Why the Hazer (ASX:HZR) share price is edging higher today

The company is focusing its efforts on its Commercial Demonstration Project in WA.

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A graphic of a tree and a green leafy capital letter H on a blue sky background, indicating a share price rise for ASX companies dealing in hydrogen energy

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The Hazer Group Ltd (ASX: HZR) share price is rising during afternoon trade. This comes after the hydrogen producer provided a quarterly trading update to the ASX before market open.

At the time of writing, Hazer shares are swapping hands for 93 cents apiece, up 1.09%.

Hazer progresses Commercial Demonstration Project

Investors appear pleased with the company’s latest update, with Hazer shares hitting an intraday high of 95 cents.

In its release, Hazer advised it is continuing to focus its efforts on developing the Hazer Commercial Development Project (CDP).

Hazer’s CDP is being constructed at Water Corporation’s Woodman Point Water Recovery Facility in Western Australia. The company aims to convert natural gas and similar methane feedstocks into renewable hydrogen and high-quality graphite.

During the quarter, civil site preparations were completed. Construction activities have since followed including building the hardstand area, trenching and cable preparations, and directional drilling for grid connection.

Concreting and ground stabilisation works are scheduled to be finished towards the middle of Q1 FY22.

The company has awarded a number of engineering and procurement contracts for the Hazer reactor and high-temperature heat-exchanger materials and fabrication. The reactor and furnace is a complex, first-of-its-kind project that requires special skills to ensure safe manufacture and operation.

Hazer stated that the fabrication of equipment modules is progressing, with equipment packages starting to be delivered and stored ahead of construction.

However, the project is facing increased costs due to COVID-19 related disruptions to global supply chains for equipment. Surging freight costs have also restricted suppliers in meeting the technical requirements to supply the project.

As such, Hazer announced that the project budget is predicted to increase by around $20-$22 million. Commissioning of the plant is still estimated to take place around December 2021.

To help fund the development, global venture capital firm AP Ventures invested $4 million into the CDP. In return, Hazer issued 4 million unlisted, unsecured $1.00 convertible notes and 2,250,000 Hazer options.

At the end of the quarter, Hazer declared cash reserves of $24.6 million. This includes $7.2 million relating to Australian Renewable Energy Agency (ARENA) grant proceeds, which is available upon specific milestone completions.

About the Hazer share price

Investors would be relatively pleased with the company’s share price, doubling over the last 12 months. Hazer shares are sitting in the middle of their 52-week range of 36 cents to $1.885.

Hazer commands a market capitalisation of about $134 million, with 145 million shares on hand.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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