NH3 Raises $732,500 and Finalises Gas Supply Deal Ahead of FEED Entry
NH3 Clean Energy has made significant strides in its WAH2 Project, finalising critical commercial agreements and progressing technical work ahead of Front End Engineering and Design (FEED) entry scheduled for Q1 2025. The company also completed a capital raise to support these developments.
- Indication of Gas Supply agreement signed with Chevron Australia
- Memorandum of Understanding secured with Australian Gas Infrastructure Group for CO2 transport
- Pre-FEED technical activities on track for completion by end of January 2025
- Capital raising of $732,500 completed to fund project progression and corporate costs
- Ongoing strategic discussions on mineral assets and potential partnerships
Strategic Commercial Milestones
NH3 Clean Energy (ASX: NH3) has reported substantial progress in the December 2024 quarter as it advances its flagship WAH2 Project, aimed at supplying low-emission ammonia to key Asia Pacific markets such as Japan and South Korea. The company has successfully executed an Indication of Gas Supply agreement with Chevron Australia, securing 33 terajoules per day of gas from 2029, covering 60% of the project's Phase 1 requirements. Additionally, NH3 signed a Memorandum of Understanding with the Australian Gas Infrastructure Group (AGIG) to facilitate CO2 transportation to nearby sequestration sites, leveraging AGIG’s recent $15 million grant from the Western Australian Government.
Technical Progress and FEED Preparation
Technical work led by Petrofac Asset Solutions Australia and technology partner Topsoe A/S remains on schedule, with pre-FEED activities expected to conclude by the end of January 2025. This phase has involved detailed optimisation of plant design to balance cost, efficiency, and emissions intensity, allowing flexibility to adapt to customer preferences and potential government subsidy criteria. The company anticipates entering the FEED stage by the end of Q1 2025, a critical step towards a final investment decision targeted for the end of Q1 2026 and production commencement in early 2029.
Capital Raising and Financial Outlook
To support these developments, NH3 completed a $732,500 capital raising through the issuance of fully paid ordinary shares, with proceeds earmarked for completing pre-FEED work, finalising commercial agreements, and covering corporate expenses. The company’s cash position stood at approximately $478,000 at quarter-end, with ongoing discussions to secure additional funding for future capital needs. An updated financial model is being finalised and will provide crucial insights for strategic investors and equity analysts.
Mineral Assets and Legal Matters
Beyond the WAH2 Project, NH3 continues to advance its mineral asset strategy. The McIntosh Graphite Project, under an earn-in arrangement with Green Critical Minerals, reported a 26% increase in mineral resource estimates. Meanwhile, NH3 exercised its put option on the Ceylon Graphite Project in Alabama, USA, transferring its residual interest back to South Star Battery Metals Corp in exchange for stock. The company also faces ongoing legal proceedings initiated by GCM Graphite concerning information disclosure warranties, which NH3 strongly disputes and intends to defend vigorously.
Market Context and Strategic Positioning
NH3’s approach to producing clean ammonia using established technology contrasts with the challenges faced by electrolysis-based projects, which have struggled with economics and offtake agreements. The company highlights geopolitical and logistical advantages of its Northern Western Australia location, offering shorter, lower-risk shipping routes to Asia compared to competitors in the US and Middle East. These factors, combined with the evolving energy transition landscape and subsidy uncertainties abroad, position NH3 favorably in the growing clean ammonia market.
Bottom Line?
As NH3 Clean Energy approaches FEED entry, the market will keenly watch the finalisation of commercial agreements and financial modelling to validate the project's viability and investment appeal.
Questions in the middle?
- How will the updated financial model impact investor confidence and project valuation?
- What are the timelines and prospects for securing additional gas supply and CO2 sequestration agreements?
- How might ongoing legal disputes with GCM Graphite affect NH3’s mineral asset strategy and overall risk profile?
