Elixir Energy on the verge of meeting major milestones

By Trevor Hoey. Published at Nov 5, 2020, in Energy

Elixir Energy Limited (ASX:EXR) has provided a promising update on operations at its Nomgon IX CBM PSC in the South Gobi region of Mongolia, just north of the Chinese border.

Aside from positive operational developments, the December quarter has been marked by strong news flow, particularly in relation to a recent statement from China which would be an important market for the group.

With China being a leader in energy usage, President Xi Jinping’s statement in October in which he committed to net zero emissions by 2060 while unexpected was embraced by those striving for a transition to carbon-neutral energy solutions.

China currently generates more than half of its electricity from coal, but natural gas is increasingly being used in the country for heating and transport.

While a transition from less coal usage to natural gas is not a silver bullet, it would at least be a stepping stone to a carbon-neutral solution.

An uptick in demand for natural gas in China would be extremely positive for Elixir Energy.

Updated contingent resource and resource booking key catalysts

Harking back to the group’s recent progress, the Nomgon 5S re-drill appraisal strat-hole well reached a total depth of 450 metres this week and has since been logged and remediated.

A total of 47 metres of net coal was intersected.

The Hutul 1S exploration well is currently drilling ahead and management anticipates it should reach total depth and be logged within the next week.

Elixir plans to drill two more exploration strat-holes in 2020 and is working with its drilling contractor on finalising local permits.

The timing of the spud of the next well is not locked in, but Elixir is aiming for this to occur within the next week.

Elixir’s shares have performed strongly in the last six months, up approximately six-fold, but the recent retracement to around 12 cents per share could represent a buying opportunity bearing in mind the exceptional surge in the September quarter when it hit a high of 18 cents.

Elixir’s managing director Neil Young pointed to factors that could see it revisit these levels in saying, “The strong net coal outcome from the Nomgon 5S Redrill well means we have now drilled five successful wells in the Nomgon sub-basin in a row.

‘’This well was a 7.3 kilometre step-out from the original Nomgon 1 discovery.

‘’Data from all the Nomgon wells will now be progressively analysed and integrated, leading firstly to updated prospective resource numbers followed by our maiden contingent resource booking.’’

The release of updated resource numbers could well have a positive impact on the group’s share price, while the release of a maiden contingent resource booking would be a major milestone for Elixir.

This will provide the numbers required to attribute a formal valuation, one which could see Elixir being the subject of a rerating should metrics demonstrate that the company is trading at a discount to its peers.

View Our Investment Portfolios

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why Finfeed.com is Australia’s leading small cap publication

Founded seven years ago, Finfeed.com is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise.

Finfeed.com provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more.

Finfeed.com is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!