NOVONIX Ltd. (OTCPK:NVNXF) Q1 2024 Earnings Conference Call April 16, 2024 6:30 PM ET
Company Participants
Chris Burns – Chief Executive Officer
Conference Call Participants
Chris Burns
Hi, I’m Dr. Chris Burns, CEO of Novonix, and welcome to our First Quarter Activities Report Update. As always, please review the notice and disclaimer when the presentation is posted.
We closed out an exciting 2023 for the company, hitting many milestones across the business and we’ve started this year with a great first quarter, which I’m excited to update about today, to really uniquely position Novonix, to build out the North American supply chain for the battery sector.
We’re a leading US-based battery materials and technology company, focused on process technology with a lower carbon footprint. We’re building into a large and growing market for battery materials, with strong support for localization efforts here in North America.
We’ve focused on building an intellectual property profile for the manufacturing of synthetic graphite, as well as new materials such as our all-dry, zero-waste NMC cathode synthesis technology. And at the core of the group is our battery technology solutions group. It provides a competitive advantage for us as we look to accelerate the pace of innovation within our materials programs.
And now customer and government financing is paving the way to profitability as we build a new sector here in North America. And we’ll talk about each of these and how they’ve impacted Novonix, both last year and in this first quarter. As we look across the structure of the group, at the core of the business is our technology solutions group. I started this group over 10 years ago to become a leader in research and development and equipment for the battery sector.
And through last year, we saw strong strategic growth in this group, as well as launching initiatives around data solutions to leverage AI and machine learning to predict battery performance and tie that back to our materials programs in an effort to accelerate the pace of development of our key materials.
Our largest area of focus is our Anode materials group. Being a leading domestic supplier of battery-grade synthetic graphite, where last year we signed the joint research and development agreement with investment from LG Energy Solutions. We finalized the award of $100 million from the Manufacturing and Energy Supply Chain’s office of the Department of Energy for our Riverside project. And we hit strong operational milestones around bringing online key equipment and process technology within our Riverside facility.
The newest part of our group is our cathode materials team, focused on commercializing our proprietary all-dry, zero-waste cathode synthesis. And last year, we were excited to announce the study showing some of the potential benefits, both economic and environmental, of this process technology. And we’ve made great progress as we continue to advance that through this quarter as well.
As we look at some of the highlights specifically in the first quarter of this year, the most significant, of course, is within our Anode materials group signing a binding supply agreement with Panasonic Energy. And we’ll speak about the details of that later.
We’re also very excited to announce that we were selected to receive $103 million U.S. dollar tax credit under the Qualified Advanced Energy Project Allocation, or the 48C tax credit. And we’ve started to submit reimbursement claims, against the Manufacturing and Energy Supply Chains grant, which I just mentioned.
Within our technology solutions group, we’ve continued to advance multiple product work streams within our all-dry, zero-waste cathode synthesis team, and began sampling various products to commercialization partners across the sector. All of this while continuing to grow and support our research and development services and hardware teams.
And at the corporate level, we’re excited to have Sharan Burrow join our board of directors. We also spent significant time in the first quarter working with Lithium Energy, on the deal that we recently announced with the intent to combine our natural graphite assets and take that vehicle public, which I’ll speak about in a moment.
We’re also excited to release our inaugural sustainability report. It’s been a focus of the company to work on lower carbon intensity process technology and focus on ESG, and we’ll speak about the importance of the sustainability report. And we closed the quarter with about $62 million cash balance.
I’ll speak first about our most recent announcement, the proposal to combine our Mount Dromedary assets with those natural graphite assets of Lithium Energy Limited, and take that vehicle public in a new company, Axon Graphite, with the intent to raise capital between AUD15 and AUD25 million. This is a great way for us to advance our Mount Dromedary project, something the company has owned for a long time, and bring value to our shareholders by putting capital and a dedicated team into focusing on developing what will now be a world-class, large-scale natural graphite, slate graphite project.
As we turn back to our primary activities in North America, I’ll start with our sustainability report. It was a culmination of a lot of work and a focus on our commitment to environmental, social, and governance principles. Through this report, we really identified our top 10 priorities and topic areas, which we’ll continue to build out within the company and report on to our stakeholders as we move into production with our Anode materials division over the coming years.
And of course, at the root of our sustainability report is cleaner process technology. And environmental benefits have always been a focus of how we developed both our Anode materials process technology as well as our cathode materials process. And at the core of our Anode materials is our proprietary process technology, including our Generation 3 continuous induction graphitization systems, which you see the photographs here within our Riverside facility.
And we’ve demonstrated through a lifecycle assessment a 60% decrease in global warming potential relative to synthetic graphite made in China and a decrease relative to natural graphite made in China. And these are critical points as we look to transition the supply chain from Asia to also into North America.
The same things become true as we look at our cathode synthesis technology. Our all-dry zero-waste process simplifies the process, requires less power, and eliminates significant waste streams that exist with the traditional process. So these types of environmental benefits remain a core principle of how we develop key process technologies to scale here in North America.
And of course, along with the benefits that come from the environmental impact, we have to make sure that we’re not just using our own resources to make the process more efficient.
Question-and-Answer Session
Operator
Q – Unidentified Analyst
Unidentified Company Participant