(
TSXV:
NBM) (
OTCQB: NBMFF)
NEO Battery Materials Ltd.
(“NEO” or the
“Company”),
a low-cost silicon anode materials developer that enables
longer-running, rapid-charging lithium-ion batteries, is pleased to
announce that the Company has recently conducted an internal
feasibility study (the “Study”) of its Silicon
Anode Commercial Plant in South Korea. The preliminary assessment
has yielded robust economics and high profitability for NEO’s
cost-transformative silicon anode materials
(“NBMSiDE™”), demonstrating the
substantial potential for scalability, international plant
expansion, and mass adoption in electric vehicle
(“EV”) batteries. NEO will appoint a 3rd party
engineering firm to validate the projections and figures through an
industry-approved feasibility study.
Initial Production Capacity Evaluation
of South Korean Commercial PlantThe internal feasibility
study has been conducted with the assumption that the South Korean
Commercial Plant is the only operational, revenue-generating asset
of NEO Battery Materials. The Study utilizes updated
mass-production models generated by the EPC contractor,
preferential bids submitted by construction contractors, cost
projections of the optimized NBMSiDE™ derived from supplier and
market quotations, and general macroeconomic conditions of the past
fiscal year.
By the first half of 2024, NEO targets to
complete the plant construction with an initial commercial capacity
of 240 tonnes per annum (“TPA”). Financial
projections integrated an equal proportional production of the two
main product lines of NBMSiDE™, P-100 and P-200. Each silicon anode
material will be supplied to global battery manufacturers and EV
automakers at an initial average price of US$ 50,000 per tonne (US$
50 per kg), resulting in maximum annual revenues of US$ 12.0
million at 240 TPA and US$ 50.0 million at 1,000 TPA.
Table 1: Maximum Annual Revenue Projection with
Phase Expansions
|
Phase I: 240 TPA |
Phase II: 1,000 TPA |
Phase III: 2,500 TPA |
Phase IV: 5,000 TPA |
Maximum Annual Revenue |
US$ 12.0 M |
US$ 50.0 M |
US$ 125.0 M |
US$ 250.0 M |
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Through NEO’s proprietary one-step manufacturing
process and the use of a cost-effective raw material,
metallurgical-grade silicon or MG-Si, the Company expects to
decrease the selling price of NBMSiDE™ while widening gross and
EBIT margins with Phase I to Phase IV expansion. With mass
production and material optimization, the Company is projected to
achieve a 70% to 80% cost reduction in the selling price compared
to current silicon anode options. Growing demand for lithium-ion
batteries and advanced technologies will bolster NEO’s cost
differentiation strategy to capture a more significant proportion
of the global silicon anode market share on a sustaining basis.
Economic Assessment of Final Phase IV
Commercial Plant CapacityIn each phase, NEO targets to
double the annual maximum capacity each year to achieve a final
production of 5,000 TPA in the next 5 years. Assuming full-scale
NBMSiDE™ production, the Company expects average annual revenues of
US$ 235.0 million to US$ 250.0 million, representing an after-tax
net present value (“NPV”) of US$ 316.2 million
discounted at an 8% cost of capital and an after-tax internal rate
of return (“IRR”) of 33.3%.
Table 2: Final Phase IV Capacity Economic
Evaluation
Financial Criterion |
South Korean Commercial Plant at Maximum Final
Capacity |
Production |
5,000 TPA |
Average Selling Price |
US$ 50,000 per tonne |
Average Annual Revenue |
US$ 235,000,000 |
Pre-Tax NPV @ 8% Cost of Capital |
US$ 434,433,000 |
Post-Tax NPV @ 8% Cost of Capital |
US$ 316,240,000 |
Pre-Tax IRR |
40.6 |
% |
Post-Tax IRR |
33.3 |
% |
Pre-Tax Payback Period |
4.5 years |
Post-Tax Payback Period |
5.0 years |
CAPEX |
US$ 80,600,000 |
Average Annual OPEX |
US$ 72,818,000 |
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Without forgoing the long-term selling price
reduction strategy, the financial projection integrated constant
NBMSiDE™ selling prices and margins to reflect the Study’s
evaluation methods and current market conditions. Unlike other core
battery metal prices traded as standardized commodities, cost
projections for NBMSiDE™ were derived from direct quotations from
upstream suppliers and estimates with long-term supply or forward
contracts for metallurgical-grade silicon.
CAPEX and average annual OPEX figures are to be
optimized through each phase expansion, occurring through
adjustments with contractors and economies of scale with increased
silicon anode production. The initial CAPEX outlays for the 240 TPA
equipment will not directly reflect the CAPEX for subsequent phase
expansions. Instead, with cost efficiency, the capacity-to-CAPEX is
expected to grow at an exponential rate as CAPEX is substantially
minimized with each capacity addition. As discussed, NEO will
target to partner with downstream battery manufacturers and EV
automakers for strategic investments in each expansion phase.
Strategic partnerships will expedite commercialization efforts,
minimize dilution impact, and enable improved economics and
efficiency by transferring and learning of production and
management know-how.
Continuing Course for
3rd Party Feasibility Study &
Cautionary StatementsTo validate the internal feasibility
study conducted, NEO Battery Materials will appoint a 3rd party
South Korean engineering firm specializing in the battery
manufacturing and materials industry. After conducting due
diligence and extensive review, the Company will select a firm with
a proven track record.
There can be no assurance that the economic
projections upon which this Study is founded will be realized. Not
limited to the viability of mass production scale-up, product
optimization, financial considerations, and macroeconomic and
environmental factors, several risks and uncertainties are
inherently associated with any nascent technology
commercialization. The Study is intended to be comprehended as a
cohesive whole, and individual sections should not be interpreted
or relied upon in isolation or without the accompanying context.
Readers are duly advised to consider all assumptions, limitations,
and exclusions that pertain to the information provided in the
Study.
About NEO Battery Materials
Ltd.NEO Battery Materials Ltd. is a company
focused on electric vehicle lithium-ion battery materials. NEO has
a focus on producing silicon anode materials through its
proprietary single-step nanocoating
process, which provides improvements in capacity and
efficiency over lithium-ion batteries using graphite in their anode
materials. The Company intends to become a silicon anode active
materials supplier to the electric vehicle industry. For more
information, please visit the Company’s website at:
https://www.neobatterymaterials.com/.
On behalf of the Board of DirectorsSpencer
HuhPresident and CEO604-355-6463shuh@neobatterymaterials.com
Not limited to phase expansion capacity
projections, NPV, IRR, payback period, average annual revenue,
average selling price, CAPEX, average annual OPEX, NBMSiDE™ cost
projections, the Company’s cost reduction strategy, the Company’s
expected value propositions, the Company’s expectations of
capturing a large proportion of market share, capacity-to-CAPEX
ratio estimates, input price estimations, strategic partnership
establishments, and international expansion strategies, this news
release includes certain forward-looking statements as well as
management's objectives, strategies, beliefs and intentions within
the meaning of Canadian and U.S. securities laws. Forward looking
statements are frequently identified by such words as "may",
"will", "plan", "expect", "anticipate", "estimate", "intend" and
similar words referring to future events and results.
Forward-looking statements are based on the current opinions,
expectations of management, estimates, and assumptions. All
forward-looking information is inherently uncertain and subject to
a variety of assumptions, risks and uncertainties, including the
speculative nature of technology development, fluctuating commodity
and raw material prices, the effectiveness and feasibility of
technologies which have not yet been tested or proven on a
commercial scale, competitive risks, and the availability of
financing, as described in more detail in our recent securities
filings available at www.sedar.com. Actual events or results
may differ materially from those projected in the forward-looking
statements, and we caution against placing undue reliance thereon.
We assume no obligation to revise or update these forward-looking
statements except as required by applicable law.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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