Small cap stocks across a number of sectors, especially TSX-V listed, have been decimated. However, there’s always an exception to the rule. Nano One Materials (NNO.V), while down from its 52-week high, is holding up better than most. By searching on Google for the word, “lithium,” one might conclude that lithium-ion batteries have won the battery wars… for now. However, there remain several types of batteries incorporating more (or less) lithium, and some proposed that use little or no lithium at all. My rule of thumb is that the less lithium found in a proposed battery chemistry, the further from commercialization it is! True or not, one thing is abundantly clear. Investors studying the lithium-ion battery space are keenly aware, and perhaps nervous about, the possibility of lithium’s role diminishing as new materials come to fore. For instance, what about the myriad of battery materials, some proven at lab scale, in universities and corporate R&D departments around the world?
US$ 8 million market cap
That’s why I believe that Nano One Materials is truly an exception, note I didn’t call it a, “game-changer.” It could be, but need not be, for investors to potentially enjoy a tremendously profitable investment. What if a lithium-focused junior had the following attributes; 1) materials agnostic, so that alternative materials are not a threat, 2) a business model embracing industry change, 3) flexibility to simultaneously work with multiple partners on multiple projects 4) potential collaborations with one or more of the top battery makers on the planet and 5) opportunities to expand well beyond batteries in coming years. Nano One has these attributes and more, yet trades with a market cap of roughly US$ 8 million.
Make no mistake, this is a highly speculative opportunity, but the risk/reward appears compelling. Regarding item #4, potential collaborations with large battery makers are in fact underway. Samples have been sent, testing is ongoing and prospective client’s labs have largely verified Nano One’s initial claims. Management does not know the timing or exact type of agreement(s) that could transpire, but they are excited and hopeful that news on this front is possible within months, not years. A single collaboration, in virtually any form, with a much larger company, would place Nano One squarely on the map of companies to watch today for tomorrow’s cutting-edge technologies.
Technology Risk Hard to Ignore no Matter how Scalable
New technologies, in any sector are inherently risky. These risks cannot be eliminated, but a number can be mitigated. The five attributes mentioned above diversify Nano One’s risk and lower its correlation to other natural resource sector stocks. In the near-term, technicals and fear could dominate fundamental developments, but that creates attractive entry points. I believe the time has come for investors to take a much closer look at Nano One. First, consider what’s going on in the lithium sector. Neometals Limited, Pure Energy Minerals, Rodinia Lithium, Nemaska Lithium and Dajin Resources are up, on average, a bit over 300% from their respective 52-week lows, while Nano One Materials is up, “only” 44%.
Nano One is developing a scalable process for manufacturing low-cost, high-performance energy storage materials for batteries. The single most important attribute going for this Company is that it’s materials agnostic, not pigeonholed into hit or miss, binary outcomes. It can thrive on events that could render others obsolete. According to Nano One’s corporate presentation, at commercial scale, the Company would have the ability to reduce battery costs of cathode materials by up to 50%. This gives Nano One the flexibility to adjust to market trends. There will be opportunities to address emerging materials in batteries, and eventually in other materials markets.
Nano One hopes to change the way key battery materials are sourced and the technology and process that puts them together. Think of Nano One as a nano-particle assembly line. Assembly lines are known to drive economies of scale, reduce waste, improve quality and cut costs. Nano One plans to use lower-grade feedstock (~30% less costly) and simpler processing (~75% fewer steps & 3x-4x higher throughput) to produce cathode materials with considerably improved charging, cycling and energy capacity. CEO Dan Blondal provided this quote,
“Nano One is developing the recipe, or processing technology, that makes robust long lasting structures from any number of ingredients and assembles them using cost-effective feedstocks and a scalable industrial process.”
The attributes of the Company’s existing technology / process is forecast to produce 90%-95% yields, fewer failure points and longer lifetimes, while using less harmful solvents, to create safer, more reliable products. Electric Vehicle, “EV” battery packs are built with excess capacity, partly to increase longevity and warranty periods. If Nano One’s technology improves longevity of energy storing materials, EV manufacturers could use fewer cells, enjoy faster charges, reduce weight, lower costs and increase mileage. Not bad, Right?
Nano One, and others across a range of disciplines, is poised to boost EV adoption rates and continued R&D on scalable substitution alternatives. Readers interested in learning more can view this video clip of CEO Dan Blondal.
I end on a note that will be addressed more thoroughly in future articles, Chairman & Director Paul Matysek is a legend in Canadian circles for developing, marketing, attracting investors and facilitating the sales of Potash One, Lithium One and was Founder, President & CEO of Energy Metals Corporation, acquired by Uranium One. Mr. Matysek was the driving force in these deals, not just along for the ride. Matysek reports that he believes,
“Nano One has game-changing technology in one of the fastest growing spaces in the world. I admire the management team and I hope to be able to add considerable value through my network and 30 years of market experience.”
Disclosure: Nano One Materials has a small market cap, as does Dajin Resources & Pure Energy Minerals. Small market cap stocks are highly speculative, not suitable for all investors. I, Peter Epstein, own shares of Nano One, Dajin Resources and Pure Energy Minerals. Mr. Epstein, CFA, MBA is not a licensed financial advisor. Readers should take that fact into careful consideration before buying or selling any stock mentioned.
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