Today, most of Australia's top 500 publicly listed companies are moving higher. Meanwhile, the Novonix Ltd (ASX: NVX) share price cannot move an inch in either direction.
Anyone who had hoped to hit buy or sell on the shares of this battery materials company is left twiddling their thumbs. The synthetic graphite manufacturer is sitting in a trading halt this morning after making the request ahead of the opening bell.
Before being hit by Frozone today, Novonix also made waves yesterday. As covered by James Mickleboro, the company revealed the inking of a binding offtake agreement with PowerCo during Monday's session, an announcement that flung the share price 30% higher on the day.
Topping up the tank
Novonix is still in its cash-burning phase. Working on reaching the commercial scale of its battery materials production, the company is a cash-hungry beast that needs to be fed.
At the end of June this year, cash and equivalents sat at US$47.1 million, while operating expenses for the trailing 12 months hit US$51.2 million. Using some quick math, we can roughly guess that Novonix would run out of funds in a little under 11 months at that pace of incineration.
Today's announcement outlines how Novonix will inject more lifeblood into its business.
A fully underwritten placement to institutional and sophisticated investors is expected to garner A$44.4 million. For context, this would be equivalent to approximately 55% of the company's operating expenses in FY24.
The Novonix share price is stationary at 96.5 cents. This means today's capital raise will be undertaken at a huge discount to the current market price. Shares will be issued at 60 cents apiece, reflecting a 37.8% markdown.
A further A$5 million is being targeted via a share purchase plan for everyday investors like you and me.
According to the release, the funds are intended for ordering, installing, and commissioning 'key equipment' to hit Novonix's 3,000 tonnes per annum milestone at the Riverside facility in 2025.
Major investor backs the Novonix share price
It appears the company's largest shareholder hasn't lost any faith in Novonix reaching commercial success.
Phillips 66, a United States energy company, will contribute another US$5 million (A$7.7 million) to the earlier-mentioned cap raise. At last check, Phillips 66 owned 15.8% of Novonix at a ballpark worth of A$75 million.
The funding is also said to be helpful in getting Novonix over the line with another government grant. Namely, the chance to assess the U.S. Department of Energy's Office of Manufacturing & Energy Supply Chains (what a mouthful!) grant of up to US$100 million.
Shareholders on the register by 7:00 pm AEDT on 25 November 2024 will be eligible to participate in the share purchase plan.
We may see a retreat in the Novonix share price when it resumes trading. Investors normally don't take too kindly to a heavily discounted capital raising.
