Freyr - A discussion

I have decided to start a new thread as today's announcement has already been infiltrated by naysers. It is not that I am against a contrary view, but they invariably immediately appear under different acronyms to down ramp what has been announced, usually in conjunction with aggressive selling in the market, by this I mean consistent hitting the bid irrespective of interest in the stock. The aim is to deter retail investors getting too excited about what has been announced and generally generates discussion away from said announcement. Today has been no exception. The basis of this thesis is that shareholder numbers have more than doubled to over 10,000 since this time last year. Additionally, it usually is around the price of institutional support from the last capital raising in this instance $ 1.45. That particular exercise was very successful for TLG as it was heavily oversubscribed, therefore it would be unwise to push the envelope too much on the downside in case some institution bites your hand off and overwhelms the offer side of the equation. I do not need to remind long term holders that TLG is now funded to the end of 2022, including funds to build the pilot anode material plant in Sweden, in conjunction with support from the relevant Swedish authorities at a local and national level.

This last point is important because it goes back to the main line of the opposite side's critique: the question of permits/approvals to go ahead. I would argue that the involvement of Swerim and Svemin seems to suggest this is not the case. Furthermore, the fact that the development of the Vitangi deposit has been declared in the Swedish national interest suggests that the said process is likely to be predicated by the grammatical conjunction 'when' rather than by 'if', and with a conclusion in the affirmative.

This announcement is definitely out of left field as Norwegian graphite operations were seen by some as a major competitor to TLG. This announcement by Freyr, a well funded battery maker listed on the NY stock exchange with a distinct technology, speaks volumes on the quality of the Talnode range of products, includingTalnode-Si, with silicone. Freyr have chosen to ignore Mineral Commodities (ASX code: MRC) deposit in Skaland, Norway; most probably on the basis that it has insufficient scale for their plans. Not only that, but also Freyr has chosen not to go with Elkem, the main Norwegian chemical company that has also been mentioned as a potential well funded competitor in the silicone space. A quick look at the Freyr shareholder list includes: Koch from the US; Glencore, a well known mining multi-national operating out of Switzerland; Franklin Templeton and VanEck, global fund managers. I also note significant Norwegian government support at a national and at a local level. In other words this is a big announcement.

Norway generates most of its national income from oil and gas, nearly 70% in fact, some from fishing at 10% and quite a bit from shipping. Norway is also very advanced on the road to adopting EVs with legislation supporting all new vehicles being zero emission by 2025, the remaining ICE vehicles will attract an as yet unspecified tax, probably punitive. Now some might argue that Norway only has a very small population and therefore is not a global player. I would point out that Norway is first and foremost an energy supplier that has underpinned the wealth of the country. They have recognised that the world is at a crucial transition point on the supply of the world's energy needs. Norway is moving way from hydrocarbons to graphite for a new carbon age. It seems they are voting with their feet and have chosen to do so with TLG.

The most compelling point of this announcement is that some potential clients of TLG recognise that TLG will not be able to supply everybody with their superior graphite material. Leclanche were among the first to formally commit, now another shoe has dropped with Freyr. It is clear to me that Northvolt in Sweden will have no choice, but to sign on if they are to supply their own customer VW with minimal CO2 content anodes. This would suggest an alliance that includes LKAB, as the underground mining expertise; ABB, as the local content automation process technology, all as already announced and Northvolt. All three highly recognised in Sweden and elsewhere in Scandinavia with TLG at the centre.

I would recommend a review of the current EV models in the market and those that are proposed, 175 at the last count from the ev-database.org site. Audi have16, VW 11, Porsche 9, Skoda 5, Seat 5 for a total for the group of 46 or 26%of the total. Tesla have 14, Hyundai/Kia have 18, Peugeot/Citroen have 16, Renault have 6. Various other manufacturers make up the rest with at best one or two; and a handful with more. To my mind TLG is a must for the VW Group for their success when they eventually make up their mind, and also SAFT, the French giga factory battery, who would supply the French automotive industry. A back of the envelope total might be 100,000 tons for each of VW and SAFT, another 200,000 tons for the UK, leaving only 100,000 tons to be shared among the other users. Every week that goes by does not put pressure on TLG, but rather on their customers seeking to secure their CO2 green and clean supply chain away from China.

As always please do your own research. I continue to hold.