An intriguing back door into the lithium world
Written by Chris Parry via CEO.ca
Hi. Chris Parry here. You may recall me as the ‘voice of Stockhouse’ for the last few years, or ‘that guy who wrote about a bunch of weed stocks and called them almost all crap’ or the better looking twin brother of George Clooney.
I’m not at Stockhouse anymore. One of the reasons I’ve moved from working for a large public company marketing firm to my own deal this past week is the importance of my own brand as a journalist. Not to blow my own trumpet (too hard) but I’ve won awards for my work, I’ve attracted a healthy readership, and central to keeping that going and growing is maintaining that legitimacy by only working with companies that I genuinely think are good clients. And the only way I can control that part of my job is by being in control oh who I write about.
Our good friend Tommy Humphreys asked me to come make a guest appearance in CEO.CA, and to punctuate that, I figured I’d post my most recent piece as a companion.
And the first company I hope to help really launch to greatness now that I’m a free agent, is Nano One (NNO.C).
Nano One doesn’t have a fat gold deposit or a crushingly busy weed grow. It doesn’t have generic pain medication formulations in front of the FDA or some sort of fintech that will turn Bitcoins and coconut shells into bullion.
It has a concept. Wait, where are you going?
Okay, so we’ve hit upon Nano One’s greatest problem as an investment opportunity, right off the bat. It has a concept, not a factory, not a product, not a recognizable brand.
But that concept is an interesting one if you, like just about everyone trading on the Canadian markets over the last three months, think battery tech is just about the next big thing.
Nanotechnology is important to battery storage. By definition, it’s the science involved in making things smaller, so small that you can do amazing things with not a lot of space. How far away are we from a time when robots can be injected into us to clear a blocked artery, or a time when we can turn our shirt into a computer, or make a car 80x stronger than its predecessors?
Nanotechnology is already prevalent – it’s what makes something the size of your phone able to hold the processing power that would have required a room full of large servers to replicate two decades ago.
But all that nano takes some expensive raw materials to make possible.
Nano One has a tech, and an armful of approved, broad patents, that aim to make the powders needed to make nano technology work, that much cheaper, easier to acquire, and more effective.
As an example, and this is only one of many, but perhaps the most relevant right now – the rapidly emerging battery tech sector, which has been kicked along by the inevitable ramping up of Tesla’s move to bigger, better batteries for everything and everyone, has much need for lithium at present. Lithium is leading the ailing resource sector, with companies such as Lithium-X (LIX.V) going nuts, with big money investment from such luminaries as Frank Giustra and a pile on from other big money investors and loads of on-point retail guys.
But much of this ‘nuts going’ involves companies that are a long way from producing the stuff. The thinking is, a rising tide lifts all boats, and as lithium needs double and triple in the years ahead, just having a piece of ground where the briny can be located will lead to acquisition opportunities.
Back at Nano One home base, the lithium buzz means something different, because NNO has tech that can help nanotech needs be met not by lithium, which is expensive and supply-strangled, but by lithium carbonate, which is cheaper and not as tough to find.
From the Nano One website:
“By cost effectively controlling the structure and size of these powders at the nanometre scale, in bulk industrial quantities, Nano One believes it can enable industry to adopt the remarkable properties of nanomaterials for a much broader set of market applications [and is] positioning its core technology to make these materials affordable, address demand and broaden [their] commercial adoption.”
The important thing to remember here is the end goal. If you want to daytrade, keep moving. Nano One is not going to pump out itty bitty bits of news designed to keep the share price bouncing like a Kardashian mattress. And it’s admittedly a way off from building a factory and churning out purchase orders for Nano One Micro Powder. You won’t be seeing Nano One on the Home Shopping Network or in Canadian Tire next to the windshield wiper fluid. But that’s not the play here. The play is the IP.
Those patents I mentioned are not material-specific. They are BROAD patents which means, if anyone, anywhere, decides they’re going to start farting about with materials to make nanotechnology a little cheaper, easier, whatever, they’re going to have NNO’s lawyers peering over their shoulder, saying “where’s our licensing fee?”
And those patents aren’t built on patent troll hopes and dreams – the company, literally, as I was writing this, announced a $2m grant from Sustainable Development Technology Canada (SDTC), that is non-repayable (read: free money), to help gets it’s pilot plant up and running to properly demo the tech to industry.
Have you ever tried to get a $2m grant from the gubmint? It’s not real easy. You kind of need to have your ducks in a row, especially for tech grants, especially when the money isn’t going to be repaid. I can barely get a car loan, and these guys showed enough oomph to get the government to fork over two mill.
And, from what I hear on the rumblephone, that may be just the beginning of the grants. More have been applied for. More are being discussed. But even if nothing comes from that, Nano has a $17m market cap right now, so they just received the equivalent of 12% of their company value – for free – from a government agency with no watering down of the stock, no debt, no drama.
More than a concept, right?
Well, it gets better. Chairman of the Board? Paul Matysek.
Yes, that Paul Matysek. The Paul Matysek that took Lithium One to a $112m merger in 2012. The Paul Matysek that took Potash One to a $434m takeover a year before that. Then there was the $1.8b Energy Metals Corp uranium takeover in 2007. .
Potash One.. Lithium One.. Nano One. Hmm.
If Paul Matysek showed up at my door for coffee and told me he was investing in pork belly futures, you can guarantee I’d be investing in pork belly futures, Louis. The man hasn’t just done well for himself, he’s done ridiculous for himself, and has a legion of investors that follow him around without question, because he’s made them rich.
THE GREAT HIDDEN HORSE OF DOOM:
For mine, the GHHOD on NNO is the chance that the world stops using nanotechnology, which obviously isn’t likely. If lithium goes away tomorrow, Nano’s patents hold up in a long list of other ingredients and applications and, let’s face it, lithium is going nowhere but up.
There’s the chance that, upon completing the pilot plant, we find that the technology somehow doesn’t work, but that’s begats belief. Matysek doesn’t show up at your door if you’re a two-bit penny stock with a four month promo plan, he shows up when you’re sitting on something with great timing, great tech, great demand, and great people.
He’s said as much, many times. It’s how he’s turned millions into billions.
I guess Nano could, eventually, run out of cash, but to do that, you’d need Matysek to fail in an effort to finance, and he’s not had that problem previously. Quite the opposite.
I guess an asteroid could drop on us and wipe us all out but, in that case, you’d be no safer having stuck your cash in US bonds.
BRINGING IT HOME
This is probably a good time to disclose that I’m a consultant for Nano One, so you can take what I say with a grain of salt, but I don’t do that with companies that I think can’t walk the walk. And the proof of that is, I took part in the most recent private placement raise for the company with my own hard-earned. That decision has already paid off nicely – the company has moved from $0.31 to $0.34 just in the last week. Those that got in around last November have taken a ride from just $0.20 to a near double. And that’s, again, with just a concept and a handful of patents. We haven’t got close to the serious stuff yet.
For mine, the serious stuff is alluded to in this statement by Matysek to analyst Peter Epstein earlier in the month;
“Nano One’s patents cover a broad range of materials and were issued quickly with only minor revisions. This indicates to us that we have a unique technological edge with fertile ground to expand our IP portfolio. Broad patents like ours can provide freedom to operate and should draw the attention of global players looking for strategic IP advantages.”
Translated: The patent applies to a wide range of materials and uses and licensees and partners and hot diggity, do we like to hear those words.
Straight up: I would be shocked if we ever see a product with Nano One Materials written on the side. I would be amazed if they ever build anything more than the pilot plant. I would be blown away if, by 2018, they aren’t bought out by some giant player that has done the math and figures it’s better to drop $100m on them now than pay $25m per year in perpetuity for the right to use cheaper nano powders.
That’s the play here, and with every new patent delivered, and every screw tightened on that pilot plant, and with every quiet meeting with a nanotechnology industry player (read:Any tech producer, anywhere), I’m convinced the investment I’ve made here is going to grow like Hulk.
Oh yeah – they also have seven figures in the bank and just raised more in an oversubscribed round. Warrants are out there, which will bring in more.
Whether this stock goes up or down in the days and weeks ahead is beyond my predictive abilities but, that it should, at some point in the next few years, explode out from where it currently is?
To me, that’s a gimme. I’mma gonna hold this a while.
Feeling good, Louis.
FULL DISCLOSURE: The author has a consulting arrangement with the company and has purchased Nano One stock.