February 7th, 2024 | 07:15 CET
Kraken Energy, RWE, Plug Power - What does the energy of the future look like?
Table of contents:
"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
Kraken Energy - 4 promising uranium properties
Almost all major industrialized countries are building new nuclear power plants. Accordingly, the demand for uranium will increase by around 160% over the next few decades. Already in the next 5 to 10 years, there could be a worldwide deficit of 150 to 200 million pounds of uranium per year. This will particularly affect the US, which needs more than 35 million pounds of uranium annually for its current infrastructure. Kraken Energy is a company focused on uranium exploration and development in the US, with projects in Nevada and Utah. The Company has 4 high-grade uranium deposits in the US, 3 in Nevada and 1 in Utah.
These properties, including former production sites dating back to the 1950s, provide a unique opportunity to access reserves and modern infrastructure. Of particular note are the high-grade uranium deposits, which range up to 0.4%. Other projects are operated with grades of 0.02%. In addition, the properties have economic potential, as other commodities such as gold, silver, copper, nickel, vanadium, diamonds, and molybdenum have been found. The Company's main properties, Harts Point in Utah and Apex in Nevada, are potential hubs for a Hub and Spoke mining model for domestic uranium production in the US.
A drilling program is scheduled to begin at Harts Point in the coming weeks. The Apex project is currently awaiting a drilling permit, which is expected to be issued in Q2. A drilling program will then be carried out to conduct a mineral resource estimation in accordance with the NI 43-101 standard**. This standard did not exist when the historical work was halted, but the drilling data shows grades of 0.23% to 1.33%. In addition to the interesting assets, the Company boasts an experienced team, which itself holds 22% of the Company and has already been involved in several corporate sales. The shares are currently trading at CAD 0.20 and placing it at the lower end of its sideways phase.
RWE - Interest in hydrogen-ready gas-fired power plants
In the midst of a global energy transition, RWE AG has undergone a business transformation. The former flagship company in the nuclear and coal industry has successfully adapted to the new market requirements. After shutting down all nuclear power plants in Germany and planning to phase out coal, RWE has made great efforts to turn more towards renewables. These steps have led to a significant change in RWE's business. Through targeted investments and acquisitions, RWE has achieved a leading position in this fast-growing sector.
Today, RWE possesses a broad portfolio of renewable energies. The Company operates offshore and onshore wind farms as well as solar plants in Europe and the US. With over 9 gigawatts of installed capacity, RWE is one of the world's largest producers of renewable electricity. It was recently announced that the Company also intends to participate in tenders for the construction of hydrogen-ready gas-fired power plants. The German government aims to have power plants with a capacity of 10 gigawatts connected to the grid by 2030. Electricity producers, however, want to have the details as quickly as possible to plan accordingly.
RWE is expected to achieve an adjusted net result of EUR 4.5 billion in 2023, representing a significant increase compared to the previous year. Adjusted EBITDA for the RWE Group is expected to be EUR 8.4 billion, above expectations. The majority of profits will come from wind, solar and other forms of renewable energy. Shareholders are to receive a dividend of EUR 1 for the past year. In recent days, there has been an increase in insider buying by the Company's executive bodies. At the current share price of EUR 32.98, the dividend yield is around 3%.
Plug Power - Positive news at last
Green hydrogen is produced from renewable energies, so the expansion of wind and solar power is important for the production of the new climate-friendly fuel. Plug Power has made a name for itself in the field of hydrogen. The Company started out with a fuel cell but now covers the entire value chain. Due to its rapid growth, the Company quickly used its financial cushion. After management warned that it might not be able to maintain business operations in 12 months, the share price plummeted. The growth prospects in the hydrogen sector are still good.
Recently, however, there have been increasing signs that the Company could still achieve a turnaround in time. On January 23, it was announced that Plug Power had started producing liquid green hydrogen at its plant in Georgia, which is the largest of its kind in the US. The plant uses 8 PEM electrolysers to split water into hydrogen and oxygen. It produces 15 tons of liquid hydrogen daily, enough to power approximately 15,000 forklifts and is delivered to customers like Amazon. After many delays in the construction of the plants, this is a real milestone.
On February 1, for the first time, customer locations of Walmart, Amazon and Home Depot were supplied with liquid green hydrogen from Georgia. Just one day later, Plug Power was awarded the contract to supply a Basic Engineering and Design Package for a 500-megawatt electrolyser project in Europe. Prior to this, there had been no major orders for a long time. Following these announcements, the stock surged by over 100%. The share is currently trading at USD 4.35. Although it is prudent to wait and see how the financial situation looks after the next quarterly earnings, there are positive signs of life after a long, quiet period.
Even though Germany has renounced nuclear power, it is gaining ground worldwide because it produces no CO2 and positively impacts the climate targets of countries. The demand for uranium is expected to increase, which will positively impact uranium companies such as Kraken Energy. With the upcoming drilling programs and corresponding results, the share has potential. RWE has transformed its business towards renewable energies and has done well so far. The preliminary annual results prove this. Plug Power has recently sent out signs of life, but the Company is not yet out of the woods. Hydrogen has a lot of potential, but ultimately, money has to be made. Caution is therefore advised here.
Conflict of interest
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