Nano One’s cathode materials are inventing the zero-emission battery future

Every once in a while, something that you have been working on, seemingly forever, starts to come together and that momentum starts to snowball. Today we are going to discuss a company that recently announced Q2 results with several exciting highlights that are the result of many years of hard work and determination. And although this article isn’t part of the critical minerals series, this company is inextricably linked to EV batteries, the processing of critical minerals and has already received funding from the Canadian Federal Government as well as the National Research Council of Canada Industrial Research Assistance Program and is engaged in the Mines-to-Mobility initiative. And if that isn’t enough of a teaser for you, their stock price has rallied over 140% since hitting its 52-week low in mid-May. It has been a solid couple of months, to say the least.

The company that has been on a pretty good roll of late is Nano One Materials Corp. (TSX: NANO), a clean technology company with a patented, scalable and low carbon intensity industrial process for the low-cost production of high-performance lithium-ion battery cathode materials. The technology is applicable to electric vehicle, energy storage, consumer electronic and next generation batteries in the global push for a zero-emission future. Nano One’s One-Pot process, its coated nanocrystal materials and its Metal to Cathode Active Material (M2CAM) technologies addresses fundamental performance needs and supply chain constraints while reducing costs and carbon footprint.

The second quarter news flow began in late May with the acquisition of 100% of the shares of Johnson Matthey Battery Materials Ltd. located in Candiac, Québec. The acquisition included the team, facilities, equipment, land and other assets, with highlights of the deal being:

  • A team with more than 360 years of scale-up and commercial production know-how
  • Team and facilities proven in supplying tier 1 cell manufacturers for automotive
  • LFP facility and land strategically located near Montréal and operational since 2012
  • Facility and equipment that can serve Nano One’s process needs with room to expand
  • Expedites Nano One business strategy for LFP and other battery materials

The fully funded C$10.25 million deal is strategically located and has the benefit of access to a North American ecosystem that will serve the broader global community with cost-effective, resilient, and environmentally sustainable cathode materials. If you’ve been following my critical minerals series you’ll recognize that this is an opportunistic deal that is the right asset in the right location at the right time.

Nano One quickly followed up with another, even more important (in my opinion), corporate announcement less than a week later by signing a joint development agreement (JDA) for lithium-ion battery materials with industry giant BASF. The JDA will see the companies co-develop a process with reduced by-products for commercial production of next-generation cathode active materials (CAM), based on BASF’s HEDTM-family of advanced CAM and using Nano One’s patented One-Pot process and metal direct to CAM (M2CAM®) technologies. The multi-phase agreement includes a detailed commercialization study for pre-pilot, pilot and scaled up production. BASF, a global leader in chemistry and high-performance lithium-ion battery cathode materials, has recognized Nano One’s advanced technology that has the potential to improve the product performance of BASF’s high-performance CAM and further simplify the synthesis of battery materials.

And if all the above wasn’t validation enough that Nano One has finally made it to the big leagues, less than 2 weeks after the BASF news the company announced a US$10 million equity investment by one of the world’s largest mining companies, Rio Tinto. In addition to the investment, Rio Tinto has agreed to enter into a strategic partnership to provide iron and lithium products, all of which will accelerate Nano One’s multi-cathode (multi-CAM) commercialization strategy and support cathode active materials (CAM) manufacturing in Canada for a cleaner and more efficient battery supply chain for North American and overseas markets. The collaboration agreement includes a study of Rio Tinto’s battery metal products, including iron powders from the Rio Tinto Fer et Titane facility in Sorel-Tracy, Québec, as feedstock for the production of Nano One’s cathode materials, which dovetails nicely with the first deal noted above.

Nano One finished Q2 with cash and cash equivalents of C$48 million, which represents roughly 14% of their C$343 million market cap. With abundant capital to deploy, plenty of tailwinds for the industry as a whole, and a team with ample experience in financing, capital growth, technology management, chemistry, engineering, materials science, batteries, and intellectual property, it seems the company is really hitting its stride. I dare say, based on the recent news flow, there could be a lot more to come from Nano One.

Power Nickel demonstrates high-purity class 1 nickel deposit in James Bay has “significant commercial potential”

Power Nickel Inc. (TSXV: PNPN | OTCQB: CMETF) took an important step last month by releasing their initial NI 43-101 compliant Mineral Resource Estimate (MRE). Terry Lynch, the firm’s CEO, said they were “extremely pleased with the estimate,” since it demonstrates that the deposit has “significant commercial potential.”

The MRE focused on the comp0any’s Nisk deposit in James Bay, Quebec, and describes a resource that consists of 2.5 million tonnes indicated and 1.4 million tonnes inferred of ~1.25% NiEq. For perspective, these numbers are about 1/3rd smaller than the Tamarack project (a deposit in Minnesota owned by Talon Metals and Rio Tinto – scheduled to go into production in 2026) reported at the same stage in its development.

While the MRE is notable in several respects, a broad takeaway is that it may be the tip of the iceberg. The reason is that nickel sulphate deposits, which constitute the Power Nickel resource, typically exist in pods concentrated in the same geographical area. This means that the Nisk deposit could well be the first of several similar strikes nearby.

This question of additional deposits should be answered quickly, since this month the company will begin infill drilling at the existing resource, and a wider drilling program to verify additional deposits.

The drilling program comes against a backdrop of powerful fundamentals in the nickel market. On the demand side, the nickel content of electric batteries is growing because more nickel means more energy density. Moreover, the nickel market is becoming more stratified, with demand for high-purity class 1 nickel (used in EV batteries) far outstripping demand for lower-quality nickel.

Importantly, class 1 nickel is prevalent in nickel sulphate deposits – which is the basis of Power Nickel’s resource.

On the supply side, the US presently has only one nickel mine in production (the Eagle Mine in northern Michigan), but it’s small and slated to close in 4 years. Otherwise, the US imports virtually all of its nickel consumption. Fortunately, our Canadian friends have numerous large-scale mines in production, and most other large nickel exporters are US-friendly.

But the nickel supply story has grown more nuanced, since there is ever more scrutiny of the nickel refining process. This has become an issue because nickel is refined through an energy intensive process in which ore is heated to an extremely high temperature, mixed with sulphuric acid, and pressurized. These steps create lots of carbon, which isn’t a good look for EV manufacturers.

Hence, major nickel consumers like Tesla are now evaluating producers based upon the environmental impact of their mining process.

It is on this issue where Power Nickel really stands out. Its Nisk deposit is located next door to a Hydro Quebec substation. Hydroelectric power = no carbon emissions = happy customers. This carbon-friendly power source gives Power Nickel an environmental edge that should last for decades.

With all this in mind, Power Nickel looks extremely undervalued relative to peers. It trades at a market cap 4x lower than Tartistan Nickel, which issued a PEA last year roughly comparable to Power Nickel’s. It is 3x cheaper (by market cap) than Class 1 Nickel, which is restarting older producing mines in Ontario. And Power Nickel trades at a tiny fraction of the market cap of Talon Metals, which has partnered with Rio Tinto to bring the Tamarack deposit into production.

In fact, Power Nickel looks very much like the Tamarack project in its earlier stages, and the just-released Resource Estimate is an important step on the road to commercialization. The key takeaways for investors are that the resource has the potential to become much larger, the demand for nickel is expected to increase 20X by 2040, and the company enjoys long-term competitive advantages with respect to the carbon footprint of their refining operations.

NEO Battery Materials’ next generation EV battery is the focus of its new Korean R&D hub

I’m going to make a bold prediction. The electric vehicles we see on the road today will be virtually obsolete in 5 years. The amount of capital and brain power being applied to battery technology coupled with the desire/need for fewer and lower carbon footprint resources that go into those batteries is going to result in material step changes in vehicle range, speed of charging and hopefully the corresponding cost. Whether the electrical grid can keep up with this rapid transition to EVs remains to be seen but we can save that discussion for another day.

Imagine you want to go on a road trip in your EV, but every 300-400 miles you have to spend a few hours charging. What if the next generation of EVs could add 50+% to that range and fully re-charge in 15-30 minutes. How much would you be willing to pay for the old generation of EV versus the convenience of a new one? For sure there will still be a market for used EVs as some people only need it for their daily commute or trips to the grocery store and otherwise the vehicle sits idle for hours, at which point in time there is little to no inconvenience to charge it. But for me, as someone who likes to fish and hike in the great outdoors of the Rocky Mountains, I can assure you there is no chance I’m buying a current generation EV with its theoretical range that potentially leaves me stranded in the middle of nowhere when the actual range ends up being 25% lower than optimal operating conditions.

One company leading the charge into the next generation of batteries is NEO Battery Materials Ltd. (TSXV: NBM | OTCQB: NBMFF), a Vancouver-based company focused on lithium-ion battery materials for electric vehicle and energy storage applications. NEO has a focus on producing silicon anode materials through its proprietary single-step nanocoating process, which provides improvements in capacity and efficiency over lithium-ion batteries using graphite in their anode materials. The Company intends to become a silicon anode active materials supplier to the electric vehicle industry with their all-star management and technical advisory team cherry picked from LG Chem, Samsung and various renowned universities.

The numbers are impressive both from a capacity/capability perspective and relative cost to their competition. In mid-2021 the Company announced that in a half-cell coin test that its nanocoated silicon anode allowed for a safe full charge within 5 minutes, which demonstrates the potential for scaling and implementation in larger cells such as those used in high power EV batteries. Through a mix of treatments and nanocoating materials, NEO utilizes pure metallurgical-grade silicon (Si) particles, which provide a 40-70% higher initial capacity compared to current competitors that employ SiOx, SiC, or other composite silicon materials. Due to NEO’s advantage of retaining a higher initial capacity, on average, a 5% silicon weight loading of NBMSiDE™ can have the equivalent impact of a 10% loading of a competitor’s materials. Initial coulombic efficiencies (ICE) – the ratio of the discharge capacity after the full charge and the charging capacity of the same cycle and is usually a fraction of less than 1 – for NEO’s 100% micron-size level Si anode have exceeded the 86% level, and cycling performance presents excellent capacity retention after 300 charging/discharging cycles.

Source: NEO Battery Materials March 31, 2022 Press Release

And all this technology is advancing beyond research lab theoretical work. The latest press release from the Company confirms an MOU with the Province of Gyeonggi (basically Seoul, South Korea, and the surrounding area) to establish grounds for investments and cooperation between NEO and the Province to advance the mass production of silicon anode materials for EV batteries. NEO Battery Materials will initially invest, over the next 5 years, 24 billion KRW or approximately C$25 million to support the construction and expansion of the silicon anode commercial plant located on a 107,000 sq. ft. site in Oseong Foreign Investment Complex, Pyeongtaek City, Gyeonggi-do. The Company aims to transform the Province into an essential manufacturing and R&D hub of silicon anode materials. The first phase of the commercial plant will possess an initial annual production capacity of 240 tons of NBMSiDE, and the facility will be built as a 4-story office building with additional space that can accommodate production expansion to 1,800 tons annually of the Company’s anode material.

I have no idea if NEO Battery Materials will be one of the success stories to advance the next generation of battery technology for EVs and energy storage. I do know that they have generated some interesting results and have NDAs signed with over 20 globally established industry players in the battery cell manufacturing, materials manufacturing, and automotive industries. With a market cap of roughly C$30 million, you can decide if this is one of the companies you’d like to hold if you are investing in the future of EVs.