Will Brown
CEO/Managing Partner

Adam Eagleston, CFA

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Nano One Update: After the Capital Raise…
Read the original white paper here.

Nano One recently issued stock at $5.35 Canadian to raise a total of $25M. While we were first concerned about this decision, after speaking to the company, we feel more sanguine about the prospects for this capital. Obviously, dilution is nothing we cheer, especially as shareholders of a company without earnings currently. But the impetus behind it, per our discussion with the company, is that its customer base is demanding larger proof of concept deliverables.

This is particularly encouraging because we have always believed that Nano One would have to do this in order to move beyond proof of concept in order to consummate larger contracts; one of the steps for that was a production facility with more capability. The bottom line is customers want to be shown that Nano One can produce cathode components in mass, and that the production efficiencies that Nano One provides can be replicated at scale. In fact, both customers and suppliers, e.g., miners, have expressed an interest in co-locating cathode facilities powered by Nano One’s intellectual property and/or production of material.

We also believe the company has engaged the opportunity in the capital markets and is looking at several opportunities for listings. We believe it is their goal to be listed on exchanges with greater liquidity and visibility. The company has focusing on its capital structure and expansion, in a space that is early in the opportunity cycle. We believe this capital raise is a direct reflection of the opportunity of their TAM and we see this as an unexpected, but necessary, next step in the company’s lifecycle.

We stated, in our original research on the company, that the size of the cathode market was going to expand geometrically and that efficiencies would be necessary because of the obvious limited supply and increasing costs of the various inputs required for the transition to renewable energy. This capital raise by Nano One echoes this type of opportunity because it highlights the aggressive nature of the technology development in the sector. Nano One is simply responding to its customers and subsequently raising capital to meet their needs. This bodes well for the opportunity of contract engagement as well as expansion of their addressable market.

Additionally, but not to be ignored is the rise of one of Nano One’s customers, including Volkswagen, and its sprawling plan to expand into the EV space. VW recently stated it plans to double EV production to 450k cars in 2021. This is a lightning rod, of which we believe Nano One may be in the pole position. Frankly, when the stock was halted, our first inclination was to guess that Volkswagen or one of the other large multinational car manufacturers was simply acquiring Nano One.

We continue to believe that Nano One’s processes, from both an environmental and performance perspective, are heavily desired and needed for a burgeoning industry.  The company’s potential to transform the supply chain for the critical inputs required to meet the world’s ambitious electrification targets not only reflect huge costs savings, but bolster the ESG credentials of company’s that adopt Nano One’s processes, e.g., https://www.youtube.com/watch?v=4i1T6s_NdAQAs

As Mork would say, sort of, “Nano Nano.”


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