2023 Final Results

11 June 2024

Chariot Limited

("Chariot" or the "Company")

2023 Final Results

Chariot (AIM: CHAR), the Africa focused transitional energy company, today announces its audited final results for the year ended 31 December 2023.

Adonis Pouroulis, CEO commented:

"Since our last set of results we have progressed all of the assets that sit within our natural gas, renewables and green hydrogen pillars and, importantly, we have further de-risked each division of the business.  In Morocco, we secured a highly experienced partner for our offshore Anchois gas project, secured new acreage and successfully drilled in the contiguous Loukos Onshore licence. We have materially increased our exposure to renewable energy generation and electricity trading in South Africa, furthered our financing and development plans for our power business and advanced our green hydrogen projects in both Mauritania and Morocco.

We are excited about the ongoing activities and catalysts ahead of us with our forward plans for Loukos, drilling at Anchois in August and moving into the next phases of evolution for Power and Hydrogen. Going forward, we are focused on generating near-term cashflows from our gas business with our overriding ambition to return capital to shareholders from these revenues. While we will continue to pursue new opportunities, we see great scale and value across our current asset base and are fully focused on delivery throughout 2024 and beyond."

Key Highlights throughout 2023 and post period:

Transitional Gas

Offshore Morocco:

·      Completion of Front End Engineering and Design ("FEED") for the Anchois gas development project ("Anchois") in the Lixus licence offshore Morocco

·      Partnership agreed with Vivo Energy to develop a gas to industry market in Morocco

·      Environmental Impact Assessment approval received for Anchois development

·      Partnership agreements signed and completed with Energean plc ("Energean") on the Lixus and Rissana licences offshore Morocco

o  Focused on expansion and delivery of Anchois

o  Formal approvals duly received from the Moroccan authorities

o  Rig contract signed with Stena Drilling for Stena Forth drill ship

o  Appraisal and development well to be drilled in Q3 2024 with option for an additional well

Onshore Morocco:

·      Award of new licence Loukos Onshore ("Loukos") in July 2023

·      Environmental Impact Assessment approval received for drilling on Loukos and construction activities and permitting conducted within 10 months of licence award

·      Initial drilling campaign commenced and successfully completed in May 2024 safely, efficiently, on time and on budget

o  The RZK-1 well drilled on the Gaufrette prospect confirmed good quality reservoir and multiple gas shows, though was sub economic

o  Gas discovery confirmed from drilling the OBA-1 well at the Dartois prospect - gross interval approximately 70m of primary interest identified

o  OBA-1 well has been cased and cemented with a Christmas tree installed for rigless flow testing and potential use as a future producer

Transitional Power

·      Strategic Review underway to secure financing and enable ongoing growth and development of the portfolio

Power to Mining projects:

·      Operational Essakane 15MW solar project at IAMGOLD's gold mine in which Chariot has a 10% share in Burkina Faso, continues to perform well

·      Progressing development of three key renewable projects in Africa:

o  Tharisa - 40MW solar project in South Africa

o  Karo - 30MW solar project in Zimbabwe

o  First Quantum Minerals - 430MW solar and wind projects in Zambia

Electricity Trading:

·      Increased stake in South African Electricity Trading joint venture Etana Energy (Pty) Limited to 49%

o  Enables Chariot's participation in large renewable generation projects - 400MW of gross wind generation capacity identified

o  Focused on securing multiple electricity offtake agreements with a range of consumers - supply deals signed up with Growthpoint Properties and Autocast with others under negotiation

o  Renewable energy wheeled for the first time through Cape Town's grid

Water:

·      Successfully commissioned the proof of concept water project in Djibouti in June 2023

·      Evaluating other opportunities within Africa

Green Hydrogen

·      Feasibility study completed on Project Nour in Mauritania alongside partner TEH2 (80% owned by TotalEnergies and 20% owned by the EREN Group)

o  Confirms world class scale, outlines first phase pathway for domestic and export development

·      Partnership agreements extended with UM6P and Oort Energy on proof of concept projects in Morocco

·      Other green hydrogen projects under evaluation and development

Corporate

·      Placing and oversubscribed open offer successfully raised US$19.1 million in June 2023

·      Cash position as at 31 December 2023 $6.0 million

·      US$10 million received on completion of Energean deal in April 2024

·      No debt and minimal work commitments

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014, as retained in the UK pursuant to S3 of the European Union (Withdrawal) Act 2018.

Enquiries

NOTES FOR EDITORS:

About Chariot

Chariot is an Africa focused transitional energy group with three business streams, Transitional Gas, Transitional Power and Green Hydrogen.

Chariot Transitional Gas is focused on high value, low risk gas development projects in Morocco, a fast-growing emerging economy, with a clear route to early monetisation, delivery of free cash flow and material exploration upside.

Chariot Transitional Power is focused on providing competitive, sustainable and reliable energy and water solutions across the continent through building, generating and trading renewable power.

Chariot Green Hydrogen is partnering with TEH2 (80% owned by TotalEnergies, 20% by the EREN Group) and the Government of Mauritania on the potential development of a 10GW green hydrogen project, Project Nour in Mauritania, and are progressing pilot projects in Morocco.

The ordinary shares of Chariot Limited are admitted to trading on the AIM under the symbol 'CHAR'. 

CHAIRMAN'S STATEMENT

Ongoing volatility over the past year has continued to highlight the interconnected global focus on energy security, as well as the necessity to strike a balance between the need for steady supply, economic advancement and progress across the energy transition.

Nowhere is this better illustrated than in Africa. The current contrast between resource abundance and energy poverty on the continent is striking and, when combined with significant levels of population growth, projected to reach over 2.5 billion by 2050, it becomes truly profound. This situation drives our focus to unlock all types of lower carbon energy resource to serve and uplift the African population and support economic growth across industrial and urban communities.

Our Purpose:

At Chariot, we look to deliver a rational and efficient contribution to the energy transition from all our businesses.  Hydrocarbons will remain a significant proportion of the global energy mix for decades to come but renewables will supplement and support the energy demand and it is critical to advance every opportunity to reduce emissions. Natural gas will play an essential part in improving access to electricity whilst facilitating growth and development, but displacement of coal power generation, as we are looking to do in Morocco over the longer term, will also be a crucial factor. Wind and solar replacing heavy fuel in decentralised locations also decreases carbon emissions while grid scale renewable power augmenting existing electricity networks demonstrates scale and immediate impact. Concurrently, green hydrogen developments and integration within hard-to-abate industries arguably foreshadows future solutions with near zero emission. Our assets play directly into the themes of energy security, sustainability and supply but our projects also have the potential to have wide ranging positive impacts across skills training, job creation and expansion of local infrastructure within the countries in which we work.

Our Portfolio

While the businesses in our portfolio are diverse, they have consistent characteristics. They all address important energy requirements, each is foundational, and we have adopted a first mover approach in all three. Each also possesses significant growth opportunities both in-country and across Africa and we are partnering with world class companies to deliver these scalable assets.

Moroccan Gas province: It is rare to discover a new gas province of significant scale. With the combined Loukos, Lixus and Rissana licences, Chariot has an enviable footprint in a Moroccan onshore, shallow water and deep water gas province where we see material upside potential. Although we are currently focused on specific prospects and areas within each licence, we also see numerous additional tieback targets, very large, contiguous basin floor fan prospects as well as an entire shallow water trend within this acreage.

Pan African renewable power: In addition to our decentralised renewable power projects focused primarily on the mining sector, our business model has evolved to scale. This next chapter takes advantage of multi megawatt wind and solar developments that can directly access the established grid network and the trade of low carbon power supply to a variety of clients across South Africa. Our renewable expertise and industry partnerships combined with our Etana trading company makes this possible and will result in cleaner energy solutions and improved access to much needed electricity.

Green Hydrogen in Mauritania and beyond: Chariot has rapidly established itself as an important part of Mauritania's aim to be a leader in the global green hydrogen market with the development of the giga-scale Project Nour, and we have initiated other smaller scale but important proof of concept projects in Morocco and Mauritania. These projects are taking advantage of the world class wind and solar power that are found in key parts of the continent and our teams are looking to develop domestic production capabilities and export optionality. With advancements in associated technology, these developments are leading the way towards delivering green hydrogen projects at competitive international pricing within the next decade.

Our Path Forward

With the challenges to energy security as a backdrop, Chariot is committed to support responsible growth and energy independence in our host countries' economies, as well as looking to develop access into wider international markets.

We recognise that our company has projects across multiple areas, and we will look for ways to advance the progress and finance of each one in the most efficient way. In 2024, we continue to progress our Moroccan gas portfolio, South African renewable generation and power trading business and green hydrogen assets as well as considering new venture opportunities. We feel there is a lot to play for. I offer sincere thanks to our shareholders, host governments, local communities, staff, contractors, and consultants. I greatly appreciate the work that has been undertaken to get us to this point and look forward to a successful year ahead.

George Canjar

Chairman

10 June 2024

Q & A WITH THE CEO

What are the key attributes that underpin Chariot as an investment opportunity?

The quality of our asset base across the three pillar portfolio, the global need to meet energy requirements, our team and our focus on Africa are the foundations of our business model and strategy. We are very much focused on our Transitional Gas division of the business where we are looking to get to first gas and generate cashflows as quickly as possible with the overriding objective to return cash to our shareholders. 

The global need for energy is increasing dramatically, and in Africa alone electricity demand is expected to rise six fold by 2050. It is well documented that there is a critical need to rebalance the energy mix whilst generating reliable, affordable and accessible supply with a focus on closing the energy gap. Viable solutions need to be implemented to ensure stable growth and address the power poverty situation that is hindering the continents development. Chariot is playing a meaningful role in this goal.

Our portfolio of projects will play an important part in diversifying energy sources, supporting industrial and downstream development and reducing reliance on imports. This also has the very important knock-on effect of stimulating the creation of further industry for the communities and countries we operate in. Our focus is on Africa due to its vast resource wealth but we also have a depth of knowledge across the continent and can leverage our expertise to play a tangible role in developing its energy networks. Importantly, we are looking to deliver into undersupplied markets that have immediate demand. Across our assets we are focused on developing competitive supply that can help meet domestic and export needs utilising our in-house expertise and working closely with our partners and host Governments. These are the underlying tenets of the unique investment opportunity that Chariot offers and how we will create future value.

Can you give us your view on the importance of developing gas assets within the Transitional Energy space?

Today, hydrocarbons still make up between 80-85% of the world's energy consumption so the transition to a new energy mix will take time but we need to have practical, workable solutions. It is impossible to implement an immediate shift away from fossil fuels and it is important to note that this would also exacerbate energy poverty in developing countries.

Whilst gas is a hydrocarbon, it has a lower carbon footprint than most and is widely viewed as a transitional fuel. African countries are increasingly embracing energy solutions that integrate hydrocarbons and renewable sources but having access to dependable baseload power underpins all developments. With hydrocarbons as a baseload - and gas in our case in Morocco - you can be more relentless in advancing new projects and technologies so it can play a key role in accelerating the adoption of a range of new energy sources whilst supporting longer term substitution.

What were your headline achievements in the Transitional Gas business this year?

Our main highlights have been securing Energean as a partner on our offshore Moroccan acreage; being awarded the Loukos Onshore licence which widened our footprint in Morocco; and successfully delivering our first drilling campaign, with a gas discovery in the OBA-1 well and completing all operations safely and efficiently. Our primary focus for this business year is to now execute our drilling plans offshore where we are looking to increase the resource base to over 1Tcf, move towards a Final Investment Decision at Anchois and progress with our forward plans at Loukos.

Can you tell us more about securing Energean as a partner?

During the first half of 2023, we completed the FEED phase at our Anchois gas project which defined our initial development plan and confirmed the commercial viability of this significant discovery. As we progressed our FEED project, we also undertook a partnering process in order to be able to look to upscale and deliver the potential that we saw this project offers. This process generated significant industry interest where we had multiple offers and we were delighted to sign agreements with Energean, the FTSE-250 company, as a partner across our Lixus and Rissana licences. Energean acquired operatorship and 45% in Lixus and 37.5% in Rissana, with Chariot retaining 30% and 37.5% respectively and ONHYM maintaining its 25% stake in each licence. We received US$10 million on completion of this deal, we have a US$85 million gross carry on Lixus pre-FID costs which includes the Anchois-East well and flow test and a further US$15 million is payable on FID. They then have an option to acquire a further 10% for a gross development carry of US$850 million to first gas, a US$50m convertible loan note or 3 million Energean shares, and 7% royalty payments on their production revenues.

Energean is a highly experienced operator in delivering projects of this nature and they share our vision on future development plans. We are looking forward to drilling the Anchois-East well in August this year which will appraise, develop and potentially be a future producer, but is fundamentally being undertaken to look to upscale the development from day one. Anchois is currently the primary focus but the partnership will undertake further exploration across Lixus and Rissana in due course as we see material running room in this acreage.

Anchois is larger and longer term, so is Loukos an earlier production opportunity?

Yes, it is, and we applied for the Loukos Onshore licence as we saw significant, overlooked potential, it was a natural fit for our portfolio and we could expedite drilling plans. We have in-depth knowledge of this area through proprietary data from our Lixus licence which is immediately adjacent and possesses clear geological similarities.

We were delighted to report a gas discovery from the OBA-1 well at the Dartois prospect recently. The planned next steps will be to design and conduct a flow test and our team are working across and integrating all the data we have acquired in the drilling campaign to understand the impacts on the exploration potential of the entire licence area and optimise the future work programme. We are focused on early commercialisation opportunities, as gas produced here can be delivered directly to local industry and we can look to build this out over time. Morocco is an excellent country to work in, with existing infrastructure that we can also utilise and it is an ongoing pleasure to work with our partner ONHYM on these assets.

Can you give us an overview of the ongoing evolution of the Transitional Power business?

When we acquired AEMP in 2021, our focus was on building a portfolio of renewable projects for mining and industrial clients to provide onsite, lower carbon energy solutions and we have four projects with a total of 515MW under development with our partners. This is a business approach that will continue to grow as heavy industry looks to reach emission targets and also because the set up and generation of renewable energy now makes long term economic sense.

The electricity trading platform, Etana Energy (Pty) Limited has become a prominent element of this business as we increased our holding to 49% in January 2024, alongside partner H1 Holdings. Through this platform we are tapping into a wide and essential network and we believe that this could be one of the most influential businesses in facilitating, installing, and delivering greener, competitive and sustainable energy across South Africa's national grid over the next decade. This business connects efficient supply to end users through the trading platform but it also enables the development of new, renewable energy generation, in which this Power business can participate. We are very pleased to have signed up some large offtake customers already with more under negotiation. Our water business is also an important part of this portfolio, addressing another essential need, and there are many ongoing growth opportunities here too. It is important to note that in producing treated water, we will use renewable energy which Chariot intends to supply.

Can you provide an update on the Strategic Review of Transitional Power?

As we have noted before, we have been looking at financing options at the subsidiary level for Transitional Power. With the majority of these assets based in South Africa, and the positive implications that these developments could have for the country, we have found that South Africa focused banks and investors have a strong interest to fund this. As announced in March, and in order to enable the onward growth and progression of this business we are undertaking a Strategic Review which could result in a full or partial sale or demerger with the aim of maximising value for shareholders. We will likely phase this review as we focus on securing financing for the projects and will provide further updates as this process moves forward.

What is the latest with your Green Hydrogen pillar?

The green hydrogen story continues to evolve. Over the past year, we completed our Feasibility Study at the 10GW Project Nour in Mauritania alongside our partners TEH2, with whom we have an excellent working relationship. This further confirmed its world class potential and we have also been working on proof of concept, nearer term projects through our partnerships with UM6P and Oort Energy in Morocco. We continue to evaluate and progress other opportunities and pilot projects across the African continent as we look at value accretive assets that fit within our investment criteria. Offtake is a key focus for us and we also continue to progress our financing options at the subsidiary level. This is an early stage but vast industry so there are challenges to overcome as it develops, but green hydrogen will be a critical part of the net zero solution.

How are your host countries facilitating its ongoing evolution?

We have had only good experiences working in Mauritania and the investment climate continues to improve. This has been recognised in a speech by Ursula von der Leyen, head of the European Commission in February who stated "we want to build a green hydrogen ecosystem…. here in Mauritania." Green hydrogen will play an important part in their European Green Deal strategy, which is to be climate neutral by 2050, and they are looking to Mauritania as a key export market for this. They also strongly underlined the importance of developing domestic industry and building out the green steel market in country and we are in step with this through our work there too. Morocco is also very keen to further develop and expand this industry to support their energy transition strategy.

Looking forward - what are the upcoming catalysts for the Company?

Our primary focus is reaching first gas and generating revenues from our Transitional Gas assets. We look forward to our ongoing work and progress with our activities onshore and to drilling offshore in the near future with Energean and ONHYM. We will finalise our financing of the Transitional Power division which will in tandem progress our Strategic Review and our Hydrogen projects will continue on their trajectories.

We believe that the key to success is to continue to adapt, collaborate, innovate and partner, as we have done consistently to date. We are proud of our entrepreneurial approach, which has enabled us to pursue new or previously overlooked assets and we will continue to look to pioneer and grow. We will always look for new opportunities that enhance the Chariot investment case. We believe we have a compelling and relevant story, we believe in our projects and will remain fully focused on realising their potential as we move forward.

Thank you

I would like to thank our shareholders for their ongoing support as we successfully raised circa US$19m in June 2023. Both existing and new institutions participated, as did our retail investors via an oversubscribed open offer. As a Board and Management team, we have continued to buy shares in the market, so remain very much aligned with our investor base and the long term success of our Company.

I'd also like to thank all our partners, Ministries and teams that we work with in Morocco, Mauritania, South Africa, Zambia, Zimbabwe, Burkina Faso and Djibouti. Collectively we are making a real difference both now and for the future and I look forward to more to come. We need to also appreciate and give thanks to all the communities in which we operate for without their support we could not achieve anything. Thank you as always to the Chariot Board and our colleagues across each part of the business with whom it is an ongoing pleasure to work with.

Adonis Pouroulis

Chief Executive Officer

10 June 2024

Chief Financial Officer's Review

Funding and Liquidity as at 31 December 2023

The Group remains debt free and had a cash balance of US$6.0 million as at 31 December 2023 (31 December 2022: US$12.1 million).

During 2023, the Group invested c.US$23 million (31 December 2022: c.US$39 million) into the business through its exploration campaigns Offshore and Onshore Morocco, business development within the Transitional Power and Green Hydrogen businesses, and administration activities.

The net proceeds of the US$19.1 million raised from the equity fundraising completed in August 2023 allowed the Group to plan its exploration campaign Onshore Morocco, continue to progress its Anchois development Offshore Morocco, as well as progress opportunities within the Transitional Power and Green Hydrogen businesses across the African continent.

As at 31 December 2023, US$1.05 million of the Group's cash balances were held as security against Moroccan licence work commitments. The increase from US$0.75 million as at 31 December 2022 was due to new bank guarantees relating to the new Onshore licence in Morocco.

Financial Performance - Year Ended 31 December 2023

The Group's loss after tax for the year to 31 December 2023 was US$15.6 million, an increase of US$0.7 million on the US$14.9 million loss incurred for the year ended 31 December 2022. This equates to a loss per share of US$(0.02) compared to a loss per share of US$(0.02) in 2022.

The share-based payments charge of US$5.7 million for the year ended 31 December 2023 was US$1.5 million higher than the US$4.2 million in the previous year mostly due to the granting of employee and Directors' deferred share awards in the current year, and the full year impact of awards granted to employees in 2022.

To provide further detail of total operating expenses, Green Hydrogen and other business development costs have been split out from other administrative expenses within the consolidated statement of comprehensive income.

Green hydrogen and other business development costs of $1.3 million (31 December 2022: $1.7 million) comprise non-administrative expenses incurred in the group's green hydrogen business development activities, the majority of which relate to Project Nour feasibility studies and related costs.

Other administrative expenses of US$8.7 million for the year ended 31 December 2023 are higher than the previous year's US$8.5 million due to employment costs from scaling up the team to progress the Anchois gas and Loukos developments, as well within the Transitional Power and Green Hydrogen teams.

Finance income of US$0.2 million (31 December 2022: US$0.1 million) relates to higher bank interest received on the cash balance over the period, as well as foreign exchange gains on non-Sterling currencies.

Total finance expenses of US$0.2 million (31 December 2022: US$0.6 million) include foreign exchange losses of US$0.2 million (31 December 2022: US$0.4 million). Foreign exchange expenses are lower than the prior period reflecting the stabilising of foreign exchange rates on the holding of cash balances in Sterling. A US$0.1 million expense (31 December 2022: US$0.1 million expense) on the unwinding of the discount on the lease liability under IFRS 16 is also included in finance expenses.

Exploration and Evaluation Assets as at 31 December 2023

Following the signing of the Loukos Onshore licence in Morocco during the year, the carrying value of the Group's exploration and evaluation assets comprise US$61.8 million (31 December 2022: US$51.8 million) in relation to the existing Offshore Moroccan geographic area, and US$1.2 million in relation to the new Onshore licence.

Across the Offshore geographic area a further US$10.0 million (31 December 2022: US$20.3 million) was invested in the asset comprising completion of the FEED phase of the Anchois gas development project, progression of the Anchois development ESIA, and geophysical and geotechnical site surveys onshore and offshore, to further define pipeline routing and landfall approach to bring the Anchois development towards FID.

Onshore investment to 31 December 2023 reflects the permitting and planning activity for the first drilling campaign of two wells.

Other Assets and Liabilities as at 31 December 2023

The carrying value of goodwill of US$0.4 million at 31 December 2023 (31 December 2022: US$0.4 million) reflects the intellectual property, management team and customer relationships acquired through the business combination of AEMP in 2021. In 2022 three Memoranda of Understandings were announced for projects in the mining portfolio totalling over 500 MW of power. These projects are large scale, early stage and are being progressed in partnership with Total Eren and a black economic empowerment ('BEE') partner on the Tharisa project, with minimal commitments in the near-term. No impairment of the goodwill was identified in the period from acquisition to 31 December 2023.

The fair value of the Group's investment in power projects relates to the 10% project equity holding in the Essakane solar project in Burkina Faso as acquired with AEMP and is valued at US$0.3 million (31 December 2022: US$0.4 million). The project, a joint investment with Total Eren, continues to generate power under a power purchase agreement with IAMGOLD's Essakane mine.

During 2023 the Group completed its construction of a desalination plant, with US$0.6 million capitalised in property, plant and equipment, for the proof-of-concept water project in Djibouti, with commercial operations commencing and revenue generated from July 2023.

In 2023, wellheads and casing valued at a total of US$1.8 million (31 December 2022: US$1.4 million) were held in inventory relating to both the Anchois and Loukos drilling campaigns in Morocco.

As at 31 December 2023, the Group's net balance of current trade and other receivables and current trade and other payables shows a net current liability position of US$3.2 million (31 December 2022: US$5.4 million). The change is primarily due to significant activity on the Anchois front end engineering design in December 2022 for which outstanding payables were due as at 31 December 2022. Note 2 details the Group's future funding plans.

Following the extension of the UK office lease term by a further three years in 2023, both the associated right-of-use asset and lease liability have been modified.  Under IFRS 16 the Group has recognised a depreciating right of use asset of US$1.3 million (31 December 2022: US$0.3 million) and a corresponding lease liability based on discounted cashflows of US$1.3 million (31 December 2022: US$0.4 million).

Outlook

We look forward to a safe and successful drilling campaign at Anchois East in Q3 2024 which the partnership hopes will upscale the development and lead to FID shortly thereafter, unlocking the further material cashflows from the Energean partnering transaction. As detailed in Note 2, our current liquidity highlights the need for funding across the business at an asset, subsidiary or Group level to ensure the Group is well capitalised to carry out its objectives.

We have continued to evolve as a business over the past year and I am proud of all the achievements as reported. As we moved forward, we will continue to progress all areas of the Company but our primary objective as we focus on the gas business is to develop these material assets, generate cash flow and return cash to shareholders.

Julian Maurice-Williams

Chief Financial Officer

10 June 2024

TRANSITIONAL GAS

Our Moroccan Footprint

In recent years, Chariot has focused on value-driven gas projects, involving exploration and appraisal operations, combined with development planning and commercialisation activities.

Chariot owns a 30% and 37.5% non-operated working interest in the Lixus Offshore and Rissana Offshore licences respectively alongside our new partners Energean, who operate both blocks with a 45% and 37.5% working interest.

Chariot also owns and operates a 75% interest in the Loukos Onshore block.

The Moroccan state owned Office National des Hydrocarbures et des Mines ("ONHYM") holds the remaining 25% working interest in all licences.

Offshore

Since the award of the Lixus Offshore licence in 2019, Chariot has delivered a material increase in the resource potential of the Anchois gas field and defined a material prospect portfolio in the same play across the wider licence area. This growth has been delivered in previously overlooked acreage, utilising latest technology and interpretation methods to identify additional gas resources, combined with the ability to evaluate the prospectivity with a critical and open mindset. 

The Anchois-2 appraisal and exploration well drilled by Chariot in 2022, increased the P50 (2C) discovered resources of the field by a factor of 5 versus the previous operator, largely through the discovery of 5 new gas bearing sands in a stacked accumulation. We have now matured the development plan for the Anchois field, which is expandable to capture material running room, a factor which helped Chariot to attract a new partner in Energean, an operator with a proven track record of executing similar offshore developments. The team are advancing together towards development sanction, the final details and confirmation of which will be determined by the Anchois-East well. This will be carried by Energean and is on track to start drilling in August 2024.This next campaign, which could include an optional second well, will mark an important step in the development plan in terms of the completion design, number of producer wells and production capacity of the field, with drilling success bringing the possibility of significantly higher rates than previously envisaged by Chariot.

The joint venture partnership will also be conducting additional exploration across the Rissana licence through a planned seismic acquisition campaign.

Onshore

Building on our successes offshore, Chariot identified significant prospectivity in the same overlooked play, this time in the onshore part of the same sedimentary basin. The Loukos Onshore licence offers an extensive exploration portfolio, optimally located to existing gas markets, and presents the opportunity to unlock a low-capex, high-value, rapid gas to industrial market solution.

The Loukos Onshore block was awarded in July 2023, complete with a rich, legacy dataset comprising 154km² of 3D seismic, acquired in 2011, and previous wells proving several gas discoveries and indications of gas bearing intervals from which the exploration potential could be rapidly assessed. There was also an extensive dataset of >900km of 2D line kms, which also reveals further prospectivity beyond the limits of the 3D seismic. Following early geological evaluation, our team identified a set of attractive drilling targets on the existing 3D seismic dataset and, post licence award, set to work to fast-track a drilling campaign. Through the combined diligent efforts of the entire team, Chariot was ultimately able to deliver drilling operations within 10 months of licence award.

We were delighted to announce the completion of the successful drilling campaign and a gas discovery from the drilling at the Dartois prospect at the end of May 2024. We now have a comprehensive dataset from the drilling of both wells and our team will integrate this with our recently reprocessed 3D seismic data to further define the resource potential of the Dartois area, confirm the future work programme and also analyse the impact on the wider prospectivity across the Loukos licence area.

We believe we are just scratching the surface with our exploration efforts to date. The coming year has key catalysts for growth through our ongoing analysis and testing planned on both the onshore licence and our offshore drilling campaign. We will also continue to leverage our long-established relationships in-country. In looking to develop important supplies of domestic gas, we hope to strengthen our future as a Moroccan gas producer and contribute to the Kingdom's ambitious energy strategy.

Developing Morocco's Largest Discovery

The Lixus and Rissana Offshore licences are covered by an extensive dataset including multiple 3D seismic survey datasets and 6 previous wells, including the Anchois-1 and Anchois-2 discovery wells and a legacy well located in the south of the Rissana which provides evidence for an extensive, deep thermogenic petroleum system, in addition to the post-nappe play of Anchois field area.

In December 2023, following an extensive farmout process, Chariot announced a partnership with Energean, who also recognised the potential in our offshore portfolio. The transaction completed in April 2024, and with a rig contract with Stena Drilling for the Stena Forth drillship signed, the partnership will drill the Anchois-East well, with a subsequent well test planned in the main gas bearing sands.

In this well, we will drill two wellbores in one operation; a pilot hole will be drilled first, into the undrilled 'Footwall' fault block to the east of the main field area, and then the well will be side-tracked and the main borehole will be drilled to penetrate the 'Main' fault block in a location to the east of the previously drilled Anchois wells. The pilot hole targets exploration objectives in the M and O Sands of the footwall structure, potentially providing an additional 170 Bcf of recoverable gas to the current volumes from the O Sands alone. The main borehole will then appraise the discovered sands of the field, currently estimated at 637 Bcf (gross 2C resource), and also explore the deeper O Sand North Flank target, potentially providing a further 213 Bcf of 2U recoverable gas below the proven gas-down-to in the field. We aim to retain the well as a potential future producer location in the Anchois Development. An optional second well is also under consideration.

The subsea-to-shore development plan currently includes 3 initial producer wells, comprising the existing Anchois-2 well, the upcoming Anchois-East well and potentially the optional second well. This approach sees individual producer wells containing multi-zone completions to cost-effectively access the stacked gas sands at Anchois. Together with the utilisation of existing wells as producers, this reduces uncertainty and post-FID capex. Production testing of the Anchois-East well, in the Q3 2024 campaign, will also allow for further optimisation of the producer wells and completions as we gather important data on reservoir productivity.

With the potential to materially increase the gas resources through this drilling activity, the joint venture partnership sees the possibility for an expanded development plan, above the current 105 mmscfd CPF capacity. 2023 saw important progress in the planning for the Anchois development, including a key step forward through the approval of the development ESIA; this was announced in October 2023, following a 15 month process, and this approval included both local regulatory approvals and additional scopes of work to align with the likely requirements of lending institutions.

The Chariot and Energean joint venture technical teams are working closely together on delivering the Anchois project, including field development FEED updates and progressing gas commercialisation agreements. With long-term local gas contracts under negotiation, including anchor contract negotiations with ONEE, and associated fixed, long-term anticipated cashflows, we are refining the extensive work undertaken so far to look to reach Final Investment Decision as soon as possible.

Offshore Project Progress

The wider Lixus and surrounding Rissana licences, contain significant additional prospectivity which provides opportunities for further near-field exploration activity around Anchois.

Following the upcoming drilling and testing campaign, we will be able to further refine our understanding of the distribution of gas-bearing reservoirs and provide further calibration of our geophysical models which are important to reduce the risk of exploration targets away from the main field. Our geological model currently shows extensive reservoir system associated with the A, B, C, M and O Sand intervals. The identified, low-risk targets in this system around Anchois are called the Anchois Satellite prospects, and these are within a 5-10km radius around the central field location; meaning that in the case of successful exploration these can be all tied back to, and be produced through, the Anchois infrastructure.

Expanding the focus beyond Anchois, future targets are abundant. Rissana's vast expanse captures a variety of plays, with multi-Tcf potential locked up in deeper exploration targets, such as the Mesozoic sub-nappe and fore-nappe plays, and the recently identified shallow Miocene Basin Floor Fan Play, which is anticipated to be a focus of future seismic acquisition.

As the work progresses on the regional onshore geology, we are also now integrating this to understand the impact on the linked offshore plays; as we know that the same sand systems moving through this onshore part of the basin feed the reservoirs offshore. We are continuously updating and refining our understanding, using modern methods of seismic analysis to best represent reservoirs and new petrographic studies on key intervals which have demonstrated significant sand fairways throughout the Late Miocene. Onshore well data and studies are consistently helping to illuminate the under-explored areas of the offshore, which will be further resolved by the planned seismic acquisition campaign.

Partner Profile - Energean

Securing an experienced, pro-active and committed partner, such as Energean, was seen as a key step in moving the Anchois Development forward in a way which could accelerate delivery of the value and inherent upsides in the project. Energean has taken Operatorship of the offshore projects and the partnership is working together, benefiting from synergies of our combined expertise, to ensure a safe, timely and cost-efficient drilling campaign.

Energean is the perfect match for our offshore operations as they are aligned with our ambitions to focus on scalable growth projects. We can leverage their development experience and expertise at Anchois, whilst also maximising upsides within the wider Lixus and Rissana licences through the unique exploration insights and understandings of the Chariot subsurface team.

Together, we are aligned on the fundamental importance of domestic market supply to underpin new gas field development and how we can be part of ensuring security of supply, development of local industry and the decarbonization of the energy mix. We also both recognize the potential of export markets to offer a rapid commercial outlet for surplus gas volumes which can offer significant value upside.

Loukos Onshore Licence

Exploring Onshore

Through our extensive analysis and interpretation of the available dataset, and leveraging our knowledge from the offshore projects, the exploration team investigated and defined the first two drilling targets. The primary target of the first well, RZK-1, was a prospect called Gaufrette, located up dip of the LNB-1 well which had discovered gas pay in the same interval downdip, and was supported by seismic anomalies. Approximately 8km north-east of RZK-1, the OBA-1 well location was also selected for the campaign, to target the Dartois prospect located along trend from a historic gas discovery in RJB-3, which tested gas from the same reservoir system.

Concurrent to this exploration activity, the drilling and logistics teams worked across the wide scope of preparation and planning required for the campaign. This planning effort involved securing of all necessary land permits, approval of the Environmental Impact Assessment (EIA), long lead items and drilling rig and services contracts. In anticipation of further drilling activity, the EIA approval we received in January 2024, from the Unified Regional Investment Committee, covers a total of 20 well operations across the block. This certificate is valid for a period of 5 years and gives us flexibility in any future campaigns.

Successful Campaign and Gas Discovery

As announced in May 2024, we successfully completed the two well campaign safely and efficiently, on time and on budget. The RZK-1 well was drilled to a depth of 961m through the Gaufrette Main target, which was found on prognosis and confirmed thick intervals of good quality reservoir, which exceeded pre-drill expectations. Multiple gas shows of various intensity were identified, however, the reservoirs of the main target were interpreted to be largely water bearing with evidence of residual gas. Whilst some thin gas pays were identified, the well was deemed sub-economic and was duly plugged and abandoned, however, we will take all of the learnings from this prospect and conduct a full post-well evaluation in order to apply our knowledge to more informed exploration of the block's wider prospectivity. We recognise that the well was supported by the presence of a very promising reservoir system and evidence for strong gas migration into the structure, which supports our exploration thesis for the block, however the well was likely unsuccessful due to a prospect-specific trap failure.

Following RZK-1, the rig moved immediately to the Dartois prospect to target a different reservoir system and trapping style, to drill the OBA-1 well. Here, we were very pleased to announce the gas discovery after successfully drilling to a depth of 901m, through target reservoirs using a slim-hole well construction. This was designed by the drilling team based on knowledge of drilling performance across the basin to look to drill this well with greatest efficiency. Further to comprehensive evaluation of the well data which included wireline logs, cuttings and gas data, preliminary interpretation confirmed the presence of reservoirs over an interval of approximately 200m with a gross interval of approximately 70m of primary interest. This interval of primary interest contains elevated resistivities coincident with elevated mud gas readings, indicating potential gas pays, with no water-bearing reservoirs identified. Further analysis will now be carried out on the subsurface dataset in preparation for well flow testing to together determine the well productivity and the gas resource potential of the discovery. The well was cased and cemented and suspended with a Christmas tree installed to allow for future rigless testing operations and potential use as a producer well.

Onshore Exploration Outlook

The pre-drill high-graded portfolio was estimated to hold approximately 100 Bcf P50 recoverable in the 3D area alone. Based on early drilling results, we can have demonstrated the presence of the regionally expansive, good quality, Mid-Messinian reservoir sand system targeted by much of this portfolio. We will now carry out detailed petrophysical and geophysical data analysis to understand the impact of the wells on this portfolio, and also the potential for other prospects to be identified on newly reprocessed seismic data which has recently been delivered to the company and is ready for interpretation. Work will focus on understanding prospect-specific trapping integrity and calibration of the seismic attributes. Both the recent well results and legacy wells provide strong evidence for gas migration across this basin which remains a low risk component of the petroleum system. This understanding is integral for the follow-on exploration of other high-graded targets, for example, Éclair. This prospect shares the same reservoir system, seismic attribute support and similar burial depths to the initial drilling targets and is one of the high-graded candidates for a future follow-up drilling campaign with associated estimated resources of 32 Bcf across the Éclair and adjacent Éclair West closures.

The team will continue to analyse the extensive, reprocessed 2D and 3D seismic datasets alongside new well data and, although still in progress, we are seeing a significant uplift in imaging quality across the portfolio in the early products.

As we progress with analysis of the drilling results to fully understand the implications for the surrounding on-block prospectivity, we continue to look to unlock and develop this overlooked gas province in the heart of the Moroccan Kingdom.

The Moroccan Gas Market and Commercialisation Opportunities

Morocco hosts a scalable domestic market with growing industrial hubs in need a steady supply of lower carbon, competitive energy and these market fundamentals are underpinned by excellent fiscal terms in country. There is currently a heavy reliance on imports and coal power generation and Chariot is dedicated to being part of the national transitional energy goals that will see Morocco be less reliant and eventually move away from these imported carbon intensive fuel sources.

Chariot is in a unique position to meet Moroccan domestic gas needs across many sectors including power and industry. We have established key agreements in efforts to support this, including key Gas Sales Principles with the state national utility ONEE, pipeline tie-in agreements with infrastructure owners and project partners, ONHYM, and a gas to industry partnership with Vivo Energy.

Natural gas from Chariot's acreage would be delivered via a variety of potential solutions, a key advantage of the existing infrastructure. Offshore for example, the more substantial volumes of Anchois gas are planned to be commercialised primarily through a fixed connection to the existing GME pipeline which directly connects to domestic power generation hubs as well as industrial hubs via future pipeline infrastructure and European markets. This interconnection with Europe via Spain means that future export sales of surplus volumes could be explored once the domestic needs have been satisfied. Multiple offtakers in Europe are interested in receiving the gas where both demand and a desire to diversify supply source has increased due to macro events of recent years.

In terms of onshore, the Loukos licence is perfectly located to supply to the Kenitra industrial zone, a large manufacturing area within excess of 10mmscfd of existing possible natural gas demand that is currently under supplied. This is only c.90km from Loukos and has a direct route to market either through the existing pipeline network in the southern part of the Gharb basin or a virtual pipeline solution. A virtual pipeline is the direct distribution of compressed natural gas (CNG) to customers by truck and this solution offers the most immediate, modular and low-cost option to commercialise early production. This is the first likely route that Chariot will initiate to get the gas to industry and it will also serve as an important catalyst for future pipeline development and further growth.

Alongside our partner ONHYM we see a great opportunity to develop onshore gas in a lower cost, simple operating environment which would complement a future subsea-to-shore development. Commercialisation options are infinitely scalable over the longer term to meet Morocco's growing gas needs as a priority, with the potential to rapidly commercialise surplus gas in the European markets. 

TRANSITIONAL POWER

Developing large renewable energy projects in Africa

Chariot Transitional Power is focused on providing competitive, sustainable and reliable energy and water solutions across the African continent through developing, financing, building and operating power generation and water assets.

Over the past year, we continued to progress our renewable projects that we are developing for Tharisa, First Quantum Minerals and Karo Mining, as well as continuing the solar operations at IAMGOLD's Essakane Mine in Burkina Faso. We have also broadened our exposure to the electricity market in South Africa through increasing our stake in Etana Energy and are securing long term offtake agreements with a diversified portfolio of customers.

As announced in March 2024, having received a range of interest from South Africa focused investors, Chariot is undertaking a Strategic Review of the Transitional Power business to look to explore the funding options available. This review may involve a full or partial sale or demerger with the aim of enabling ongoing growth and development of the portfolio and maximising value for all stakeholders.

Solar and Wind Solutions for Mining Projects

Through the renewable energy projects that we are developing in conjunction with our clients and partner TotalEnergies, we are establishing a secure and direct energy supply to their mining operations, reducing reliance on heavy fuel, and in turn lowering their carbon footprints. 

ESSAKANE: BURKINA FASO: Solar Power Production

Chariot's first renewable power project, supplying the Essakane Gold Mine in Burkina Faso with 15MW of solar energy is now in its fifth year of operation. On commissioning in 2018, the project was the largest hybrid photovoltaic (PV) - heavy fuel oil (HFO) power plant in the world and one of the largest solar facilities in sub-Saharan Africa with 130,000 solar panels. Chariot holds 10% equity in this award-winning project, with TotalEnergies holding the remaining 90%.

Year on year the mine has reduced its fuel consumption by an estimated 6 million litres, representing 18,500 tonnes CO₂e annually. 100% of permanent Essakane project staff are nationals, while 1% of project revenues are dedicated to community investment. Carbon credits are also registered with the UN to raise funds for community developments.

THARISA: SOUTH AFRICA: Solar Power Project

In partnership with Tharisa and TotalEnergies, Chariot is developing the 40MW solar PV Buffelspoort project which will supply electricity to Tharisa's chrome and platinum group metals mine in the North West province of South Africa. Project development and permitting continues to move forward with Financial Close now expected in Q4 2024.

The plant, to be built on Tharisa's property and connected behind the meter, will contribute to the company's goals to become carbon neutral in 2050 as it will reduce the project's dependence on coal fired power from 100% to 69% as well as creating around 200 local jobs during the construction period.

FIRST QUANTUM MINERALS: ZAMBIA: Wind and Solar Power Project

Alongside TotalEnergies, Chariot is progressing the development of 430MW of combined wind and solar power to look to expand Zambia's existing renewable energy capacity and provide First Quantum Minerals with competitive and sustainable power for its Zambian mining operations.

Once completed, the combined project will be one of the largest renewable energy projects in Zambia and a flagship project in the Southern Africa region.

The split of power will be 230 MW solar PV + 200 MW wind, and the requisite permitting and planning is underway. Further updates will follow as this progresses towards Final Investment Decision.

KARO PLATINUM: ZIMBABWE: Solar Power Project

In Zimbabwe, Chariot is working on the development of a 30MW solar plant, to supply competitive electricity on site at Karo's platinum mine in Zimbabwe. Construction of the mine has commenced but the timeline for delivery has slowed down further due to a review of the PGM price environment. This has delayed the implementation of the solar plant but permitting of the project continues to progress and further updates will follow as this moves towards Final Investment Decision.

With Tharisa as a 75% shareholder in Karo, this project is also linked to their carbon emission reduction targets.

Electricity Trading Licence

As announced in December 2023 and completed in January 2024, Chariot now owns 49% in the South African electricity trading platform, Etana Energy (Pty) Limited ("Etana") alongside partner H1 Holdings (Pty) Limited which holds 51%. H1 is a black-owned and managed company based in South Africa, which has a proven track record in developing and investing in large renewable projects.

Etana is one of five companies to hold an electricity trading licence granted by the National Energy Regulator of South Africa. Its objective is to provide competitive and sustainable end to end electricity solutions through connecting new and existing energy generation projects to commercial and industrial users. Major deregulation changes currently taking place in South Africa's electricity market provides licence holders the opportunity to trade to a range of high-volume off-takers as well as the opportunity to participate in new renewable energy generation projects. 

Market Opportunity

South Africa is the largest electricity market in sub-Saharan Africa. It is predominantly supplied by coal fired power generation and as a result, around 80% of greenhouse gas emissions come from the energy sector. There is a major lack of supply however as insufficient electricity is generated, and power outages have significant macroeconomic impacts. Investec estimates that there was a cost of around ZAR300 billion to the South African economy due to downtime in 2022 and this issue has compounded further over the past twelve months, with just 50% of power availability recorded in December 2023.

These two fundamental issues underpin the rationale for the rapid market deregulation that is now taking place, enabling private sector renewable power generation and opening up trade through the national grid. The SA National Energy plan has forecast the needs for an additional 30GW of renewable energy to be procured by 2030, with the first 4GW to be added into the grid by the end of 2024. Etana's trading license, coupled with Chariot's business network and development track record means it is extremely well positioned to play a material role within this high growth, high demand sector.

The Etana Business Model:

There is significant market demand for green and competitively priced electricity and multiple commercial and industrial offtakers have already been secured across mining, industry, municipal and retail sectors. Etana's model is already working, as evidenced by the first wheeling of renewable energy through Cape Town's grid announced in September 2023. Wheeling is a process where electricity is bought and sold between private parties, using the existing grid to transport power from the point of generation to end-users.

On the generation side, 400MW of gross wind generation capacity has been identified and is in negotiation with Etana. The trading platform enables Chariot's participation in these large renewable projects, and there is a strong focus on securing a future pipeline of large generation projects.

Long Term Agreements signed with Growthpoint Properties, AutoCast and Petra Diamonds

·      As announced in February 2024, Etana will supply Growthpoint, the largest South African Real Estate Investment Trust company with 195GWh of renewable energy per year - 32% of their current annual consumption across their commercial properties located around South Africa

·      This will be a mix of wind, solar and hydroelectric power and is the first multi-jurisdiction, multi-building, multi-source renewable energy wheeling arrangement

·      This agreement has also enabled Growthpoint to secure the rights to purchase 30GWh per annum of 24/7 baseload hydropower

·      Autocast, a leading supplier of cast and machined components to the automotive, mining and engineering industries selected Etana as its renewable energy supplier in April 2024

·      Autocast is part of a cluster of the high energy users in the Nelson Mandela Bay area together (about 30 members) which has selected Etana to find a common solution to procure clean power

·      The agreement signed with Petra Diamonds will wheel renewable energy to their Cullinan and Finsch diamond mines, supplying between 36-72% of the expected power requirements from FY2026 onwards 

Renewable Water Production Business:

Our water business is focused on delivering clean water solutions on the African continent using renewable energy. The process utilises a modular, scalable, reverse osmosis technology that can be powered 100% by solar energy to produce desalinated water. Our objective is to originate, invest in and own decentralised water supply projects that can provide affordable water access for private offtakers and municipalities through long term agreements.

Our first test project, the Ghoubet water project which is affiliated to the largest wind farm in Djibouti was commissioned in June 2023 and is running well. This project is providing 50 m³ potable water per day to local communities, around 1,000 people, over the next 20 years and the team is looking at further opportunities across the continent. 

This business complements both our Transitional Power and Green Hydrogen pillars and has a natural overlap with our current network and portfolio. The business model strategically sits within the Power business as it follows the renewable project model with long term offtake but access to desalinated water is a key part of green hydrogen production cycle.

GREEN HYDROGEN

Near-Term Production, Long Term Scalability

Our objective with our green hydrogen pillar is to build a world class portfolio of projects that have a mix of near- term production opportunities balanced with long term scope and scale.

Our Strategy and Focus

Project Nour, our giga-scale project based in Mauritania remains the cornerstone asset in our portfolio, but our strategy has evolved over the past year as we have adopted a deliberate phasing approach to look to establish earlier production on a commercial basis. Our overarching aim is to become a significant green hydrogen producer and Nour has the potential to be one of the largest, lowest cost assets in Africa but there are key elements that we are focused on as we look to reduce risk and deliver projects:

Partnering and Offtake. Working alongside experts and world-class partners is fundamental, as through this we co-invest, secure offtake, collaborate and ultimately deliver bankable projects. Our strategic partnership with TEH2 (a dedicated green hydrogen developer, owned 80% by TotalEnergies and 20% by Eren Group) has been excellent in the development of Project Nour to date and it is a pleasure to work with UM6P and Oort Energy, the Governments in Mauritania and Morocco and other key industrial players in the sector.

Portfolio. We aim to build out our asset base to diversify risk over various projects and countries but also benefit from the economies of scale and shared learning in working with different partners in different industries. We have strict criteria that we work within around project selection, with a focus on resource availability and long-term offtake opportunities, as well as a host country's approach to development in the sector and its legal and regulatory framework.

Near-Term production. We are looking to deliver a series of technical proof-of-concept projects to progress early commercial phases and generate early revenues with domestic offtake as initial priority. These projects will allow us to showcase delivery and importantly lay the basis to scale up, increase production and develop export options over the longer term.

Access to Technology. Having access to technologies critical to the green hydrogen production cycle is also important in future proofing development plans. Having early-stage partnerships in place helps secure access to important elements of the supply chain, builds expertise within teams and importantly helps leverage participation in new ventures.

We maintain our conviction that green hydrogen will be one of the most important components of the future energy mix and look forward to developing our role in this. We also continue to pursue various sources of financing for this pillar of the business at the subsidiary level.

Market Demand

Green hydrogen, created by splitting water into hydrogen and oxygen using renewable energy, has a material role to play in reaching net zero climate targets. Currently around 95% of hydrogen is produced using fossil fuels so there will be a significant transition across this sector and demand will continue to grow as the energy mix changes. IRENA states that to achieve the 2050 target, the supply of hydrogen overall will need to expand more than five-fold, to more than 500 MT/y, if it is to serve a broader range of uses and decarbonize carbon-intensive sectors. There are a range of hard-to-abate sectors which currently utilise a substantial proportion of grey hydrogen but an emphasis is being placed on three key industries - steel making, fertiliser production and transportation fuel (including aviation); all of which Chariot is looking to address within the projects we are working on.

Key demand centres will be looking to import competitive green hydrogen and the EU will likely need to import about half of the estimated 60 million tonnes of decarbonised hydrogen and derivatives required by 2050. Hydrogen is a key building block in Europe's climate targets and these factors were both underlined by the visit by the European Commission to Mauritania in early February 2024. They publicly reaffirmed their commitment to the sector, its importance within Europe and have selected Mauritania as a key partner in the EU's Global Gateway initiative with regard to future hydrogen export and green steel production.

Project Nour:

Project Nour spans two onshore areas, totalling approximately 5,000 km² across northern Mauritania. With up to 10 GW of electrolysis to be installed, it could become, once implemented at scale, one of the most significant green hydrogen projects in Africa, producing 1.2 Mtpa of green hydrogen.

We recently completed the Feasibility Study, conducted in compliance with Equator Principles and IFC Performance Standards, which further confirmed the scale and viability of the project and outlined a phased pathway for domestic offtake and export development. Nour will be developed in multiple phases with the initial phase seeking to install 1.6 GW of electrolysis and initial development designs are focused on domestic use for green steel production and export of green ammonia.             

Sustainable economic development is embedded within the project planning with local content aimed at maximizing employment and business opportunities in Mauritania. In parallel discussions are ongoing with the local iron ore mining sector to establish a green steel industry in the country. Next steps include completion of the investment framework, engineering conceptual study and offtake negotiations.

We have been working alongside TEH2 and TotalEnergies' in-house Power-2-X engineering unit 'OneTech' on the technical side of the project. The OneTech team consists of highly experienced engineers and their specialist teams (solar, wind, hybrid and green Hydrogen) are widely recognised by peers and partners. They have been instrumental in delivering the feasibility study for Nour, and their expertise shared from other large-scale projects that they are working on in other parts of the world is invaluable.

Case Study: Decarbonising the SNIM iron ore train in Mauritania

At COP28 in December 2023 Chariot signed an agreement, along with partners TEH2 and Société Nationale Industrielle et Minière ("SNIM"), Mauritania's national iron ore mining company, to undertake a scoping study to look at the country's first green hydrogen pilot aimed at decarbonising the SNIM iron ore train using green hydrogen technology.

·      SNIM is Africa's second largest iron ore producer and the study will focus on SNIM's train transport operations from the Zouerat iron ore mine to Nouadhibou port which run on imported diesel fuel

·      The concept is to produce green hydrogen as a substitute power source via fuel cells mounted on carriages of each train - which can be up to 3 km long

·      The scoping study will look to utilise existing wind resources to generate green hydrogen and adapt this into a power source for the locomotives.

·      Overall objective is to materially reduce the carbon emissions in local iron ore mining industry and showcase the value of green hydrogen in production and application, helping to put Mauritania on the map

Proof-of-concept projects

In September 2023, we extended our collaboration with UM6P and Oort Energy in conducting electrolyser pilot projects in Morocco. The partnership is developing a technical Proof of Concept project at OCP's Jorf Lasfar industrial complex which will use a 1 MW polymer electrolyte membrane ("PEM") electrolyser system, patented by Oort. This will both test the capacity of the electrolyser in an industrial setting, develop education and skills whilst also evaluate the feasibility of larger scale green hydrogen and ammonia production in-country.

Ongoing Collaboration, Commitment and Cost Reduction

There are still challenges in development timeframes and scale of investment needed but Chariot welcomes ongoing implementation of initiatives that are driving co-operation and alignment. The improvements in legal and regulatory frameworks, as well as national and EU commitments focused on encouraging investment and development, all point to future success.

The Government of Mauritania in particular has made great strides in creating a favourable environment for developers. It has drafted a comprehensive hydrogen code - very similar to a mining code - that would grant 35-year operating licences and includes a wide range of incentives and tax breaks to boost investment in the hydrogen sector. The draft legislation is expected to be promulgated by the end of 2024 and further highlights the government's commitment to becoming a major green hydrogen producer.

The Africa Green Hydrogen Alliance - in which both Mauritania and Morocco are partners - is amongst those paving the way in this regard, fostering collaboration across governments, the private sector, financing institutions and society to look to establish long term stability. Importantly, the cost of production is expected to decline significantly towards 2030 driven mainly by technology advancements, cheaper renewables and manufacturing economies of scale.

ESG - OUR COMMITMENT TO SUSTAINABLE OPERATIONS

Robust management of environmental, social and governance (ESG) concerns are at the core of what we do and how we work. Chariot seeks to embed a responsible approach to ESG management throughout the business.

In line with industry best practice Chariot uses the IFC Performance Standards, Equator Principles, and the United Nations' Sustainable Development Goals as benchmarks and guiding principles. We also comply with applicable environmental laws, regulations and standards of the countries in which we are present.

We acknowledge the potential ESG impacts that our activities may have as we develop our projects. Our team is committed to proactively identifying and assessing issues that are important to our business and to our stakeholders. We manage these and their associated risks and seek to minimise the impacts of our activities as far as possible by putting robust frameworks and policies in place.

Anchois ESIA and Loukos EIA approvals

In October 2023, Chariot received approval of the Anchois gas development project's Environmental and Social Impact Assessment from the Moroccan Ministry of Energy Transition and Sustainable Development. This process was conducted over a 12-month period and included detailed onshore and offshore environmental baseline studies, a social baseline survey and a wide-ranging stakeholder engagement process. The resulting Management plan sets out mitigation and monitoring measures which will be implemented during construction and production. In line with the most recent iteration of the Equator Principles, Chariot also commissioned a Climate Change Risk Assessment and Human Rights considerations were embedded in the main ESIA.

The Environmental Impact Assessment approval was also received for drilling activity on Loukos Onshore in January 2024. This covers a total of 20 wells, is valid for 5 years and will also inform Chariot's activities here going forward.

Environmental Authorisation, Buffelspoort, Tharisa

Equally good progress was made by the Transitional Power team on permitting the Tharisa solar project in Buffelspoort, South Africa. In May 2023, the Environmental Authorisation was issued, along with the required water license, National Forest license and alien species (NEMBA) license.

Local Content Program for Project Nour

As part of Project Nour's feasibility study, a comprehensive local content program was developed in 2023. This includes proposals to expand Mauritania higher education and technical training capabilities, to localise as many jobs as possible. The team also led consultations with 50 local entrepreneurs regarding the work packages which they may be able to execute, especially during construction. Seventeen key areas were identified in this context, from precast concrete panel manufacturing to insulation, from scaffolding to valve inspections and repairs, along with the requirements of each in terms of additional investment, training, and certification. The study has been shared with the Mauritanian authorities and its technical and financial partners with a view to securing support for its implementation.

Materiality Assessment

Our Materiality Assessment is compiled in line with the Global Reporting Initiative ("GRI") framework and linked to the Sustainable Development Goals which will guide project development and implementation in the future.

Focus on Reducing Emissions

Considering the transitional nature of Chariot's energy projects, each is expected to deliver carbon emissions reductions in their host countries:

·      Morocco's energy needs are heavily dependent on coal (which currently makes up circa 70% of the country's requirements) and gas imports. The domestic gas from Chariot's Anchois project has the potential to directly supply into the national grid and become an important contributor in rebalancing the country's energy mix and reducing emissions going forward.

·      Chariot's renewable power projects are bespoke solutions for mining companies, often sited in locations well away from power grids. Accessing wind and solar power for use directly on the mine sites removes the dependence on and need for transportation of carbon heavy fuel and provides a renewable, long term energy supply. Wheeling renewable power through the South African national grid through Etana will also notably reduce the reliance on coal fired power stations opening up a wider customer base including municipalities, industrial and retail sectors.

·      Green hydrogen also has the potential to supplement and replace traditional fossil fuels in both power generation and hard-to-abate industrial processes, leading to a significant reduction in associated emissions of greenhouse gases. It also has the potential to stimulate the development of greener primary industry (such as green ammonia and green steel production) and could lead to significant, positive long term impacts for Mauritania as well as the entire global energy transition. 

Two of the UN SDGs are particularly relevant to across our each of our business pillars and underpin our strategy and our values:

Goal 7:

Ensure access to affordable, reliable, sustainable modern energy for all - specifically around increasing the share of renewable energy in the global energy mix, improving energy efficiency and advanced and cleaner fossil-fuel technology…expansion of infrastructure and upgrade technology for supplying modern and sustainable energy services for developing countries

Goal 9:

Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation - … raise industry's share of employment and gross domestic product, in line with national circumstances…upgrade infrastructure and retrofit industries to make them sustainable with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industry.

Alignment to the SDG's

Based on the updated Materiality Assessment and key goals, Chariot's alignment to the UN SDG's have been reviewed accordingly, with key targets for each one selected. This will also guide the reporting framework going forward.

Chariot Limited

Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2023

All amounts relate to continuing activities.

The notes form part of these final results.