• East Coast Research values Altech Batteries at 15-21c, substantially higher than its current share price of 8.7c
  • Valuation is based solely on Silumina Anodes™ and does not include the CERENERGY® battery project
  • DFS for CERENERGY® is expected in the short to medium term, which will add substantially to company’s value

 

Special Report: With two revolutionary battery technology projects progressing towards commercialisation in Germany, East Coast Research believes Altech Batteries is among the pioneers as decarbonisation of the world’s economy continues.

The first of the company’s two technologies is Silumina Anodes™, which combines high purity alumina (HPA) coated silicon and graphite to produce a lithium-ion battery anode that promises to increase energy capacity by ~30%.

While silicon has long being known to increase the energy capacity of lithium-ion batteries, developers had previously struggled to account for silicon particle swelling, which could see silicon particles expand by almost 300% in volume when they react with lithium.

Altech Batteries’ (ASX:ATC) alumina coating technology appears to have addressed this and other concerns by coating silicon particles with a nano layer of HPA.

This resolves the expansion defragmentation, as well as curbing the significant first-cycle loss associated with silicon, paving the way for smaller, lighter batteries that are ideally suited for use by battery electric vehicles.

Research has indicated that demand for silicon-based anodes could experience compound annual growth rate of ~48% from 2024 to 2036.

A DFS for a 8,000tpa (120GWh) alumina coated metallurgical silicon plant in Saxony, Germany, outlined a project capable of delivering net present value of €684m and internal rate of return (IRR) of 34%.

Capex is estimated at €112m with payback in 2.4 years.

 

Targeting grid storage

ATC’s other battery initiative is its unique CERENERGY® solid-state batteries, which are ideally suited for grid energy storage use and require just common table salt (sodium chloride) and nickel, with no need for lithium, cobalt, graphite and copper, thus limiting exposure to critical metal price rises and supply chain concerns.

These batteries are capable of operating at a very wide temperature range (-40 degrees Celsius to +60 degrees Celsius), are fire and explosion-proof, and have a life span of more than 15 years.

Over their life, they are estimated to be capable of reducing costs by up to 40% compared to regular lithium-ion batteries and boast an emissions footprint at least 50% lower than that of lithium-ion batteries.

ATC has already developed battery packs with capacities of 5kWh and 10kWh and is currently manufacturing prototypes of its 60kWh CERENERGY® battery pack grid storage use.

It is also in a joint venture with German government owned Fraunhofer IKTS to commercialise a 120MWh battery plant on ATCs land in Schwarze Pumpe, in the German state of Saxony.

 

Plenty of upside potential

East Coast Research notes that while ATC’s battery projects are still speculative from an investing point of view, their revolutionary nature puts the company at the forefront of players commercialising innovative battery technologies.

Based on the strengths of ATC’s Silumina Anodes™ project, the research firm valued the company at 15c in a base case scenario and 21c using a discounted cash flow approach, well above its current share price of 8.7c.

This assumed a modest discount rate of 9.3% using a cost of equity of 11.5%, a cost of debt of 12% and a tax rate of 30%.

East Coast Research noted that the modest discount rate is due to the tax savings of the assumed 70% debt potion of the capital required to build the plant.

“We think this is a safe assumption given that the Silumina project has been assessed as a green project and is eligible for green bond financing and various government grants,” it added.

Adding interest, the estimate does not include any valuation from the CERENERGY® project, which East Coast Research says offers substantial upside potential to its current valuation range.

“We expect Altech to release a DFS for the CERENERGY® batteries project in the short to medium term, which will potentially add substantial sums to the company’s valuation,” East Coast said.

 

 

 

This article was developed in collaboration with Altech Batteries, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Read MoreBattery MetalsTech

Featured Companies

You might be interested in