The Hazer Group Ltd (ASX: HZR) share price closed slightly down today after the company announced the start of new works at its Woodman Point treatment facility.
Shares in the hydrogen producer were trading 0.38% lower at a price of $1.29 when the market closed today.
It comes on the back of a positive year for the company that has seen its share price rise 323%. In comparison, the All Ordinaries Index (ASX: XAO) has gained 38.8% in the same period.
What happened
This morning, the Hazer share price was trading lower despite the announcement of new works at the company’s wastewater treatment facility. The work will involve the mobilisation of equipment, cite clearing and civil earthworks which will start this week.
It’s possible that Hazer’s falling share price is a result of cost revisions for the project. The company advised that the project has seen some price increases, with the expected final cost now estimated at between 5% and 10% above its initial cost estimate of $17 million.
The company attributed the price blowout to a number of factors, including the increased cost for the reactor and furnace packages. Hazer also chose to revise the design in a more complex manner to enable the company to deal with the required process conditions and engineering costs more safely.
Moreover, increased labour and equipment costs as a result of COVID-19 have also pushed up the pricetag. As such, the company estimates that the plant will now cost between $17.9 and $18.7 million.
Management comments
Commenting on the update, Hazer Group CEO Geoff Ward said:
We continue to make strong progress on the CDP with finalisation of key aspects of the technical design and commencement of earthworks.
As a first-of-kind project, the technical challenges are significant, but I am delighted by the way the Hazer team has worked with industry experts, suppliers and universities to resolve these challenges and deliver a robust design for the Hazer project.
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Motley Fool contributor Daniel Ewing 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.
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