Elixir Energy Ltd (ASX:EXR) is set to receive a research and development (R&D) rebate of $400,000 for FY23. The rebate comes after the company receiving an advanced finding from the Australian Government’s Department of Industry, Science and Resources that activities associated with its Daydream-2 well (part of the Grandis Gas Project in Queensland) will qualify as eligible R&D activities for the purpose of the R&D tax incentive.
The rebate is 48.5% of the qualifying expenditure for the project and is due to be received shortly.
Elixir will incur most of its qualifying R&D expenses for its Daydream-2 project in FY24.
“The R&D rebate for Daydream-2 of around half of the total costs of the well is a very attractive form of non-dilutive funding for Elixir,” Elixir managing director Neil Young said.
“We are pleased to work with Radium Capital to provide us with a very simple and effective debt facility to optimally manage our cash-flows in 2024.”
Non-dilutive funding
To manage cash flows efficiently related to the R&D rebate for the year, the company has recently secured a term sheet agreement with Radium Capital, a preeminent provider of R&D finance that offers companies liquidity by giving early access to anticipated R&D tax rebates.
The agreed debt facility is straightforward and includes:
- funding up to 80% of the expected rebate;
- a fixed interest rate of 16%;
- security against the R&D rebate due; and
- absence of additional fees, conversion rights, or options.
This agreement will allow Elixir to maintain cash flow while eliminating the need for dilutive equity.