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Why the QEM (ASX:QEM) share price is shooting 16% higher today

The Motley Fool logo The Motley Fool 17/03/2021 Marc Sidarous
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QEM Ltd (ASX: QEM) shares are on fire again today after the vanadium and energy company released an investor presentation to the market this morning. At the time of writing, the QEM share price has surged 16.3% higher to 18 cents.

In comparison, the All Ordinaries Index (ASX: XAO) is currently down by 0.76%.

Let’s take a closer look at what might be affecting the QEM share price today.

QEM investor presentation

The company followed its market update of two days ago, which saw the QEM share price rocket by 119% in one day, with an investor presentation today.

In the presentation, the company provided investors with information regarding three key revenue sources. They are:

  1. The Julia Creek vanadium and oil shale project
  2. The hydrogen production strategy
  3. Government funding

Julia Creek project

Located in the North West Minerals Province (NWMP) of Central Queensland, the Julia Creek site is both a vanadium and oil shale mine.

According to The Royal Society of Chemistry, vanadium is a silvery metal mainly used in steel production. It reinforces steel for strength, weather resistance, and increased fuel efficiency. The twenty-third element is also used in ceramic and dye production, and in renewable energy storage.

Elements essential to renewable energy technology, such as lithium and rhodium, have seen their prices boom in recent weeks.

The Australian Government considers vanadium to be a ‘critical mineral’. According to Geoscience Australia, a critical mineral is “…vital for the economic well-being of the world’s major and emerging economies, yet whose supply may be at risk due to geological scarcity, geopolitical issues, trade policy or other factors.”

The Julia Creek site is also home to a large oil shale reserve. Oil shale is sedimentary rock which contains organic matter. It has not yet undergone the process of converting into crude oil in underground wells. The company sees the emerging oil shale industry as an untapped market within Australia.

Hydrogen production strategy

Using solar power, QEM is exploring opportunities to produce ‘green’ hydrogen. The company separates hydrogen from water using a process known as electrolysis.

The hydrogen will be used to power the Julia Creek site, and any surplus electricity would be sold to the Queensland grid. As well, QEM will use the universe’s most abundant resource to hydrogenate raw oil, thus making it more sustainable.

Long term, the company wants to turn the Julia Creek site into a hydrogen hub for the entire NWMP.

Government funding

As a producer of critical materials, QEM advised it is targeting a range of government loans and grants through both state and federal funding agencies. One such agency is the Northern Australia Infrastructure Facility (NAIF).

NAIF is a commonwealth agency designated with boosting economic development in northern Australia through strategic private sector investment. In the last financial year, NAIF made $1.4 billion worth of investments.

Another government agency QEM believes it may be able to access is the Australian Renewable Energy Agency (ARENA).

ARENA supports research and development in renewable energy technology through strategic investments and sharing research with the private sector. Hydrogen production, storage, and use are all within ARENA’s scope.

At the state level, the Queensland Government has several initiatives to boost mineral extraction in the state. The most relevant ones include the NWMP Strategic Blueprint worth $39 million, the Hydrogen Industry Strategy worth $19 million, and the $100 million Resources Community Infrastructure Fund.

QEM share price snapshot

One year ago, the QEM share price was sitting at 7 cents. Since then, it has gained more than 150%. Almost all of these gains occurred over the last couple of days. Only last Friday, shares in the company were trading at 8.2 cents.

However, the QEM share price is still trading half a cent lower than its initial public offering (IPO) price of 18.5 cents.

QEM has a market capitalisation of around $15.5 million.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the QEM (ASX:QEM) share price is shooting 16% higher today appeared first on The Motley Fool Australia.

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