Lion Energy Limited announced that it has completed the initial front-end engineering and design for its first commercial-scale hydrogen production and refuelling station in Australia aimed at the heavy mobility market. To achieve the required outcome, the FEED level design and estimate was based on recently completed projects, along with actual pricing quote from equipment vendors and sub-contractor pricing. Lion is now in advanced discussions with key vendors and expected to finalize procurement within the next few months.

In parallel, Lion is actively negotiating with a shortlist of landowners to select and secure the location for this initial facility. Lion is confident hydrogen will play a major role in the decarbonisation of the Australian heavy transportation industry, including the bus sector. It envisions to build and operate a network of hydrogen generation and refuelling stations across the eastern states of Australia, which will complement the Hydrogen highway project announced by the New South Wales, Victorian and Queensland governments on 25 March 2022.

With governments' mandates to transition new buses to zero-emission from 2025 onwards, and assuming a 20% market share for hydrogen, about 300 hydrogen buses would be deployed each year under a natural replacement profile. Using an average consumption of 12.5kg/day/bus1, an 8,600 strong hydrogen bus fleet would require about 40 million kg hydrogen per annum. This volume could be delivered through 270 hydrogen refuelling points of 400kg/day capacity each.

For reference, the 20 largest fleet operators in Australia operate about 300 bus depots in total, with an average of 61 buses per depot2. The eastern states represent more than 70% of the addressable market2. Funding considerations As of 30 June 2022, Lion had a cash balance of USD 7.9 million.

To ensure adequate liquidity for its initial hydrogen project and to plan for future growth, Lion is exploring various funding avenues. In particular, Lion is entertaining a number of parties that have expressed interest to joint venture Lion's first mover hydrogen initiative in Australia. These parties have large existing businesses in the energy sector and would provide significant business complementarity in the future.

A joint-venture arrangement would significantly reduce the cash outlay required from Lion or would allow Lion to fund multiple facilities in parallel. Lion is also exploring other funding options, including debt financing from financial institutions and other parties. There is no certainty at this stage if any of these initiatives will bear fruit.

In any case, Lion does not anticipate any external funding requirement in 2022. Highlights include: FEED scope includes hydrogen hub transport and refuelling station. Facility designed to produce and dispense 430kg hydrogen per day, with allowance for capacity growth in the future up to 1.7t per day.

Lion expects the facility to start hydrogen production by fourth quarter of 2023, with full handover by first quarter of 2024. The facility is expected to supply hydrogen fuel onsite to bus operators transitioning their fleet from diesel to zero-emission vehicles. Lion envisions the facility to be the first of a green hydrogen refuelling network on the Eastern Seaboard of Australia, servicing initially the bus market and later the larger heavy mobility industry Project capex estimate of AUD 12.0 m, Procurement process underway, with vendor quotes and delivery timing within expectations.