NEO Battery Materials Ltd. (TSX-V:NBM) said its South Korean subsidiary, NBM Korea Company Limited (NBM Korea), has signed an agreement to receive a strategic investment of 3 billion South Korean won (C$3 million) from Automobile & PCB Inc. (A&P) for a 40% stake.
The Vancouver-based company said the proceeds from the Series A financing will be used to optimize commercialization efforts and to advance the first phase of the Korean silicon anode mass production facility for EV lithium-ion batteries. The investment is scheduled to close by July 1, 2022, added the firm.
NEO noted that on the back of the strategic memorandum of understanding (MoU) with A&P on June 8, 2022, NBM Korea has “successfully secured a strategic investment and collaboration opportunity” after holding positive discussions and instituting a strict due diligence process.
READ: NEO Battery Materials inks coating technology collaboration deal with South Korea’s ACN
As a result, NEO and A&P, along with Yongsan and YSP, will cooperate to commercialize all NBMSiDE products and construct the Silicon Anode Commercial Plant. Both parties will actively seek to undertake joint projects and expand their network within the automotive and lithium-ion battery business, noted the company.
The Series A strategic financing allows the shareholders' value of the parent company, NEO Battery Materials Ltd. (TSX-V:NBM), to be protected without dilution from any issuances of shares or purchase warrants. Funds received from A&P will be solely used by the South Korean subsidiary, NBM Korea, the company said.
In a statement, NEO CEO Spencer Huh said: "Despite difficulties and headwinds in both the financial markets and the economy, NEO Battery Materials is highly excited about this meaningful achievement of NBM Korea's $3 million Series A financing to advance mass production to the next step.”
He added: “In particular, we strongly believe that NBM Korea will create additional synergies through strategic business relationships with A&P and its related parties, Yongsan and YSP, that hold a proven operating history of over 40 years in the automotive industry."
Huh noted that with the $3 million secured, NBM Korea is under discussion with financial institutions in South Korea to obtain debt or equipment purchase financing for the next phases of the mass production facility.
“Through this achievement, NEO will focus on optimization and concurrently proceed with the process design in order," added Huh.
A&P and its related parties will actively support NBM Korea to pursue debt financing from financial institutions and other forms of strategic synergies through utilizing their extensive business network.
Separately, the company revealed that NEO will be holding a webinar in the middle to end of July, discussing the ongoing corporate activities related to the commercialization efforts, mass production plant, financing, and other related activities. The firm will provide a registration link to the webinar closer to the date of the event.
NEO is focused on producing silicon anode materials through its proprietary single-step nanocoating process, which provides improvements in capacity and efficiency over lithium-ion batteries using graphite in their anode materials. The company intends to become a silicon anode active materials supplier to the electric vehicle industry.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive