With the world continuing to move towards net zero, Metgasco is ensuring that it stays on top of this transition by acquiring renewable hydrogen producer Patriot Hydrogen.

Patriot is no mere technology company.

The waste biomass to hydrogen developer has already manufactured its first proof of concept unit and expects to commission it for Kimberley Clean Energy (KCE) before the end of the year as part of a comprehensive memorandum of understanding for the delivery of up to 75 units to support remote power needs in northern Australia.

These pyrolysis units work by slowly heating organic material without oxygen and without any burning and converting it into five revenue streams – syngas (dense hydrogen), turbine generated electricity, biochar, carbon credits and wood vinegar for industrial and agricultural applications.

While the technology itself isn’t new, Patriot’s approach of designing smaller, modular systems which operate on lower amounts of waste and can be purchased off-the-shelf is.

Given that these systems are carbon negative, it is clear to see why Metgasco (ASX:MEL) believes the acquisition is part of its diversification strategy to deliver a sustainable, commercially attractive and carbon net zero opportunity while potentially offsetting emissions from its core natural gas assets.

 

Metgasco ASX:MEL Patriot
Preparing Patriot KCE Project first gasifier for shipment to Broome. Pic: Supplied

 

“With completion of the recent Cooper Basin sub-surface program and gas production at Vali due to start in the fourth quarter of this year, the acquisition of Patriot should enable us to offset these emissions while also delivering a compelling standalone commercial opportunity,” managing director Ken Aitken said.

The MoU with KCE certainly provides the most direct route to commercialisation but it is by no means the only option on the table with Patriot having several further identified potential clients who are interested in its technology.

Acquisition terms

Under the binding terms sheet, Metgasco will carry out a phased acquisition of Patriot’s business with the first stage involving the provision of certain logistical and financial support (including a modest secured working capital facility) to provide for shipment and delivery of the initial plant.

Subject to certain project delivery milestones, it will then undertake a $750,000 equity investment into Patriot as the first stage of an option to acquire 100% of the company, on the same valuation as the final acquisition.

This funding is expected to take Patriot’s initial KCE project to first commercial gas and revenue.

Once all other conditions – including project and commercial outcomes – are met, Metgasco will then acquire Patriot through an all-scrip acquisition.

 

 

 

This article was developed in collaboration with Metgasco, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.