Nano One Materials Corp. TSX:NANO [NDQ:NNOMF] has said it is streamlining its operations, allowing for increased focus on lithium iron phosphate, joint ventures, contracted projects, an accelerated path to revenue generation, and growth through licensing.
Nano One’s CEO, Dan Blondal, said the new strategic plan has an increased focus on LFP with prioritization on third party product validation, future sales, and commercialization opportunities at the company’s production facilities in Candiac, Québec.
Government support and other non-dilutive sources of capital will also play a key role in enhancing Nano One’s value for its partners and stakeholders.
In parallel, Nano One is continuing to build on its strategic relationships, advance its technology, planning for capacity expansion, and accelerating for long-term growth through LFP CAM package development and licensing. To align with these elements of our plan, and to accelerate near-term growth opportunities, we have also taken the necessary steps to streamline our operations and right-size our spending,” Blondal explained.
As part of its broader strategic plan, Nano One said it is committed to controlling costs and focusing on near-term commercialization targets. This includes streamlining operational and corporate costs, with a workforce reduction of approximately 20%.
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Focus on lithium iron phosphate
Nano One prioritized LFP in Q4 2022 by acquiring a 10-year-old LFP production facility and integrating a team with a long LFP track record in Candiac. The plant was repurposed to pilot and demonstrate the ompany’s One-Pot LFP process at a commercially valid scale. The waste handling systems at the facility were no longer needed and subsequently decommissioned, freeing up space for the installation and commissioning of the 200 tpa One-Pot reactors in Q4 2023 and for future capacity expansion.
The Candiac LFP pilot facility is the launch pad for Nano One’s growth strategy and a clear path to first revenue and larger offtakes. It is now being used to facilitate demonstration, sampling and evaluation while also informing FEL design studies and LFP CAM packages.
There are plans to further expand the capacity of the existing facility up to 2,000 tpa, as demand for LFP takes hold, leveraging existing full-scale equipment and the balance of plant with further automation. It is expected that production from Candiac could bring in working capital while also supporting customer validation and offtakes for high volume LFP production with potential licensees.
Nano One is continuing to work on its 25,000 tpa LFP development project and is considering various paths forward including the project becoming a separate stand-alone operating company. As such, Nano One would significantly reduce its capital needs and could earn a license fee for the use of its One-Pot technology. This would be in addition to a development fee for its efforts on the 25,000 tpa project which could be settled by either an equity interest in the operating company, cash, or a combination thereof.
The FEL3 engineering work-to-date on the 25,000 tpa plant has shown even lower capital costs and operating expenses than its earlier FEL2 pre-feasibility study. This further enhances the One-Pot value proposition, aligns with collaborators and supports the strategy to develop and license process engineering design packages for LFP (LFP CAM package).
Robust deal pipeline
Nano One said it has over 20 potential LFP customers at various stages of maturity including evaluations for LFP with two automotive EV manufacturers and others in the pipeline, a number of energy and stationary storage cell manufacturing companies, and several US government supply chain cell and pack contractors.
Nano One is also in preliminary discussions with parties interested in LFP CAM package licensing. The company’s piloting facility in Candiac provides a distinct advantage in North America as it is able to produce cathode materials at commercially relevant scale today with the capability of expanding capacity up to 2,000 tpa.
These initiatives are further complemented by recent injections of non-dilutive capital. This includes the recent agreement to sell the vacant lot on its land in Candiac for CAD 5 million in gross proceeds, and last week’s award of CAD 2.8 million by Next Generation Manufacturing Canada (NGen) through its Electric Vehicle Manufacturing Program (EVMP). Nano One said it has additional non-dilutive initiatives underway that could bring significant accretive capital to support its business objectives.
Global market shift towards LFP technology
The global market has seen a decisive shift towards LFP technology, which offers significant advantages in terms of cost, safety, security of supply, and environmental impact compared to traditional lithium nickel manganese cobalt oxide cathode materials. LFP is suited to high-volume, heavy-duty applications in energy storage systems and electric vehicles and it has already reached 60-70% market share in China, leading other jurisdictions to prepare for similar levels of demand.
Nano One’s patented One-Pot process for producing cathode active materials positions it favourably, with a more environmentally friendly and competitive production process, to meet the emerging demand for LFP in North America, Europe and the Indo-Pacific region. NMC remains important for applications in long range, energy dense batteries and Nano One said it will keep modest efforts on its One-Pot NMC program to support collaborators and stakeholders in developing sustainable process solutions for the future.
Licensing plans
Nano One said it still has the goal of global technology adoption and licensing of its One-Pot LFP CAM packages. Licensing will be driven through business and technology development with EV manufacturers, battery producers and chemical companies for the EV and ESS markets.
Shareholder value will be created with increased market penetration through the Company’s partnership channels, with the low cost of capital from its licensees, and by diversifying revenue exposure to include engineering and equipment procurement, along with licensing fees and revenues from its plant in Candiac
Blondal added: “Nano One has a track record of anticipating market trends and by intentionally refocussing on the most important initiatives, we believe we can do it better and faster, while also enhancing our financial resilience and value to shareholders. We are excited by the robustness of our sales pipeline, we are steadfast in supporting our team and partners, and we are deeply committed to the success of the company’s business objectives.”