Ann: Company Update, page-213

Another update from Far East Capital Ltd - 9 March 2024 (http://www.fareastcapital.com.au/imagesDB/newsletter/WeeklyCommentary9March2024.pdf)

We last covered AnteoTech (ADO) in December 2023, seehttp://www.fareastcapital.com.au/imagesDB/newsletter/WeeklyComm9Dec2023.pdf We recently had an updatebriefing with the CEO. Not a lot has changed since then,but the Company did record its first revenue from theAnteoX product in December. The 20,000 litres p.a. AnteoXproduction facility has been built in Brisbane and is nowbeing commissioned. This will be expandable to 80,000 litrep.a.Recall that ADO has achieved a 70% loading level ofsilicon in battery anodes (by weight). This is streets aheadof other silicon anode companies, most of which are downin the 10-20% range. Silicon in anodes promises to be thenext generation as they can hold 10x the charge of simplegraphite anodes (theoretically).

However, to do so theyexpand up to 300% and suffer from cracking and prematuredestruction. The proprietary AnteoX binder seems to largelyovercome this problem.ADO is working with two German car manufactures thatthey refer to as EV1 and EV2, but it doesn’t require muchimagination to guess that these are probably Audi andBMW, though Mercedes could also be one of them.EVI has managed a 30% performance improvement in theanode performance on 650 cycles. An 800 cycle level isgenerally seen as the minimum threshold, having 80% ofperformance capability remaining, but maybe there is someflexibility on the parameter. (NB: Our December note saidthat the cycle rate was up to 750 with 90% energyretention, so there seems to be some flexibility in what theCompany is saying).

EV1 has also reduced the costs of an EV by $500 throughthe significant reduction in the use of carbon nanotubes(CNTs) in the anode mix, from 0.2% to 0.015%. CNTs arevery expensive and they present health and safety issuesas the fibres seem to behave a bit like asbestos. Ideally, thetarget should be to avoid their use totally.Use of the AnteoX enhanced anodes is not restricted toEVs. Consumer electronics will be a strong source ofdemand. Large scale batteries for grid storage and powerplants are also being targeted but this is work in progress atthe moment.The earlier intention was to be at the design freeze stageby mid 2024, in preparation for commercial production, butit seems as this timeline has slipped by three months. Thelist of approximately 200 potential customers has beenwhittled down to the most serious twelve. Negotiations tosecure sales and revenue agreements are in the process ofbeing negotiated.

Back in December we speculated … “Each EV could use1-1.5 litres of AnteoX, at a price of, say $300/litre (which isa much lower cost than the competing product, by about60%). If you take a typical German automobilemanufacturer, making six million cars p.a. with half of thembeing EVs, that is a potential sale of > $900m p.a.. If theAnteotech product costs $200/litre to make, it leaves thepotential for an operating margin of $600m p.a. There hasbeen no revision of this guesstimate”.

AnteoTech continues to lead the pack in the race todevelop a commercial silicon/graphite battery anode withreported performance figures being significantly better thanits competitors. It is well-entrenched in the Germanautomotive industry with expectations of being able tosecure meaningful sales agreements.The share price has seen a spike in January, but has sincecome back to lower levels. Thus the story has not ignitedcontinued market support yet. Maybe therein lies theopportunity for serious investors as opposed to hot traders.