What you need to know: • Jericho’s portfolio company, H2U announced a successful demonstration of its non-iridium PEM electrolyzer for commercial hydrogen production. • PEM electrolyzers currently rely on iridium catalysts, which poses scarcity and supply-chain threats to the green hydrogen industry. • H2U will develop and construct its first external proof-of-concept units which will be shipped by year-end. Jericho Energy Ventures Inc. (JEV:TSXV, OTC:JROOF) announced that its portfolio company, H2U has completed a successful demonstration of the first non-iridium proton exchange membrane (PEM) electrolyzer for commercial hydrogen production. We view this as a major development for H2U as it becomes one step closer to developing a solution to one of the biggest issues in the green hydrogen space today. We are maintaining our BUY rating and C$0.40/share target price on Jericho Energy Ventures. The demonstration was completed in-house using its 200kW containerized iridium-free electrolyzer system. The demonstration provides additional datapoints that can help further validate the durability and performance of novel non-iridium catalysts at commercial scale. H2U plans to develop and construct its first external proof-of-concept units which are set to ship at the end of 2023. Currently, all commercially available PEM electrolyzers rely on iridium catalysts, which poses scarcity and supply-chain threats to the growing electrolyzer industry. The International Energy Agency stated in its Global Hydrogen Review that if PEMs supplied all electrolyzer production in 2030 in a net zero emissions scenario, the demand for iridium would increase by 9x to 63 Kt. H2U’s solution aims to decrease production costs and alleviate supply chain constraints, making green hydrogen more accessible and cost-effective. We remind readers that JEV has invested a total of $1.5M into H2U preferred shares, equating to 6.5% pro-forma ownership and holds a board seat. H2U’s technology is based on 10 years of research and development and $122M in funding from the U.S. Department of Energy through Caltech’s Joint Centre for Artificial Photosynthesis. The technology is exclusively licensed to H2U by Caltech. For a full analysis on H2U, please refer to our initiation report here. Other investors in H2U include Freeflow Ventures, VoLo Earth Ventures, Hess Corporation, Dolby Family Ventures, and Motus Ventures. H2U also has a strategic partnership with SoCalGas (the largest natural gas distributor in the U.S.), Tokyo Gas Co. (the largest provider of city gas in Toyko), and De Nora (the leading catalyst-coated membrane supplier). We continue to value JEV’s minority investments at cost due to their low visibility; however, given today’s release and the plan to ship proof-of-concept units by year-end, we foresee an opportunity to increase our valuation of H2U. We continue to derive our target price based on a SOTP analysis assuming 0.7x the PV-10 value of its O&G JV assets, 4.0x 2025E Hydrogen Technology sales, in addition to the minority investments at cost.