Altech (ASX:ATC) Research Initiation

Highlights:

Arrowhead is reinitiating its coverage on Altech Batteries Limited with a fair value bracket of AUD 0.33 to AUD 0.74 per share (share price on April 03, 2023: AUD 0.096) based on the Net Present Value (NPV) methodology.
Altech Batteries Limited is a specialty battery material technology and development company with a specific focus on downstream battery and battery materials development
The Company aims to address existing challenges in the Electric Vehicle (EV) and grid storage battery industries by leveraging its disruptive and innovative technologies, thereby achieving breakthroughs in the respective applications
The Company is working on two main projects, namely CERENERGY® Batteries and Silumina AnodesTM
The Company has taken an enormous leap forward in the world of energy storage by joining forces with the renowned Fraunhofer IKTS institute to create a revolutionary new battery technology, with the introduction of the CERENERGY® Sodium Alumina Solid State (SAS) battery. This innovative new battery technology, which Fraunhofer developed over the past eight years, offers a safer and more affordable alternative to traditional lithium-ion batteries (according to Fraunhofer, the CERENERGY® batteries will be 40-50% cheaper than lithium-ion batteries) that have dominated the market for years. With plans to construct a 100 MWh production facility on Altech’s land in Saxony, Germany, the company is poised to become one of the major players in providing grid storage solutions to the market. However, the Company’s longer-term vision is to construct a Gigawatt battery facility in Saxony.
No thermal runaway risk, a wider operating temperature range, and negligible usage of critical battery raw materials mark Altech’s introduction of Sodium Alumina Solid State CERENERGY® Batteries. These could be potential game changers that could revitalize the grid storage market by addressing the concerns faced by lithium-ion batteries
The company recently launched the design for the CERENERGY® Sodium Alumina Solid State (SAS) 1.0 MWh Grid Pack, which is specifically engineered to adhere to the Ingress Protection (IP) 65 standard, thereby addressing the shortcomings by ensuring complete protection from both dust and inclement weather, making outdoor installations safe irrespective of the weather conditions. Also, the Grid Pack is constructed using a sea container design for easy transportation by sea or road to the installation site, as well as to ensure simple installation
The Company has commenced the Definitive Feasibility Study (DFS) required for the commercialization of the 100 MWh project and expects the completion of its DFS by November 2023
By incorporating high-capacity silicon into lithium-ion batteries, the company has achieved a remarkable 30% increase in energy storage capacity, along with improved battery life and cyclability, through its extensive in-house research and development, which has helped the Company successfully crack the “silicon code”. The Company’s proprietary silicon graphite product is registered as Silumina AnodesTM.
The Company is in the race to get its patented technology to market and has announced the results of a Preliminary Feasibility Study (PFS) for the construction of a 10,000tpa Silumina AnodeTM material plant within the Schwarze Pumpe Industrial Park in Saxony, Germany, which will also house a pilot plant which is designed to produce up to 43,800 kilograms of anode-grade coated battery material per year, i.e., 120 kg per day for the production of samples for EV original equipment manufacturers
The PFS has robust and attractive economics with a high-margin, high-value proposition, and a relatively low level of capital investment. With a capital outlay of c. USD 95 mn, the Company estimates a project net present value (NPV) of c. USD 507 mn (discount rate of 8.0%), with an EBITDA of USD 63 mn per annum. The Company estimates the internal rate of return (IRR) at 40%, with a pay-back period of c. 3.1 years. The total annual revenue at the 10,000 tpa is estimated at USD 185 mn per annum, with an EBITDA margin of 34%. The Company has already commenced its DFS for its 10,000 tpa battery materials plant ahead of its schedule, and it is expected to be completed in H2 2023
The Company has signed two Memorandums of Understanding with two Europe-based suppliers of lithium-ion battery-grade anode materials, namely SGL Carbon GmbH (SGL) for the supply of uncoated synthetic graphite anode material and Ferroglobe Innovation S.L. (Ferroglobe) for the supply of Silicon anode material
The Company has an agreement with Fraunhofer as a strategic partner to expedite the testing and qualification process for the Silumina AnodesTM product, with the main objective being to test the long-term performance of the products in different applications
The Silumina AnodesTM project has recently been awarded green accreditation from the independent Norwegian Centre of International Climate and Environmental Research (CICERO)
Recently, the Company changed its name from “Altech Chemicals Limited” to “Altech Batteries Limited” (ASX: ATC). The Company believes that the new name reflects the Company’s vision to meet a battery storage future, is consistent with the business and market segments of all of its projects, and might allow the Company to better market its future products more beneficially
Altech Batteries Limited is publicly listed on the Australian Stock Exchange (ASX) and is traded under the symbol ‘ATC’. It is also listed on the Frankfurt Stock Exchange (FRA) under the symbol ‘A3Y’