Apr 28, 2022

Sentiment: Sideways

Type of Trade: High Growth, Speculative

Industry: EV - Electric Vehicles - Graphyte and Battery Technology Solutions

Sector: Materials

NOVONIX is a vertically integrated battery materials and technology company, that is engaged in manufacturing and R&D partnerships, pioneering new materials, processes, and equipment. Current partners include Dalhousie University, Harper International and Samsung SDI. The company has developed a proprietary manufacturing process to eliminate waste and significantly lower the cost of cathode production.

Novonix provides advanced products and mission critical services to leading battery manufacturers, materials companies, automotive original equipment manufacturers (“OEMs”) as well as consumer electronics manufacturers at the forefront of the global electrification economy.

With the front-line access to industry trends, NOVONIX intends to be an industry leader, delivering materials and technologies to support high-performance and cost-effective battery and energy storage systems. Our mission is underpinned by an increasing emphasis on environmentally conscious battery technologies and is key to a sustainable future with prolific adoption of electric vehicles and grid energy storage systems.

The company is focused on the development of materials and technologies that support key ESG criteria in the field of battery materials and technologies, including: longer life batteries, higher energy efficiency, reduced chemical usage, reduced waste generation, and cleaner power inputs.

✅ HYFY22 – Net Asset of $374M including $259K in cash and cash equivalents at 31 December 2021.

✅ August 2021 – Strategic Investment of Phillips 66 acquiring 16% of Novonix expanding PSX’s presence in the battery supply chain, hence advancing the company’s production of synthetic graphite for high-performance lithium ion batteries.

November 2021 – RIVERSIDE – New facility in Chattanooga, Tennessee was open, where the Novonix will produce high-capacity long-life synthetic graphite anode material, set to bring large scale production of synthetic graphite to U.S.

This facility in USA, manufactures synthetic graphite anode materials used to make lithium-ion batteries.

Novonix is currently working to increase its production capacity to 10,000 tpa by 2023, with further target of 40,000 tpa by 2025 and 150,000 tpa by 2030.

✅ December 2021 – Novonix received CAD$1.67M from Next Generation Manufacturing Canada (NGen) to play key role in building its Canadian battery materials supply chain. NGen is the company that is behind Canada’s Advanced Manufacturing Supercluster.

✅ December 2021 – Novonix receives the preliminary results from Ninviro assessment

🚩 HFY22 – Statutory Loss of $28.8M, nevertheless in line with the expectations.

Since Novonix goal was to expand its production capacity for battery-grade synthetic graphite materials, the company end up investing significative money and we have detected two key one off cost we have detected as part of this extended statutory loss:

  • Cost that has generated this statutory loss was to do with the purchase of 400,000+ square foot RIVERSIDE facility in Chatanooga, Tennessee that is planned to be the site for expansion of at least 10,000 tonnes per year of production capacity.
  • Cost related to the acquisition of 5% stake in KORE Power (~$12.5M consideration paid).

✅ January 2022 – Novonix enters in Technology Development Agreement with Phillips 66 to advance production of Lithium-ion Batteries in North America.

✅ January 2022 – Novonix enters investment and in 5 years supply agreement with Kore Power to become the exclusive supplier of graphite anode material to Kore Power. In this agreement Novonix will be supplying KORE Power with 3,000 tonnes per annum beginning in 2024 and this supply can ramp up to 12,000 tonnes per annum.

✅ January 2022 – Novonix acquires 5% stake in KORE Power with USD $25 million consideration paid in a combination of 50% cash and 50% NVX shares.

✅ Novonix continue to invest in sole owned intellectual property for battery technology solutions. (Key material technologies, including anode and cathode, that the company’s believe will enhance the performance of long-life EV and ESS applications. Novonix has a full cell pilot line, which the company can conduct extensive cell testing and work with tier-one customers across the battery value chain.

Novonix Battery Technology Solutions (BTS)

✅ Novonix Battery Technology Solutions (BTS) Division in Nova Scotia (Canada) continued strong revenue growth each quarter with expansion of hardware sales and research and development services. Novonix BTS provides battery R&D services and manufactures the most accurate lithium-ion battery cell test equipment in the world. This equipment is now used by leading battery makers, researches and equipment manufacturers includes the following as well numerous consumers electronics and automotive OEMs.

This research has been significantly expanded R&D capabilities through direct investment in and through a long-term partnership agreement with Dalhousie University.

✅ Novonix Anode Materials Division has initiated work on further expansion plans beyond Riverside with the scope of planned 30,000 tpa (phase 2 plant build-out. It is most likely that Novonix will announce catalyst information regards this project.

These announcement normally tend to boost the stock price.

Expected announcements :

  • Site Selection confirmation
  • Plant layout confirmation
  • Engineering design confirmation
  • feasibility study
  • government applications and approvals.

Further offtake agreements normally boosts the Stock price.

In June 2021 quarter, Novonix produced anode materials using the Generation 2 furnace system to support next steps in customer qualification program. (customer qualification programs direct lead to commercial agreements). The first mass production materials from the generation 2 furnace system were shipped to SANYO Electric for qualification. The company’s agreements with two of the worlds largest battery manufacturers (Samsung SDI and SANYO Electric which is a subsidiary of Panasonic Corporation) have continued with plans to defer deliveries or subsequent materials to provide samples that will meet specifications using Generation 3 furnaces.

Novonix continue sampling and testing engagements with other key battery and automotive manufacturers with expansion plans in North America (as mentioned before in this analysis). It could be just matter of time for Novonix to announce new offtake agreements.

Novonix Cathode Material Division

✅ Novonix Cathode Synthesis technology is well positioned to become a part of supporting the large growth in the cathode market for the lithium-ion battery industry.

This division aims to leverage the pending patent DPMG (Dry Particle Micro Granulation) to eliminate water waste and use simpler metal inputs to reduce cathode manufacturing costs or improve yield in cathode manufacturing.

The key advantage of single-crystal materials technology are:

  • Improve the cost of cathode materials.
  • Improve performance and sustainability of cathode materials which would be targeted for use in electric vehicles and energy storage applications.

Expected announcements :

  • Since Novonix is currently working to meet key testing milestone over the next 12 months as it expands its next phase of pilot-scale plant with 10 tpa demonstration capacity, the demonstration plan is set to come online in 2022. The confirmation and announcement of demonstration plan commissioning is likely to have direct positive effect on stock price.

Mount Dromedary

Novonix also owns The Mount Dromedary Graphite Project is a world-class, high-grade (18%+ natural graphite deposit located in Australia. Nevertheless, this project is currently on hold given the substantially more favorable investment opportunities with the other projects. Any outcome out of this project will have direct impact on stock price. Unfortunately we are unable to speculate whether it is positive or negative until analysing the nature of the move.

Technical Analysis and Entry Details (VIP MEMBER login required)

Entry Details (VIP MEMBERS login required)

The information provided by BG Trading to you does not constitute personal financial product advice. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. BG trading recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance).