Q: So much seems to be happening globally around the energy transition at the moment, from big companies such as the oil majors to the micro-cap space. How do you see the transition at the moment?
It has been an exciting time to be involved in the industry! I think we shall look back at this period at some point in the future and realise we were living through a rather unique part of our history, especially in terms of the energy space.
There is undoubtedly growing momentum in the transition/clean tech/renewable arena this year already, and increasing investor interest, too.
Just as two examples which I am close to… we raised £4.5m last week in Coro Energy as we deepened our renewables footprint through a second SE Asia-focused clean tech developer acquisition.
At Corcel we also recently raised funds to help progress our Burwell Energy Storage project in the UK, one of our key battery storage assets supporting the UK’s push for electrification.
So whilst you inevitably see rather aggressive “greenwashing” by the bigger players, attempting to cover the fact that they inevitably still have their roots firmly in fossil fuels, the smaller, more nimble players are able to adapt much quicker (and follow the money!).
My sense is this is an irreversible trend with companies looking to future-proof themselves and increase their relevance to increasingly ESG focused investors.
Q: You were one of the early adopters in transitioning micro caps over to the clean energy space. It looks like this started with your role at Corcel plc, a Battery Metal explorer and developer, in 2019 and has been further re-inforced with Coro Energy initiating a pivot to renewables last year and Ascent plc recently announcing an ESG Metals strategy. I guess this all reflects your own personal belief in the carbon transition. But do you see any future for Oil and Gas?
There is, to my mind, no doubting the remaining importance of hydrocarbons to the energy mix, and their necessity for some time to come, especially existing developments or producing assets where the hard work to find them has been done, and their deployment provides time for other energy technologies to mature.
This is particularly true for gas, which remain an obvious bridging fuel for near term gains in low carbon energy, and as a back up for intermittent solar and wind power.
I am however personally very clear that oil and gas now have a finite place in the forward provision of energy, and we must all engage in the progression of alternatives as practically, economically and quickly as possible if we are to deliver on targets to ameliorate the impact on the climate.
Q: How quickly can you build scale with firms like Corcel, which clearly have an interesting platform on which to grow?
Corcel is, in my view, one of the “yet to be recognised” early leaders of the energy transition in the micro-cap space.
We operate at the intersection of battery metals mining and its end-use in energy storage with a portfolio focused on first acquiring battery metal resources prior to the widely expected structural price hike and secondly generating low risk cash flow from energy storage and trading via batteries.
If we were directing a movie of the 2020/21 energy landscape, I would suggest a suitable working title to be “The Rise of Batteries”.
Corcel is right in the middle of that space and looking forward to playing its part! Since 2019 we have focused on sorting out the inherited legacy issues, and then turned our attention to building the strategic foundations for the future – this is swan paddling stuff, with lots of work going on unseen but we are really making progress now.
The focus at the moment is on achieving shovel ready status at Burwell, the battery storage site in Cambridgeshire, on securing a Mining Lease at Mambare, our first PNG Nickel deposit, and on unlocking Wo Wo Gap in conjunction with RMI (an ASX listed company where Corcel has a significant debt position).
So, scaling up is critical and that will come as we both broaden and deepen the portfolio – however, I really want to see some of the inherent NAV we have already created reflected in our valuation before we make the next big move. I don’t expect that to be too long!
Q: Tell us about your views on mining. Following the pivot of Ascent to ESG Metals, it seems to play an increasingly important and strategic part in your work, doesn’t it?
It absolutely does and mining was a relatively new space for me, so it has been hugely interesting to get up to speed on the industry and particularly to dovetail it with my own ESG agenda. At Ascent, we have now formalised our ESG Metals strategy as one of the emerging “special situations”.
We see huge opportunities in reclassifying, through highly efficient recovery techniques, stockpiled surface mining waste (previously viewed as a liability for mining companies) as a valuable asset for reprocessing and commercial sale.
The larger producers have historically seen tailings as sub-commercial so our opportunity here is to provide strong cash returns without exploration risk and with only a modest upfront capital outlay, all whilst supporting a key ESG objective of materially lowering global waste.
Q: It is fascinating to watch both the companies you are involved with – and you personally – plot the course through the energy transition. Do you think investors can still expect to see the “multi bagger” type returns in the ESG energy space?
The beauty of the extractive industries has always been the binary nature of the outcomes and the resulting risk / reward balance (ie if you “strike it big” investors can see immediate significant returns).
It is absolutely true that clean energy technology normally has a much lower risk and more modest return profile.
However, there are still ways to secure the upside exposure, such as being a first mover (eg as Ascent is in ESG Metals) or taking strategic bets on the macro fundamentals and forecast supply crunches (eg Corcel’s positioning with significant Nickel deposits in PNG). I’m very pleased with the ESG portfolio I am involved with and excited about where these micro caps will be a few years from now.