Hummingbird Hydrogen Corporation (“HH₂”) is in the business of producing liquid hydrogen (LH₂) for bulk export to Japan. In co-ordination with local First Nations in the Squamish to Pemberton corridor of British Columbia, HH₂ intends to produce liquid hydrogen at its integrated hydrogen biorefinery complex. LH₂ will be produced from regionally-supplied wood waste biomass and by splitting water into hydrogen and oxygen by electrolysis.
LH₂ produced by HH₂ will be ≥ 99.9% pure liquid hydrogen produced with no GHG emissions. It is CO₂ free to produce and consume. LH₂ is combined with oxygen from the air in a fuel cell to create electricity by an electrochemical process. Water is the only byproduct of electric power generation with hydrogen.
Japan's "Hydrogen Society" Market
Japan forecasts importing 660,000 tonnes of hydrogen per year by 2030 (1.25M m³). Its Kobe, Japan Hydrogen Import Hub will be fully operational in 2020. Initially, HH₂ intends to produce 2,500 m³ of LH₂ each month for annual shipments of 30,000 m³ which equals 2.4% of the 1.25M m³ to be imported into Japan annually in 2030.
In 2015 Prime Minister Abe announced Japan's "Hydrogen Society" plan where fuel cells powered by renewably produced hydrogen are used to power homes, apartment buildings, office towers, other commercial buildings and utility-scale power plants as well as cars, trucks, buses, trains and other vehicles. Japan's "Hydrogen Society" will be showcased at the 2020 Olympics in Tokyo.
The 2011 Japanese earthquake and tsunami, as well as the subsequent nuclear disaster in Fukushima, launched the concerted effort by Japan to move toward more hydrogen-based energy systems and away from nuclear and fossil fuel energy sources. As an island nation, Japan currently imports its coal and oil. However, fossil fuels are unattractive for Japan from an economic as well as an environmental perspective. Fossil fuel prices are too volatile and fossil fuels produce CO₂.
To become a "hydrogen society", Japan must establish a system for procuring LH₂ by importing it from other countries that are a stable and low cost source of supply. Through HH₂, Canada is such a stable and low cost source of hydrogen for Japan.
As with LNG projects, Japanese trading companies will be entering into 20-year Purchase & Sale Agreements to import LH₂. On the basis of this 20-year commitment from a creditworthy Japanese trading company, HH₂ will seek Project Financing for the design, development and construction of its hydrogen biorefinery complex from Canada's leading pension funds investing in Renewable Energy Infrastructure Projects.
The monthly revenue from the export of LH₂ to Japan will be dedicated to operations first and then to payment of principal and interest on the 20-year Term Loan component of the Project Financing. Where possible, any surplus may be available for the payment of dividends to HH₂ shareholders. Management anticipates that the amount available for the payment of dividends will increase as the outstanding principal amount of the 20-year Term Loan is reduced. The value of HH₂ increases with each payment reducing the principal amount outstanding on the 20-year Term Loan.
Use of Proceeds
Funding working capital, research and market development, retaining management and employees of the Company, and building key international partner relationships as per budgets and business plans approved by the Board of Directors, and paying the fees and expenses of this Financing.
Hummingbird Hydrogen plans to grow dramatically over the next several years and will be reinvesting its operating cash flow into the continued growth of the company. Once operations have reached an optimal level, management will consider the best exit strategy for its shareholders. This may include a strategic merger or acquisition, or an initial public offering.
In 2015, Prime Minister Abe announced Japan’s plan to become a “hydrogen society”. In addition to fuel cell electric vehicles, hydrogen is being used in Japan to power homes, apartment buildings, office towers and even utility-scale power plants. To achieve this objective, Japan must import liquid hydrogen from countries where it is produced without GHG emissions. It plans to import 660,000 tonnes (1.25M m³) annually by 2030. A Liquid Hydrogen Import Hub will be fully operational in Kobe, Japan in 2020
They are both electric vehicles powered by electric motors. The difference is how they get their “fuel” as electricity. A Tesla relies on electricity stored in its battery. FCEVS from Toyota, Honda and Hyundai carry liquid hydrogen stored in a fuel tank which is combined with oxygen in a fuel cell to create the electricity to power the electric motor. FCEVS have 5-6 minute refueling times as opposed to the long recharging times for BEVs and they have a distance range comparable to conventional automobiles.
Yes. Japan forecasts 5.3 million ENE-FARMS in homes as furnaces/water heaters by 2030.
Just as Toyota is working to replace the gasoline in its cars with hydrogen fuel cells, Japanese companies are leading the charge to convince Japanese homeowners they’re better off using hydrogen to power their lamps and TVs as well as heat the water in their homes. The electricity is generated by so-called energy farms, or ene-farms, about the size of a refrigerator. They’re made by companies such as Panasonic and Toshiba and sold by leading utilities, including Tokyo Gas. Instead of a furnace and hot water tank in the basement of Japanese homes, today there are ENE-FARMS.
EBC Registration and RSP Contributions
The Company is registered as an Eligible Business Corporation (EBC) under the Small Business Venture Capital Act (BC), with registration No. 31384. The Company’s registration expires December 31, 2017. Under this registration, the Company is authorized to raise CDN $200,000.00 in equity capital and qualified investors may be eligible for a 30% tax credit thereunder.
Certain investors may also be able to make contribution of their Common Shares in the capital of the Company to their self-directed RSP.
For certainty, nothing in the term sheet or in any of the definitive agreements is intended to be, nor should it be relied upon, as legal or tax advice. Each party should seek legal and tax advice while evaluating this Financing.