even $5 a kg, talking about projects which have global, you know, global projects and their projections.

3:07 So that let's just take a number, $3, for example. And the sale price currently, for green hydrogen, and I said the large, long, you know, commercial big time contracts are being spent today or, you know, during this period that people are now looking at engaging in this in such contracts. But the price could be anything between 5 to $8. And if you look at, say,

3:31 so, you know, $8, even $9, and don't forget that we are gonna be competing with natural gas, with LNG, etcetera. So look at those prices as well. And and maybe they form the sort of baseline, benchmarking for this commodity. So if you look at, if you say, just take $5, and and let's just take that, for for ease and for understanding and for reference, we are going to be producing 55,000 tons a year.

3:59 Make that into fifty five five hundred and fifty million kg, and then $5 a kg. So just very roughly speaking, we're looking at revenues of or in excess of $250,000,000 a year. Now, of course, this is all very subject to what kind of prices we get. I mean, it could very well sell for $9 or $10, or it could sell for $4.5 a kg. So it really depends. And then, of course, it also depends on how these prices pan out over the next eight, ten years. This is a commodity just like oil is. It's it's a that is it's the future oil. And and so, you know, when we look at the prices of this, you know, the market actually built in, its own speculations and its own model for the way these prices will be set going forward.

4:46 Hence, it's very hard to just provide a fixed model, and then that cannot remain the way it is because there will be times when you'll when the company will make much more money than it expects because it is then dependent

5:00 on speculation, demand, as well as the supply of other competitive fuels in the market. So I hope that kind of provides a view of of the kind of model that we're talking about and the kind of picture that we're looking at. Naheed, thank you very much for that. Perhaps just turning on to the next question, which relates to solar and wind. Solar and wind, particularly solar, are very quick to deploy versus building a hydrogen plant. Is it feasible to have a significant amount of

5:30 solar installed and running in this financial year and wind in the late twenty three or early twenty four? What is stopping this from happening and growing shareholder value? Will you pursue this at speed, and what is the projected deployment as it stands? Right. So our plan is to develop this entire project in phases

5:51 and and sort of solar the hybrid power generation first, and the LOI that we have allows us to even sell this onto the grid or to a private buyer, etcetera. So, I mean, the good news is that we're already in conversation with potential contractors and financiers to actually get this phase of the project moving whilst our other work for hydrogen is also ongoing. So, you know, that so our main target is that. But, yes, in the first phase, we are certainly targeting putting up, you know,

6:25 sort of a solar and wind production facility. Just to go back to the numbers, our target is to set up 1.2 gigawatts. That's massive. That's huge. That's, you know, 1,200 megawatts of solar and wind together. The plan is to start off with a couple of 100 megawatts of renewable power straight away. And as I said, we are in conversation, and, hopefully, we would be able to update the market as soon as plans of this sort of you know, in this realm become more firm.

6:59 That's great, Nihid. Thank you very much for that. And perhaps two questions that we have here, which are similar in theme. The first one reads as follows. In your last update, you indicated for far possible other power generation. What are the other considerations? And if you go ahead, what would be the commissioning date?

7:19 So, yes, we are in in in serious conversation with potential off takers, which are regulated entities because power is a regulated commodity. So whoever buys is a regulated entity, and there are distribution companies now, which are provincial or which are district distribution companies, and their offtake is bankable. So we are in conversation with with an off taker and a couple of other companies who would be potentially bankable off takers, and we are in advanced discussion.

7:52 And if those conversations become sort of they progress the way we plan for them to progress, I believe we would be able to sign on to, you know, something very meaningful, and we would be able to update the market. And in case we do do that, then, really, the timelines are similar to any other offtake agreement being inked. And then the process thereby would be that it would take us twelve months to eighteen months to to have the entire project put together and for the commencement to begin. So that's exactly what we're working on.

8:27 And, hopefully, as I said, and I'll repeat myself, we should be able to put some good news out, you know, in in the near term and hopefully try and get the, you know, the share price to reflect this achievement soon. Perfect. That's great. And I know you just touched on timelines there, but the second question that was similar in theme reads, Pakistan is suffering from a power crisis, a gas crisis, expensive fuel, and a huge bill for importing coal. The government has expressed its intention to expand THAR coal use wherever possible. If far block six can't achieve approval now, then when? I agree. And I it will be now. It has to be because we

9:13 you know, I have said earlier, people have been like, you know, we've tested our investors' patience to no end because, you know, this project has taken the longest time to sort of get across the line.

9:28 And but we've always said, okay. And and, you know, sometimes the investors and our supporters have said, well, if it's not working, then then sort of, you know, divest or come out of it, etcetera. And I've always said something like, yeah, the right price, of course, I would. But now the time has really changed and, you know, the direction has changed. And suddenly, coal asset, which was almost stranded given the the last few years of movement towards, of sustainable renewable green energy. And and we and we have also, kind of embarked on that journey and rightfully so. We've done that. But now our coal asset is no longer a stranded asset. There's renewed interest in its development in Pakistan.

10:13 And based on the very reasons that this,

10:16 you know, as investor has pointed out, our shareholder that, there is a crisis. And, I mean, it's not just in Pakistan. It's, it's it's literally everywhere. Come on. A fuel crisis, an energy crisis, and Pakistan being more vulnerable given its, its sort of balance of payment, scenario, is much more vulnerable and hence the need to develop indigenous coal in Pakistan is much more critical today than it was yesterday or any time before. So hence, we are very hopeful that we should be able to get this across the line. And as I said, the previous questions

10:52 spoke about offtake, etcetera. So we are really trying to work on a on a model to put this across right now and get it moving, hopefully, and then give the shareholders what they have waited for, for a very long time.

11:09 Thank you very much. Perhaps just turning on to the next question, that we have here. The currency value drop, has been significant in the last six months. How does this affect the overall projects in Pakistan, and how do you see this financially?

11:27 So, of course, it's not good news for for anybody who lives there in in many ways because the cost of living really does go up because we're very import dependent. But leaving aside that situation, if you talk about our commercial aspect, for us, the commodities that we are in the business of producing, that's energy

11:51 and even hydrogen, these are all dollar indexed. So we're gonna be relating to a dollar price, and hence, our revenues do not get really affected. But, of course, the import component of project development does go up. And but then that, unfortunately, for the global market at large, gets translated and pushed onto the consumers eventually. So it's not the right thing to say, but we don't really end up paying for this.

12:23 Not good news, as I said, for the whole world at large. But as far as we are concerned as a company and, you know, developers, and looking at just the pure commercial aspect, it's not a terrible story for us at all because it just means that the selling price goes up for us.

12:44 Hey. That's great. The next couple of questions that we have here are similar in themes, so perhaps if we could take these together. And the first one reads, what confidence does the normal shareholder get in ORACLE when nonexecutive Andreas Meej sells 8,800,000 of his shares at a high price without his dealings being notified by an RNS at the time of sales?

13:05 And then the second question goes on to say, what is the reason Andreas left with immediate effect? Yeah. So I do take this opportunity to say that we do regret this incident, and it is really attributable to a person's personal negligence and a manifestation of his, I guess, you know, a certain irresponsible behavior. It has nothing to do with the company, at large and the way we, function, and and our sort of compliance and adherence to rules. However, you know, we we have taken note of this, and we will try our best to ensure that something like this is not repeated. With respect to his the circumstances and his departure, you know, he had certain personal and professional issues that he was dealing with, which warranted him to distance himself and immediately move on to other things. So, you know, that is just the way it was unfortunate for us as a company, and I think for him as well, given the circumstances that he found himself in.

14:14 But, on behalf of the board and the company, we do regret this incident, and, and we hope that it is in no way how we you know, it's not attributed to any of us or to the company, as I said before.

14:31 Thank you very much for that. The next question that we have here relates to the company's current share price. And it reads, according to the RNS' issued since June 2008, ORACLE have raised just under £15,000,000 and the share price has plummeted down 98%. So, you know, what really have shareholders perhaps missed here and and, you know, the value and for shareholders? If you could talk a bit more about that, that'd be great.

14:56 Right. So in terms of the asset value, there's simply no doubt in what it is today as well as its prospects. But I guess for a small company, what matters is that how very quickly can we get, you know, the sort of milestones and and how do we get them across the line. And because the company has, you know, been sort of the first project that we developed, it has taken a long time for it to get across the line. There has been some sort of, you know, I guess, a lack of confidence, and that then reflects in the final price. Having said that, the portfolio of our assets are extremely current and relevant and valuable.

15:42 And I do believe that, as a project development company, as soon as we are able to, achieve the few milestones that are very, you know, sort of now on the horizon for us, the value will certainly start reflecting the true value of the assets that the company holds and the prospects of the portfolio of the entire company. The prospects are very current, very relevant, and are not going away anywhere. So whether we look at,

16:15 and they're all energy assets. So they are assets which will form, the sort of, you know, the the kind of the mainstay, not just for our company, but also, you know, at large for for, like, global economies. So from that perspective, it's it's just the right place to be. But as I said, because of some delays that the company has encountered in getting certain milestones checked,

16:41 the the share price hasn't really reflected the value as it really should have. But, of course, we are trying our best and trying to push out as hard as and fast as we can to ensure that the investors who support us get, a return as soon as possible.

17:01 Thank you, very much for that. The next question that we have here, reads as follows. You stated FarBlock is for sale at the right price. And why don't you sell ASAP and get all the money investing into green hydrogen? Yeah. I mean, I think I I probably picked up on this because this question, and I merged it with something else that I spoke about earlier with respect to. As I said, it's a relevant asset now, and now is not the right time to divest it as long and if there is a development model that can be very quickly put together, then I think the shareholders deserve to to sort of get the best, return from that development as well given the fact that the company, did,

17:45 invest in it and has also remained, on top of it. So now I guess it just may be the time that we can cash in and get the best benefit out of it, and that's what we're really trying to do. So, and and based on all the, you know, other questions that have come in earlier, the situation globally, the situation in Pakistan, the energy crisis, the value of indigenous assets, and so on. Putting all that together, this could very well be the time when something useful can be achieved on on that resource. Thank you very much, Need. That's great. And perhaps just moving on to the question to a question I can see here regarding gold. It reads, is there any update on the gold, please? We need some huge news on any front this year before the share price is worthless.

18:35 Well, we

18:39 are pushing very hard. It is in my sort of like, the top of my agenda to close that joint venture agreement for the gold for Northern Zone. And, I will try my best to convey something very positive as soon as possible with regards to that.

18:59 That's great. And just turning on to another question here, relating to gold as well. If our gold and coal assets, have a future, would the company consider listing them projects separately, as an IPO spinout so that they can generate their own funding and share insurance, resulting in less dilution for Oracle investors, I e, Oracle Goldfield or Oracle Coal? So we are very open to restructuring, dependent depending on the timing and depending upon the circumstances. So we do have a portfolio of of assets, and and as soon as we feel that any one of them is is substantial enough and warrants its own positioning as a separate entity, then I don't see why we would not do that. We would.

19:51 And, you know, we we as I said, we don't restrict ourselves to any mode of for of development, and it's, you know, shareholders' interest, which is primary for us. So if that is to, you know, generate a sort of a benefit for our shareholders through through another listing or or another sort of agreement for financing, then we would certainly not shy away from that. Thank you very much for that, Nadeed. The next question here relates to your green hydrogen project. I know you briefly touched on this before, but perhaps if there's any further color that you can add here. The question reads as follows. When does the company expect our green hydrogen project to reflect any worth in the share price?

20:40 So think that perhaps because we have the goal and the gold and our investors are also they also have, you know, their their sort of eyes on what's going on over there. Perhaps not enough significance is attached to per one of the most valuable projects that we really have in our portfolio, and that is the green hydrogen project. I mean, there is a complete paradigm shift globally towards the development of this fuel and this commodity. And the targets that large companies and governments have set out are are humongous. I mean, it is and and a lot of money is being poured into the development. So this is not going away anywhere.

21:27 And so we are very, very, you know, well placed and timely, you know, in in this sort of, development, kind of project. The milestones that we have set out for ourselves are are clear. And I believe that as soon as some of these start to show, there will be a greater recognition of the true value here as to where we are really going. So for example, you know, our feasibilities with one of the biggest companies in the world is ongoing. We are in conversation with some of the biggest companies in the world for investors and contractor as as contractors.

22:14 As soon as some of those start to show up, that's when the our shareholder base would start to realize what this is really all about. It's not a concept. It is on ground. We've got our land. We've got our permissions. We are already engaged with with, as I said, some of the largest companies. This project is not a a project that can be done with any small companies. The largest companies in the world as well and a lot of them are sovereign companies owned by governments. Those are the kind of companies which will come into the play. And once these things start to surface and we are able to update the market about developments in this regard, I guess the share price will and should reflect the true value of what is being developed and its relevance and its importance. You know, the first question someone asked today was about the value of the income and the it's like a profit and loss. Well, that comes from an off take agreement. Right?

23:09 So once my off take agreement start to show up, so then you're not just talking about a project which is going to develop a product which will eventually sell at a certain price. No. Then you're talking about a project which is developing a product which will be sold to x y zed, and this is no x y zed or not a small entity. This will be sold to a sovereign a sovereign fund or one of the largest companies in the world. So when these things start to show up, then the the price will reflect the prospect, and the prospect will then become, would have, by then, become much more clearer. So, really, our objective really right now and my objective and what I'm totally focused on is to show the market the value of this prospect.

23:54 And, hopefully, as that starts to show up, I am convinced that the price will start to reflect the work of what we are doing and what this would eventually mean in terms of returns. Nahi, that sounds great. And perhaps just to end here, two questions relating to the GHP. So perhaps we could take these sequentially. The first one that we have here reads as follows. What are the next major milestones for the GHP? So I mentioned those a bit. So we've got our feasibility study that Thyssenkrupp's doing. The results for that are expected, you know, in a few months. Are other studies ongoing on land, etcetera? Are we gonna be engaging much more on the renewable side for the solar and wind? And I'll update the market as and when those developments take place.

24:47 I mentioned offtake. That's huge. That's mega. That's the biggest story that we will hopefully be able to update the market with that what are some of the arrangements that we have put in place for the sale of the commodity. And then, of course, the investors and the financiers, we are already engaged on that side. And as I said, this is no small company which will come in and say, oh, you know, let me try and help you build this. These are big companies. And once there is so those sort of arrangements and those sort of agreements will also, start to show up. So those are the kind of milestones. The results of feasibilities are agreements with off takers, are agreements with financiers, our agreements with the renewable side of the project, and its development, the results of other ongoing studies, etcetera. So there is, you know, in our mind, the road map is very clear. We know where we need to get to, and we know that we don't want to be late because now is the time to actually kind of place ourselves firmly as a supplier in the global supply chain of green hydrogen, and that's exactly what the world is building today. So, you know, there is development in Chile, and Japan will not buy from Chile. Right? Japan will buy from us because we are 10,000 kilometers from Japan.

26:08 So we wanna be there to be able to sell to Japan or to sell to Korea. Where will Europe buy from? You know? Where will Australia sell to? So we really are positioning ourselves to be a key seller for green hydrogen and as well as the fact that we have a huge, humongous domestic market. So we also have, you know, sort of the ability to push this out in the domestic market. So we're working on those avenues as well. Again, offtake agreements domestic, offtake agreements internationally. So these will also start to, you know, show up, and we would be able to update the market, in due course. And, of course, these would also then help to to sort of improve our valuations and the way investors are looking at our company and the confidence that they have in us.

27:01 Hey. That's great. And and the final question that we had here did regard outlook and demand for offtake agreements for the GHP, but I think you might have touched on that. Is there anything further to add? No. I think I've covered that. In fact, I may have repeated myself, but the reason I probably did that is because it's super important. So, and and if I can explain this just one more sentence, it mitigates investor risk. No bank is gonna give me money if I'm gonna say, yeah. I'm gonna produce this, and I'll find a buyer. I'll you know, I'm not gonna be able to put this out on an ice cream van. Like, I need a contractual agreement with companies, with off takers. This is we are producing a commodity here which will which will move the world and move throughout the world. So these are very important. And so mitigating risk is key.

27:51 Of course, as a project developer, it is key. And also for our shareholders, it needs to be key because if our risk is mitigated, their risk is mitigated because they invest in us and we need to mitigate the development risk. And that comes through robust off take agreements also coming together. I think that's great. And thank you very much indeed for being so generous of your time there in addressing all of those questions that came in, from investors. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended for you to review to to then add any additional responses, of course, where it's appropriate to do so, and we'll publish those out on the platform. But perhaps before redirecting those on the call to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments, that would be great.

28:42 Sure. Thank you very much, and I would like to thank everyone who joined in today. Thank you for your time. But most importantly, thank you for continuing to, to be there and to continuing to sort of, you know, have some confidence and some faith. I know that, you know, you may have not got the entire, you know, the return that you have been banking on, but I can assure you that everyone in the company is completely committed and working round the clock to ensure that we are able to deliver for you and for ourselves, of course, because we do want to take this company to the next level. And I really do hope that you continue to support and we are able to get there because, you know, we've got our targets, we've got our goals, and we've got a road map.

29:30 Now we need your support, and we just need, you know, to be able to get through the sort of the plan that we have put together. So thank you once again, and thank you for your support going forward. Thank you. Naheed, that's great. And thank you once again for updating investors at this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of ORACLE POWER PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.