Project and Corporate Updates
Corporate Structure
Your Company has instituted a dynamic management structure more suited to its current aims and financial resources. Chief Technology Officer, Mahesh Venkataraman leads our key mission to prove the SiBox technology for commercial use and develop the next generation of efficient silicon energy storage. General Manager-Aurora, Tom Thwaites leads our other priority mission to realise cashflow from a large battery connected to the NEM at the Aurora Energy Project. They form our management group with Lead Product Development Engineer, Josh Zowtyj and Communications and Engagement Lead, Maretta Layton, who will boost market recognition of our technology and cash flow potential.
This group will jointly manage our Company using their complementary skills and experience with engineering, research and development, marketing, and finance to secure a profitable future for your Company. The restructure has severely reduced overhead costs so we can focus the majority of our resources on delivering results from our two key projects within 12 months. We will be reviewing the leadership according to the performance of the management group. Meanwhile, the board has approved me as Executive Chairman to lead the Company on a salary of $120,000 p.a.
The corporate structure has also been simplified, with the regulatory compliance and reporting outsourced to our company secretary Katelyn Adams of HLB Mann Judd. She has joined a trimmed down board of three experienced directors whose focus is supporting the management team to achieve shareholder value. Ms Adams will also oversee our accounting and payroll to ensure our Company has continuity of support from their experienced team.
This structure is expected to reduce management overheads by some $500,000 p.a. compared to the previous year and will be reviewed by your board according to results.
Finance
Your Company ended the quarter with $1.01 million in cash. The R&D refund of $1.27 million was received in January resulting in a current cash balance of $2.06 million. The Company’s cash balance has been adversely affected by a $1.2m cost escalation for the SiBox demonstration module (SDM), which resulted in your Company funding a much higher proportion than envisaged. We expect to reach agreement on further funding that will allow us to complete the SDM test program. Currently the undrawn balance of grants to completion of the project is $1.6m.
The cash position is also being addressed through the trimming of the top heavy corporate overhead. We are preparing forecasts to take our Company through to realising cash flows and commercial success within two years. As required by ASX Listing Rule 4.7C3, the Company notes that $60,000 was paid to related parties during the quarter. These payments were Directors Fees.
Aurora Energy Project
The SiliconAurora joint venture (50% 14D) with Vast Solar continues to gain momentum with the various government, environmental and statutory approvals underway with all stakeholders. Negotiations with OZ Minerals continue to progress well toward to an agreement to connect to the 275 kW transmission line.
Consultants Emanden and AECOM have been undertaking the connection studies which will lead to a GPS application with Electranet to participate in the National Electricity Market. During the quarter we announced modelling that showed a substantially higher revenue outlook for the battery on the project. Further modelling will be conducted this quarter to update the business case for financing. It is anticipated that site works will commence in the later part of 2023 and construction of the battery will follow. Future stages allow Vast Solar and 1414 Degrees to construct and connect their respective solar capture and storage technologies to the NEM.
SiBox Technical Development
Construction of the SiBox Demonstration Module has been completed. Commissioning activities are in progress to validate the SiBox operation to the design specification and expected to deliver first results later in the quarter. Subsequently, the team will carry out a 12 month test campaign to validate the SiBox system and thermal storage media performance. We are working with our current industry partners and potential end-users to optimise the SiBox solution for their applications.
The SiBox Demonstration Module is designed to capture all the features and information needed to physically validate engineering design tools, minimise risk and increase technical confidence in the SiBox technology to ready it for commercial use. The SiBox Demonstration Module consists of storage media supported by a heating system, furnace insulation design, and energy recovery system designed to replicate commercial applications. The equipment specifications and designs for the demonstration module can be scaled to build long duration thermal storage solutions for industry.
The SiBox Demonstration Module is a culmination of the development of our core intellectual property in silicon-based thermal storage media and the expertise gained from earlier projects, all of which enables us to deliver a robust thermal storage technology for future low-carbon high temperature industries. Thermal processes are simple in principle but can be complex in execution, especially at ultra-high temperatures due to the intricate materials challenges involved. Our team has developed the expertise needed to engineer flexible solutions for our industry partners with the ability to retrofit existing plants and processes with minimal modifications.
Commercialisation
Thermal energy storage can enable cost-efficient electrification and decarbonisation of the most widely used heat applications (namely, steam and hot air). A very substantial value market is developing for thermal energy storage as part of a global push towards long duration energy storage (e.g. thermal storage; compressed air storage; pumped hydro) to meet decarbonising targets. 1414 Degrees is contributing to the global effort to decarbonise and is a member of the Long Duration Energy Storage (LDES) Council that recently found firming heat can be cost-efficient when the final demand is heat, which is our main target for the SiBox technology. The question for 1414 Degrees is how to get payback and profit from its technology. A large proportion of the global high temperature heat demand is at temperatures >800°C, and SiBox is uniquely placed in this market segment. 1414 Degrees has also independently engaged with Logic Figures Pty Ltd to quantify the benefits of SiBox’s unique capabilities while targeting specific applications above 800°C. The aim is to deliver a “go-to-market” strategy focussing on capturing early market share of this significant cashflow potential from the global energy transition and decarbonisation push.
The $5.4 million project to test and prove the commercial potential of SiBox storage at scale is well advanced with the demonstration module undergoing commissioning at the date of this report. The remaining $1.6 million in grants from our funding partners, Woodside Energy Technologies and the Australian Government will be applied to complete the program over the next 17 months with a design for a commercial-ready scaled up SiBox. We are working with high temperature industries engaged in alumina and cement production, in Australia and globally, to identify parts of their processing that would benefit from the addition of our SiBox to reduce emissions and make cost savings. These industries would be an excellent site for the large scale SiBox pilot.
Research and development
Your Company has focussed its research and development efforts on refining the preferred molten silicon thermal storage media for SiBox. Long term testing and thermal cycling of different configurations in our test furnaces continues to demonstrate the robustness of our selected materials and optimised design for the SiBox Demonstration Module. Samples have now completed close to ten months of rigorous testing under anticipated real-life conditions. Your Company has also engaged in continual improvement through complementary R&D activities on new storage media concepts to further improve the cost and performance of SiBox. A patent application was filed in November 2022, further highlighting our focus on research and innovation.
Our SiBox technology incorporates the latest version of our silicon-based storage media with the knowledge gained from previous demonstration devices. The GAS-TESS, in a world’s first, demonstrated an integrated system which could time-shift the value of biogas energy to on-demand dispatchable electricity but was uneconomic. Despite the technological challenges, which are expected with such first-of-a-kind integration, the innovation and engineering expertise gained through operating GAS-TESS has led to even greater advances as is evident in the SiBox technology. The SDM will further drive confidence in our engineering ability to install large-scale industrial SiBox that reduce emissions and production costs.
