Media Watch - NVX related, page-12595

Some great discussion here of late, reminds me of the days before the take off pre-$2.00.

Great post @Proga and welcome to this part of the world. Most sane people won't (or at least shouldn't) criticise posts that are having a crack at trying to analyse/interpret a company's fundamentals, so fair play to you. I have been invested (and closely monitor) for a number of years now. Heck, I am still learning despite constant research and review of discourse on forums like this one. One thing I would disagree with what you have mentioned is your comment about Syrah being ahead of Novonix. I dont think this is the case -- we shouldn't forget that Novonix is ramping up to produce 10ktpa in the coming months, and that will obviously be expanded to 20ktpa. Novonix has had part of this facility and another facility doing testing with possible customers for months and months. I think the investment proposition here, in general, is much stronger, fuelled by the nature of SG (is and will continue to be favoured over natural imo), the world class management/board team and de-risking of key supply (Phillips 66). What we really need to see is a key offtake commitment to a) justify building the next site and b) exhaust some of the soon-to-be-available supply at Riverside.

I am not as bullish as many others in the macro environment re: demand smashing available supply -- China has demonstrated how quickly it can ramp up to support unticks in demand (to be frank, also to try and cripple the attempts of other countries to establish their own supply). There is and will be plenty of anode -- that isn't to say it is environmentally friendly. I also don't buy the ESG arguments like many -- I am a big believer that most companies (sigh) will pick the cheaper option. The key macro thesis here -- for Novonix, but also Syrah and to a lesser extent Talga -- is establishing AAM outside of China due to the national security implications. We have finally seen a month ago some of the panic start to spread re: China possibly reducing anode supply.

I also think 400-500m for expansion of Riverside is a gross overestimation, but what I will say is we don't have enough information to make a confident assessment here. I would suggest another 200-300m is required for the additional furnaces and mill, 100m of which will be covered by the grant. That potentially leaves 100-200m of cash to fund to get the 20ktpa facility up and running. So that leaves the (possible) remaining 17ktpa not currently taken up, based on the Sep 15 announcement.

Operating costs, based on the SG in question, range from $6-8 per kg. With AAM pricing currently in the bin, the sales price given here is the unfortunate reality of China smashing the market with supply. Importantly, there may be some short to medium term price increases here based on the possible tariff implementation in addition to any sort of panic about supply ex China. But I wont speculate about this, lets say $7-10kg applies in conjunction with the tax credit, leaving an estimated margin of 23-28%. If we call it at $8 per kg, and x that by available supply (17ktpa, with 3ktpa already put aside for Kore) we are talking 120+m in revenues. It might be that we see a similar deal like the LGES deal, where the customer gets a stake in the business, or we just see a simple upfront revenue payment made in conjunction with the offtake agreement. I would be very surprised to see a capital raise undertaken -- management have thus far explored and used other options available to them and I expect that to continue. I also think it is why they have elected for a 20kpta facility, previously 10, with the next facility likely to be pushed back significantly until a relevant offtake/s is agreed before any build out. We can't even fill the 10ktpa site at the moment, which is ominous enough. Management would be crazy to build ahead with any new site without having customers onboard.

Friday in the US will be very interesting. We are about to see some decisions in the next few months (possible tariff introduction included) that will be significant for all companies trying to build up critical material capacity in the US.