Zacks Small Cap Analysis – NVX: A number of Agreements to Safe Demand, Funding; Tariffs Underscore Anticipated Advantages of Native Provide – Cyber Tech

By M. Marin

NASDAQ:NVX

READ THE FULL NVX RESEARCH REPORT

Deliberate Mount Dromedary spin-off to Axon anticipated to put worth on NVX stake…

Novonix (NASDAQ:NVX) accomplished due diligence for the proposed transaction to mix its pure graphite pursuits with these of Lithium Power Restricted (LEL). The 2 intend to contribute their respective pure graphite exploration pursuits into a brand new firm, Axon Graphite Restricted, which can subsequently be listed on the Australian Securities Alternate, topic to the required approvals. NVX has retained the land belongings of its legacy Mount Dromedary unit in Queensland, Australia on which a graphite mine is located, though it doesn’t actively interact within the mining enterprise. Via this proposed transaction, NVX will divest its Mount Dromedary pure graphite exploration pursuits and in change, NVX will obtain Axon shares.

Axon expects to finish an IPO to lift from $15 million to $25 million. NVX will retain a stake in Axon following the deliberate IPO, giving it publicity to Axon’s potential upside. Along with the potential to comprehend worth from Axon’s operations, the deliberate Axon IPO additionally ought to assist place a price on NVX’s stake and create a extra liquid alternative for NVX to comprehend worth from the Mt. Dromedary asset, which we consider just isn’t mirrored in NVX share worth at the moment.

…Latest funding from authorities and company sources validate potential of NVX technique…

Different current NVX initiatives embrace securing financing and advance demand for its supplies. Importantly, the U.S. DOE (Division of Power) not too long ago really helpful NVX to obtain a US$103 million 48C tax credit score below the Qualifying Superior Power Mission Allocation program earmarked to assist manufacturing of essential battery supplies from its Chattanooga, Tennessee Riverside facility.

NVX additionally obtained financing from the DOE (Division of Power) workplace of Manufacturing and Power Provide Chains, with the award of a US$100 million grant in 4Q23. We consider the anticipated elevated want in North America for supplies to assist sustainable vitality sources, mixed with NVX’s technique to develop a neighborhood provide chain, are key elements behind the funding the corporate has obtained not too long ago from DOE and different sources. For instance NVX additionally acquired funding from Canada.

PowerCo Testing & improvement settlement…

One of many firm’s near-term key pillars is to safe extra prospects and lock in demand for its merchandise. Among the many many agreements NVX has shaped to safe demand, entry to key relationships and / or financing, is a current settlement with PowerCo SE. Established in July 2022, PowerCo SE is a part of the Volkswagen Group and was shaped for Volkswagen to bundle its international battery actions into one key working group. PowerCo and NVX have signed a non-exclusive Testing and Improvement Settlement (TDA) to develop, check and analyze artificial graphite anode supplies custom-made to fulfill PowerCo’s necessities. If the outcomes are profitable, the 2 may then enter right into a provide settlement for developed merchandise. This follows the 1Q24 binding off-take settlement for NVX to provide high-performance artificial graphite anode materials to Panasonic Power’s North American operations. NVX’s provide agreements with Kore, Panasonic, LG Power Resolution (LGES) and probably PowerCo and others are key parts behind the corporate’s technique to ramp manufacturing capability at its Riverside facility in Chattanooga, Tennessee.

… want for native provide chain …

Along with proximity to North American battery demand, we consider geopolitical points additionally assist the necessity to develop a neighborhood provide chain. Not too long ago the U.S. Commerce Consultant (USTR) introduced new, prolonged or greater tariffs on materials from China.

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