Novonix have had a few good announcements recently, with a few more key milestones/updates likely to be imminent.

For context, Novonix is preparing for production at its Riverside facility, which when in full production, will produce 20,000 tonnes per annum (tpa) of battery-grade synthetic graphite. They need 300m to get there, 200m of which is covered from a grant and tax credits (the latter likely to be monetised). How they bring in the rest of the cash required (100m) remains up in the air, but there have been talks about customer pre-payment, additional investment from a partner or a cap raise. I don’t think they will have any issues getting the funds required.  

Updates in November 2024:

1. Offtake for a minimum of 32,000 tonnes of synthetic graphite material to be supplied to PowerCo (Volkswagen) from 2027-2031.
2. Offtake for a minimum of 86,250 tonnes of synthetic graphite to be supplied to Stellantis’ cell manufacturing partners in North America – with a target volume of 115,000 tonnes – from 2026-2031.

With these two binding offtakes, Novonix’s Riverside facility is now fully allocated.

In order to meet growing contractual demand, Novonix is also planning a second greenfield facility in the US, to produce another 30,000 tpa of synthetic graphite – with plans to expand that facility to 75,000 tpa as required. The company is in advanced discussions with the DOE Loan Program Office to support the construction of this facility and I expect they will receive confirmation of this loan before Trump takes office.  

Around 60% of the greenfield site’s production capacity has already been allocated, so in addition to the loan confirmation, I expect at least one more binding offtake over the coming months (possibly from LG or an expansion of the existing Panasonic deal).

It has been a slow, long road for Novonix. But the recent offtakes with Volkswagen and Stellantis provide enormous validation that their product is up to scratch.

After today’s price action (up 30%), they have a market cap of 310m (US). When Riverside is in full production (expected 2026-2027), revenues should be more than 200m. So the current share price in my view reflects their Riverside facility, but not their additional greenfield site (and expansion), separate cathode venture and 3.7% holding in the unlisted Kore Power. Their success isn’t guaranteed, but they continue to de-risk, increasing the probability that they will make it. I remain confident in my holding noting this remains a high-risk play.