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Why is the Novonix (ASX:NVX) share price in a trading halt today?

asx share price trading halt represented by stop sign
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The Novonix Ltd (ASX: NVX) share price was in a trading halt today on news the company plans to undertake a capital raising. The graphite producer also released its half-year report today for the period ending 31 December 2020.

At the time of writing, the Novonix share price remains suspended at yesterday’s closing price of $3.29.

It has been a positive year thus far for the company as its shares have soared an astounding 165%. Let’s unpack the latest announcements.

Novonix half-year report

Novonix reported depressed revenue for the half-year as the coronavirus pandemic impacted results. As such, revenue from ordinary activities decreased by 6% from $2.9 million to $2.734 million. Moreover, the company saw a widening loss as operating expenses increased. To this point, the loss increased by 53% to $10.767 million.

During the period, the company continued strong growth in research and development services with tier 1 clients. This was highlighted as Novonix continued research progress through a partnership with Professor Mark Obrovac working on new IP development.

Regarding the company’s financials, Novonix currently holds $25.28 million in cash, down significantly from the $38.8 million held at the end of FY20.

Capital raising

The Novonix share price is in a trading halt today after the company announced an equity raising. A fully underwritten placement to raise approximately $115 million to institutional investors will close on 26 February.

The company will use net proceeds to fund expansion in capital expenditure and working capital to scale its anode materials production to 10,000 tonnes per annum. The increase comes under an exclusive technology alliance announced in December with US-based thermal processing solutions expert, Harper International Corporation.

This will include a new manufacturing site expansion, along with infrastructure and equipment being commissioned over the next 24 months, as well as working capital associated with increased production levels.

The placement offer price is $2.90 per share. This represents an 11.9% discount to the last traded price of its shares ($3.29).

Furthermore, the company will begin a share purchase plan (SPP) on 4 March. Eligible shareholders will be able to subscribe for up to $10,000 worth. The SPP aims to raise approximately $15 million.

Management comments

Commenting on the capital raising, Novonix chair Tony Bellas said:

It is an exciting time for the company as it begins to rapidly scale production of high-performance anode materials for lithium ion batteries to meet the growing demands of the electric vehicle (EV) and energy storage system (ESS) markets in North America.

The company remains well positioned as the only qualified producer in North America of high grade anode material suitable for lithium ion batteries for EVs and ESS. Importantly, the company is continuing to strengthen its position with key relationships across the industry such as Harper International to develop next generation furnace technology systems.

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Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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