ATOME plc (LON:ATOM), has made remarkable strides in the green hydrogen and fertiliser sectors. As the only international company in this niche, ATOME is well-positioned to lead the decarbonisation of the agriculture and food industries. Analyst David Mirzai from SP Angel offers a detailed and positive outlook on ATOME’s future, emphasising its innovative approach and strategic milestones.
Major Milestone: Yara Agreement
A significant highlight in ATOME’s journey is the recent agreement with Yara, a global fertiliser giant. This agreement entails Yara taking 100% of the output from ATOME’s green fertiliser project in Villeta, Paraguay. This milestone is pivotal as it not only validates the project’s commercial viability but also brings ATOME closer to securing full financing and achieving a Final Investment Decision (FID) by the fourth quarter of 2024.
David Mirzai points out, “The agreement with Yara is a key gating item towards achieving full financing and FID in 4Q24.” This collaboration is expected to enhance ATOME’s credibility among funding partners, ensuring smoother progress towards project completion.
Leveraging Paraguay’s Hydroelectric Power
ATOME’s strategy to use Paraguay’s abundant and cost-effective hydroelectric power is a game-changer. By utilising existing hydroelectricity from the Itaipu dam, ATOME plans to produce green hydrogen, which will then be combined with nitrogen and limestone to create premium calcium ammonium nitrate (CAN) fertiliser. This process is designed to produce approximately 260,000 tonnes per annum of CAN fertiliser, significantly reducing carbon emissions.
“Villeta’s output will have the lowest carbon footprint (90% reduction) of CAN fertilisers available today,” Mirzai states, underscoring the environmental benefits and the anticipated premium pricing in global markets.
Financial Projections and Future Prospects
SP Angel projects robust financial outcomes for ATOME, with an estimated annual EBITDA of $70 million from the Villeta Phase 1 project starting from the second half of 2027. The recent developments have led to a reiterated BUY rating and a target price of 200p per share, indicating a significant upside potential from the current share price.
David Mirzai highlights, “Following the heads of terms with Yara, we expect ATOME to deliver several near-term valuation catalysts in 2H24 that will de-risk the development.” These catalysts are expected to alleviate market uncertainties and drive share prices towards the target.
Strategic Expansion and Future Developments
ATOME’s vision extends beyond the Villeta project. The company is negotiating with Paraguay’s National Electricity Administration (ANDE) to secure up to 300MW of renewable electricity for a larger Phase 2 development. Additionally, ATOME is exploring opportunities in Costa Rica, further diversifying its project pipeline and enhancing its growth prospects.
“In the larger Phase 2 development, ATOME is negotiating with ANDE to supply up to 300MW of renewable electricity,” notes Mirzai. This forward-thinking approach positions ATOME to capitalise on future growth opportunities in the green energy sector.
On a Final Note
ATOME plc is setting new benchmarks in the green hydrogen and fertiliser industries. With strategic agreements, innovative use of renewable energy, and robust financial projections, ATOME is poised for substantial growth and success. Analyst David Mirzai’s insights reflect a strong belief in the company’s potential to lead the charge in sustainable agriculture and energy solutions. Investors looking for exposure to the exponentially growing market of green technologies should keep a close eye on ATOME plc.
