Altech Batteries (ASX:ATC) CFO Martin Stein discusses entitlement offer

Sonia Madigan:

Altech Batteries (ATC) is taking strides towards the commercialisation of its table salt-based CERENERGY grid batteries, as well as its silumina anode technology.

It’s selected suppliers to take the project to the next crucial stage and to fund ongoing work, Altech is raising $15.8 million.

CFO Martin Stein joins me now.

Martin Stein:

Thanks very much, Sonia.

Sonia Madigan:

Now, Martin, shareholders tend to squirm around the word capital raising. Why should they feel any differently about Altech’s raise now?

Martin Stein:

Well, we entered into the joint venture with Fraunhofer back in September of 2022, so not too long ago. And since that time, we’ve been able to make some key achievements. One being the design of the product for the 60-kilowatt battery and one the design and the specifications for the one-megawatt hour grid pack.

We’ve also been able to start fabrication of two 60 kilowatt-hour battery prototypes as well as move forward with the DFS on the hundred-megawatt hour plant that’s going to be built on Altech land in Germany.

So we’ve made some really good progress in that amount of time. Now this is really the first capital raising that we’ve undertaken since we’ve had the CERENERGY battery project, so it’s quite exciting.

Now, we recently raised $3 million by an issue of shares to sophisticated and professional investors, and we’re now following that up with an entitlement offer that will be for all shareholders to participate in at the same price as the placement.

So we’re doing that at 7 cents per share. What’s extremely pleasing is that our two biggest German shareholders who are very close to the action over there, they attend our workshops and they see how the projects developing and progressing. They’ve expressed a lot of interest, and in fact, they have supported the entitlement offer for $6.7 million underwriting. So that’s almost 52 per cent of the total amount proposed to be raised under the entitlement offer. It sends a fantastic signal that they’re fully supportive of the project, and we are really pleased.

Sonia, we think we really do have something special here and we hope that our shareholders do feel the same way.

Sonia Madigan:

So what will the money allow Altech to do?

Martin Stein:

Okay, so the money’s been earmarked for both of our German battery projects, so the CERENERGY project will use the funds for finalising the fabrication of the two 60-kilowatt-hour battery packs.

It will also be used to finalize the definitive feasibility study, and we’ll also be using it for the Fraunhofer joint venture commercial payments in relation to the silumina anode battery project. We’ll be using some of the funds on that as well. So the funds will be allocated towards finishing off the DFS on that project for the full scale 10,000 ton per annum plant, and we’ll also be finalising construction of our pilot plant that’s due to be commissioned in Q4 of this year.

Sonia Madigan:

I understand that Altech has selected suppliers to advance the battery project. Can you tell us about that?

Martin Stein:

Yes, so we have regular workshops in Germany and at these workshops, obviously, the Altech Senior management teams there, the Fraunhofer teams there, which includes some of the best engineers and battery specialists in the world. We invite potential suppliers to present at these workshops.

Now, out of those workshops, both Fraunhofer and Altech have handpicked a select group of German suppliers. Some of these, or most of these suppliers have worked with Fraunhofer in the past or are known to Fraunhofer, so they come very well recommended and very well credentialed. These are some of the best robotic and engineering and manufacturing suppliers in the world. So we’ve assembled the suppliers. We think we’ve assembled a very good team that’s going to take the CERENERGY project to the next level of production, so we’re really happy with how that’s coming along.

Sonia Madigan:

I also understand that Altech has enlisted the services of an independent environmental research centre in Oslo. What’s that about?

Martin Stein:

Yes, so we’ve engaged CICERO. Now CICERO are based out of Norway. They provide independent accreditation for projects looking at the environmental and social aspects of the projects, and then they weigh up all of the requirements and the inputs for the projects and determine whether it’s actually a green environmentally friendly project.

So we did the same thing with our silumina anodes and we were able to achieve a medium green rating. Now with CERENERGY project, as you know, we don’t use any lithium, copper, cobalt, or graphite. We use common table salt, sodium chloride technology. These batteries are also fire and explosion-proof, and we recently achieved a study, an independent study that said that these CERENERGY batteries produce 50 per cent less greenhouse gas emissions in a comparable lithium-ion battery.

So we think we’ve got a very green product here, a very green project. We’re going to get CICERO to accredit it, and then that will enable us to send to our shareholders and stakeholders the message that yes, we are doing the right thing environmentally, we are responsible, and that also helps in attracting future finance to construct the plant.

Sonia Madigan:

Now, just before we go, there’s certainly a race towards sustainable energy for the future. How is Altech placed in this race?

Martin Stein:

Well, as you know, Altech CERENERGY batteries targeting the industrial grid storage solution. Now, what’s happening around the world as we’re trying to electrify and meet the decarbonisation targets is that the ramp-up of the renewable energy, solar and wind and the like, has grown exponentially, but it’s grown so quick that the grids don’t have the ability to manage and use all of that power.

So much so that in the state of California, they actually return US$3 billion per year in renewable energy that they can’t use at that time and the grid can’t use it. They’re putting that back into the ground. Germany is putting 2 billion euros back into the ground every year in wasted energy. So these grid energy storage batteries, they will be able to store the excess supply of energy, say for a solar plant that produces power during the day, the grid needs it at night.

The batteries will be able to take that power, store it and then return it to the grid when it’s required. So the world scaling up, its production of green energy, but it also needs to scale up its ability to store that energy in batteries. That’s the second part of the solution.

So it’s going to be a very big industry. It’s growing at 28 per cent compound annual growth rate. It’s expected to be worth US$15 billion by 2025, and it’s going to be so big that Tesla’s actually come out and said that they see the future of their business being more battery related than EV related. So it’s certainly going to be a very lucrative niche industry, and Altech is racing to get into that industry as soon as possible. The product that we’ve got with the CERENERGY battery is unique and we think we’ll be able to penetrate the market with it.