NEO Battery Materials Ltd. (TSXV: NBM | OTCQB: NBMFF), a leader in the development of low-cost silicon anode materials, is at the forefront of a technological revolution that promises to redefine the lithium-ion battery landscape. As the demand for electric vehicles (EVs) and renewable energy storage solutions grows, the quest for more efficient and cost-effective batteries has become more critical than ever. NEO’s strategic initiatives and recent achievements reflect its commitment to driving innovation in this space, amidst a broader industry shift towards silicon anodes over traditional graphite.

Since the commercial debut of lithium-ion batteries three decades ago, the technology has seen vast advancements, including a significant drop in price and improvements mostly on the cathode side. However, the graphite anodes used in these batteries have seen little innovation, until now. Silicon, capable of holding up to 10 times as many lithium ions by weight as graphite, has emerged as a promising alternative, despite its initial challenges, including volume expansion and material fracture.

NEO’s recent strategic moves, including increasing its ownership in its South Korean subsidiary, NBM Korea, and filing its 9th patent for a major silicon anode manufacturing innovation, underscore its role in this evolving market. The company’s efforts to overcome silicon’s historical challenges signify a major leap towards the commercialization of silicon anodes, which are essential for the next generation of lithium-ion batteries. These batteries promise longer ranges, faster charging times, and reduced costs for EVs, positioning silicon as a critical material in the global push towards electrification.

The significance of NEO’s advancements cannot be overstated in the context of the broader industry’s pivot towards silicon anodes. Companies like General Motors are already integrating silicon anodes into their products, signaling a market ready for change. Furthermore, the recent influx of nearly half a billion dollars in investments towards commercializing silicon anode materials, including significant contributions from the U.S. Department of Energy, highlights the strategic importance of this technology.

Silicon anodes not only offer the potential for longer-range and faster-charging EVs but also promise to alleviate supply chain constraints associated with graphite anodes, nearly all of which are processed in China. By reducing reliance on overseas graphite and leveraging silicon, the most abundant metal in Earth’s crust, companies like NEO are paving the way for a more sustainable and efficient future for batteries.

In its comprehensive strategy for 2024, NEO Battery Materials outlines a multi-faceted approach to commercialization, emphasizing operational execution, capital efficiency, and risk mitigation. The company’s vision extends beyond mere technological innovation; it aims to optimize the electrochemical performance and cost competitiveness of its silicon anode material, NBMSiDE®, to establish advanced commercial agreements and expand its global supply chain network.

As NEO and other industry players continue to advance silicon anode technology, the promise of more affordable, efficient, and sustainable lithium-ion batteries becomes increasingly tangible. This shift not only supports the growing demand for EVs but also contributes to the global effort to transition to renewable energy sources, marking a significant milestone in the quest for greener and more sustainable energy solutions.

The NEO Battery Materials Ltd. (TSXV: NBM | OTCQB: NBMFF) market cap for Thursday, February 22, 2024 is CAD$28.70M.

The EV battery race is heating up, and there seems to be a decided ABC (anyone but China) theme to the progression of this race, at least in the West. With that said, China likely isn’t all that worried at present given the advantage they currently have in various necessary commodities (via outright ownership or purchasing control) and the subsequent upgrading and/or refining of those commodities into some of the most important end-use products. Nevertheless, the rest of the world is doing their best to work together, get along and advance the green revolution as quickly as possible.

One part of the world that is “playing nice” with the West is Southeast Asia, with many EV battery deals of late in both the U.S. and Canada being announced with joint venture partners including Panasonic (Japan), LG Energy Solution (South Korea), Posco Chemical (South Korea) to name a few. Not to mention all the actual car manufacturers from the region, like Honda, Toyota, Hyundai, etc. getting in on the act. It has become pretty obvious who these nations want to align themselves with, or perhaps it’s more of a tale of who they don’t want to partner with and potentially have all their IP put at risk. Maybe I’m being a little unfair, I’m sure there are plenty of reasons behind the trends we are seeing of late, but it’s always fun to stir the pot a little bit.

Before I sink any deeper into speculative conspiracy theories, let’s circle back to something with a more investable theme. A company looking to advance the next generation of EV batteries. NEO Battery Materials Ltd. (TSXV: NBM | OTCQB: NBMFF) is developing 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 management and technical advisory team cherry picked from LG Chem, Samsung and various renowned universities.

This Vancouver-based company has strong ties to South Korea, where on January 26, 2022, the Company received approval from Gyeonggi-do, the largest Economic Province in South Korea, to build its commercial plant on a 10-year lease term. The site is located in Oseong Foreign Investment Zone in Gyeonggi-do and is approximately 106,700 square feet (or 2.5 acres). 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. NEO Battery Materials aims to transform the region 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 with additional space that can accommodate production expansion to 1,800 tons annually of the Company’s anode material.

NEO is making solid progress towards this goal on numerous fronts, having announced in October that it had successfully installed additional production equipment into the R&D Scale-Up Centre to step-up efforts in incrementally optimizing the all-in-one mass production process for NEO’s silicon anode materials, NBMSiDE™. This scale-up milestone will enable product development as the series of NBMSiDE™ material characteristics and manufacturing costs can be evaluated and adjusted to meet the various specifications of downstream customers. Additionally, on the commercial front, the Company signed NDAs with 3 European companies and 1 U.S.-based company, and a European company is scheduled to visit the R&D Scale-Up Centre to discuss practical cooperative initiatives such as a joint development agreement.

Keeping the ball rolling, at the end of November NEO reported that following the announcement of the late stage in architectural design, NBM Korea, NEO’s South Korean subsidiary, has submitted the construction permit application for the Silicon Anode Commercial Plant to Pyeongtaek City, Gyeonggi Province. With a processing period of 1 month, the construction permit is expected to be obtained at the end of December 2022. Upon the approval of the construction permit, the initial construction process from site clearance to basic civil engineering work will be carried out sequentially.

It would appear shovels are about to start digging and NEO will take another step forward from concept to reality. NEO has a market cap of less than C$22 million with roughly a little over C$2 million in cash at the end of August. Keep an eye on this situation to see if someone steps up to help NEO fund the build out of the silicon anode commercial plant. After all, Twitter is so yesterday for Elon Musk, I’m sure he’s gotta be looking for the next big thing by now.

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.

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.

NEO Battery Materials Ltd. (TSXV: NBM | OTCQB: NBMFF) (“NEO”) is advancing at full speed with their recent announcement that they have “completed a contract for the Commercial Plant’s construction, design, and permits with an architectural firm”. The plant will be located in Gyeonggi Province’s Oseong International Investment Zone in South Korea, near major battery manufacturers LG Energy Solution and Samsung SDI.

As a brief reminder for new investors, NEO has developed high-performance silicon anode materials to replace parts of the graphite used by anode and battery manufacturers in their battery anodes. Their leading product is NBMSiDE™, a silicon anode material for EV lithium-ion batteries. NBMSiDE™ is manufactured through the Company’s proprietary nanocoating technology, achieving a high specific capacity of >2,500 mAh/g. This essentially means the NEO silicon anode material helps improve the all-important battery energy holding capacity and ultimately the charging speed of the EV.

As NEO states: “Through a mix of treatments and nanocoating materials, NEO utilizes pure metallurgical-grade silicon particles, which provide a 40-70% higher initial specific energy or capacity compared to current competitors that employ SiOx, SiC, or other composite silicon materials.”

South Korea anode plant design progressing with an increased production target

Regarding the new anode materials plant, the final site approval has now been granted. Due to the land site being in a Foreign Investment Zone, NEO will receive a range of benefits including a 99% reduced lease rate and tax incentives. NEO may also access Provincial financial support for equipment purchases, employment subsidies, and education/training subsidies.

Additionally, NEO recently stated that the “Company will now advance to the detailed process design for the production lines and will proceed with early orders of components that have long lead times for the commercial plant. Through a structured execution plan of performing procurement and construction processes one after another, NEO expects to achieve the initial commission of the Commercial Plant by the first half of next year… We are currently working on pursuing strategic investments and communicating with the respective companies and investors to finance the construction of the commercial plant.”

In another very interesting development from NEO, the Company has increased their anode material production targets again. The original pilot plant capacity was 10 tons, which last year was increased 12 fold to a commercial scale of 120 tons pa. This was recently increased to 240 tons pa. Even more impressive is the longer term target of the full facility capacity after installing the maximum number of mass-production lines through expansion, of 2,000 tons of NBMSiDE™ anode material pa.

NEO has also been busy sending NBMSiDE™ product samples to several potential off-take companies for testing. If this stage goes well then usually off-take agreements follow, which then typically helps the project financing process.

“The first refined sample of NBMSiDE™ has been provided to a Europe-based battery materials company,” NEO recently stated,  “and a second delivery is planned in April. NEO is additionally conducting sample tests with several Asia-based and European battery manufacturers.”

NEO has also recently internally developed NBMSiDE™ pouch-type full cells which have been manufactured to evaluate product performance, viability, and durability in genuine battery charging conditions.

In an April 5, 2022 news release NEO stated that: “NEO Battery Materials will commence construction in June 2022 and will follow stringent timelines and protocols to aim completion in June 2023.” I would assume this is subject to project financing.

Closing remarks

NEO is making great progress with their silicon-anode material commercialization plans, with the excellent advantage of locating their manufacturing facility in the Oseong International Investment Zone in South Korea.

Investors should understand that the next stages of product evaluation and testing, off-take deals, financing, and project construction all carry risks and the possibility of delay. Nonetheless, NEO is certainly making all the right moves and looks to be very well connected to the major Korean battery manufacturers.

NEO Battery Materials trades on a market cap of C$52 million.