Montem Resources (MR1) - Green Hydrogen Focus Exciting Investors

Montem Resources is a mineral exploration company that develops and explores steel-making coal mine projects. The company's major assets include the Tent Mountain Mine, Tent Mountain Renewable Energy Complex, and Chinook Project. 

Matt Gordon caught up with Peter Doyle, Managing Director, and CEO, Montem Resources. Peter is a geologist with over 25 years of coal mining experience. He has worked in various roles including exploration, planning, development, production, and management within the coal industry. He previously served as the Vice President of Marketing and Business Development at Atrum Coal Ltd., CEO at Cockatoo Coal Ltd., and Vice President and Wood Mackenzie. His educational credentials include a Bachelor of Science degree in Geology and an MBA. 

Company Overview

Montem Resources is a mineral exploration company primarily within the coal industry. The company was founded in 2017 and is headquartered in Australia. It is listed on the Australian Stock Exchange (ASX: MR1). Montem Resources Alberta Operations Limited is the company's subsidiary. 

Montem Resources is a coal development company with operations in Calgary, Alberta. The company has coking coal and steelmaking coal deposits within the Crowsnest Pass. The company is currently in the process of transitioning the Tent Mountain Mine, a major asset from coal mining operations, to renewable green energy and green hydrogen production facility. 

The Coal Market

The coal mining and energy industry has seen an ongoing transition towards environmentally-friendly operations. Montem Resources is currently diversifying its risk at the Tent Mountain Project. 

The company is looking to export its hard coking coal reserves due to growing market uncertainties. Companies with similarly-sized projects are also facing production constraints that are leading to significant supply challenges within the market. The pricing for coal currently stands at $400 in Queensland, Australia, and within the $500-$600 range on the US east coast. Meanwhile, the prices are even higher in western Canada. This makes it an ideal time to offload supply in the market. 

The Tent Mountain Project

The Tent Mountain Project features bodies of water by virtue of historic mining carried out in the area. The company has a large body of water 300m above the valley floor, where multiple man-made structures help impound the water. Back in 2019, the company expected this project to be a pumped-hydro energy storage project. As permitting challenges increase, Montem Resources is planning to transition Tent Mountain to a renewable energy project. This was initially planned at year 15 of the mine life, however, given the change in circumstances, the company is looking to place this plan in action. Through discussions with various consultants, the company decided to add a hydrogen electrolyzer at the site. 

Montem Resources has the right access to infrastructure including railways, pipelines, high-voltage electrical lines, and highways at the Tent Mountain site, making it ideal for a hydrogen project. The company also has a wind farm under consideration to generate low-price renewable electricity along with pumping the water back up the hill for supplying the electrolyzer for the pumped-hydro project. 

Relationship with First Nation Communities

Montem Resources has a strong relationship with the Piikani Nation communities that are present in the vicinity of the Tent Mountain Project. This helps the company operate on First Nation territories without any issues. The company has come to an agreement with investors to look for mutual benefits that provide rights to the First Nation community within the region. This region is the epicenter of wind farms in Alberta. 

Currently, the company is working on its Feasibility Study, which is scheduled to conclude within the next 12 months. The relationship with the Piikani Nation community has been fostered for a long time. The company recently had a site visit from the elders of the community along with council members that blessed the ground.

Project Strategy

Montem Resources has 2 primary projects in its portfolio, the Tent Mountain Mine and the Chinook Project in Alberta, Canada. 

The Tent Mountain Mine is an asset with an existing mining license with a supply of 1Mt annually. The company is looking to get this project into production at the earliest. This project is relatively short in duration compared to similarly-sized projects that have a 14-15 year mine life. The company originally planned to offer dividends and generate profits from this operation to deliver the significantly larger Chinook project. 

The Chinook project is currently under advancement. It is important to note that the coal present at both Chinook and Tent Mountain sites is freehold coal that is owned by Montem Resources and its shareholders.  The company is currently running coal operations at both projects and is looking to make an investment decision next year following the results of its Feasibility Study. 

Given the changes in the coal mining industry, Montem Resources is facing unforeseen delays in restarting the Tent Mountain Mine. As the company is profit-driven, it is looking for different ways of generating revenue including the green hydrogen project. 

Cash Position

Montem Resources has strong financial backing through its shareholder base. Being publicly listed, the company has received growing support from its investors in regards to the recent announcements for green energy generation. 

The company currently has the funding to carry out the next phase of operations. It is expecting to receive a confirmation on the $5M funding from the government as part of the Clean Fuels Program by the end of Q1 2022. Following this, the company will assess its cash balances as it devises a future strategy. 

Green Hydrogen Technology

Montem Resources is looking to deliver a large-scale green hydrogen conversion product that delivers electricity. The technology utilized here is well-understood and has been in application for over a century. 

The company is currently in the process of formalizing a steering committee that will be spearheaded by an industry expert in pumped-hydro technology. The company plans to announce the senior electricity professional to lead this committee within the next 2 days. This team will lead an SME (Subject Matter Expert) driven approach to oversee the program development through the next phase of the project. Following this, the company will decide on the ideal future path for the asset. 

At the Tent Mountain site, the company has a large body of water filled with void as a result of historic mining operations from the 1980s. This closed-loop system differentiates the water from the remaining water in the system. The company has a series of pipelines that allow this water to flow into 2 turbines located at the bottom of the hill. As the Tent Mountain's water is located 300m above the valley floor, the system can store energy. This allows the company to pump the water back up and release it during periods of high demand. 

The electricity market is wholesale in nature, with bids occurring within 5 minute intervals. As there are wild fluctuations in electricity market pricing, the company is looking to supply energy during periods where solar and wind power aren't available. The company has a huge battery capacity to store the generated power. 

A few years back, the Alberta government made a decision to phase out all existing coal-fired power stations. As per this directive, Montem Resources is looking to remove 30% of its baseload power, replacing it with renewable energy.  This green energy generation offers both production and storage for the company. Energy is produced through water vapor, hydrogen, and oxygen through a simple chemical transition process within the water molecules. The hydrogen produced within the electrolyzer is eco-friendly in nature. 

The company is looking to build a minimum of 100-megawatt electrolyzer capacity for this project. This will make it the largest green hydrogen facility in North America upon its completion. The company is pushing this towards a full Feasibility Study to assess the project in its entirety. 

M&A Considerations

The Alberta government is set to announce the final decision on the coal mining industry within the province in November 2021. Meanwhile, Montem Resources is looking to offload the freehold coal in the market and strategize between additional coal mining along with the green hydrogen project to generate profits. 

The coal mining industry has seen an influx of M&A (Mergers and Acquisition) activity globally and Montem Resources is also open to M&A in the future. It is looking to introduce additional capital into the company through its Chairman, Mark Lochtenberg. This strategy also encompasses asset acquisition. The company is currently assessing various deals within the market.

To find out more, go to the Montem Resources Website