Magnis Resources (ASX:MNS) (“Magnis” or the “Company”) is pleased to present its Quarterly Activities Report for the period ended 30 September 2018.
Magnis Resources Limited is to be renamed Magnis Energy Technologies Ltd effective with the ASX on Monday 5th November 2018, following shareholder approval at the Annual General Meeting held last Friday 26th October 2018. The change of name is to better capture the operations and value the Company is creating now and in the future. As Magnis scales up its lithium-ion battery manufacturing operations, it has become apparent from meetings with stakeholders, potential investors and partners, that a change of Company name to better reflect current operations is warranted. Any name change will not impact on the future development of its high-quality flake graphite project in Tanzania.
The ASX trading and quoting code for Magnis will remain the same as ASX:MNS.
Magnis has announced its participation in global consortiums, including ownership, to operate lithium-ion battery gigafactories in Australia, the USA and Germany. As a member of these consortiums, Magnis’ role will be to provide raw materials and associated technologies to assist in the production process. The Company continues to develop the Nachu Graphite Project towards the mining and processing of the ore into high purity flake graphite for use in various industries, including batteries for storing electrical energy.
The major activities announced during the past quarter are summarised in this report.
Battery Results with partner C4V
Early in the quarter, Magnis and exclusive partner, Charge CCCV (“C4V”) noted that joint testing programs on the commencement of lithium-ion battery manufacturing are well advanced. Magnis and C4V have made significant progress in qualifying patented next generation materials for leading battery performance and commercial supply chain partners.
Recent test programs utilising silicon enhanced graphite anode materials have delivered major advances in both anode performance and the cost of its manufacture. In particular, the patented nanostructure silicon composite material can now be manufactured at a significantly lower equivalent cost to graphite after allowance for its increased capacity.
Supply chain qualification for commercial integration benefits include:
• First cycle lithiation capacity of 623+ mAh/g, an 80% improvement on the energy density performance of existing graphite-based anode material;
• A first cycle efficiency of >89% without any pre-lithiation;
• Greater than 98% capacity retention after 35 cycles
In general terms, 80% more capacity translates to approximately 30% more distance covered by a vehicle using a similar battery pack size, when compared by dimensions. For example, an average Tesla battery has a range of approximately 450km and the results achieved here would allow the same size battery pack to achieve 600km.
The Company has received significant levels of interest from leading anode suppliers for the silicon graphite anode blend. Samples and results are currently being shared with these parties.
Original Equipment Manufacturers qualification began with battery cells being recently sent to OEM’s in the United States. Larger volumes of samples will be prepared for delivery and sent to European OEM’s.
Discussions to date have been promising and the Company expects to reach forms of agreements before the end of the calendar year.
Magnis and C4V Generation 1 and Generation 2 cathode technologies have received interest from groups within the battery industry and potential new entrants to date. Generation 1 cathodes, which will be ready for mass production in the near term, do not require any cobalt or nickel and have much higher capacity than phosphate (such as LFP) or oxides (such as NMC, NCA, LMO). Generation 1 cathode BM-LMP has been tested on commercial size (several Ah) cylindrical as well as pouch form factors. Generation 2 is targeted towards higher energy density (~300Wh/kg) and higher temperature stability (no cooling until 65°C). Testing for Generation 2 remains ongoing and the Company will provide an update to shareholders as developments materialise.
New York State Gigafactory
Significant progress has been made by Imperium3 New York, Incorporated (iM3NY) with respect to start-up activities for the New York Gigafactory project in which Magnis has increased its indirect and direct shareholding to 46.4%.
Physical relocation including the disassembly, packaging and shipment of the acquired equipment from the previous battery manufacturing plant in North Carolina to the new iM3NY facility at the Huron Campus in Endicott, New York is complete.
Some 108 full-sized container and flat-bed truckloads were moved during the recent few months without incident and there was no damage to equipment and no safety incidents reported.
Meticulous care has been taken to ensure the plant and equipment traceability including tagging, recording and tracking every asset from the original auction item identifiers to iM3NY’s equipment and inventory tracking system and fixed asset tagging of items as they arrived in New York.
The three photos below show major items located at the Huron Campus recently received from North Carolina. Work on design and process engineering has commenced along with site preparations following the successful move of the battery manufacturing plant. Equipment manufacturers, engineers and the Imperium3 (iM3) New York team have been closely working together to meet the production time frames. Local government and environmental approvals are underway with all approvals expected in Q2 2019.
Figure 1 : Cell fabrication equipment at Huron Campus, New York.
Figure 2 : Automation robots and electrode processing equipment carefully packed and moved to Huron Campus, New York.
Figure 3 : Parts of fully automated cell formation lines with cumulative capacity of tens of thousands prismatic cells per day moved to Huron Campus, New York.
The equipment and inventory will remain in approximately 100,000sq feet of storage space while plans for the design and installation of production lines and facilities are developed over the next few months. Plans are geared towards the initial state of production during the latter stage of calendar quarter three next year in a more robust 300,000sq feet facility that is located within the adjacent storage facility on the former IBM manufacturing campus at Endicott.
Key personnel hiring will be undertaken over the next six months and the manufacturing system design will be tailored to accommodate high-volume production throughout.
Battery Sales Agreements and Partners
As announced to the ASX on 15 November 2017, a significant portion of the planned production has been presold via binding sales agreements to clients mainly in the automotive and renewables industry, with further agreements expected in the coming months.
Recently, several potential partners have held high level discussions regarding being involved with the New York battery plant through an investment. The board will assess all proposals as they are received and will update the market according.
Other NY Developments for Magnis Partner, C4V
C4V Delivers Lithium-ion Battery for Smart Grid Connected Environment
C4V achieved a major milestone in delivering its first battery towards a demonstration project that was approved under a New York State Government entity.
As announced to the ASX on 22 August 2018, the project relates to the development of a software system that combines renewable energy sources with lithium-ion batteries and demand management to create a low cost Distributed Energy Resource (DER) System. This system essentially assists in the integration of renewables into the power grid by mitigating instabilities arising from short-term fluctuations in renewable energy generation. This is of particular relevance to the New York State region, due to the large number of cloudy or overcast days that cause such short-term fluctuations.
Partners in this project include the New York State Government entities, Binghamton University, Ioxus and C4V.
C4V Solid State Battery Production
In a subsequent event to the end of the reporting period, the Company announced to the ASX on 2 October 2018, that C4V completed production of a working prototype of a Solid State Battery which was demonstrated at the 2018 NYBEST Conference in New York.
C4V’s new Solid State Battery, replaces more than 80% of the liquid electrolyte with a solid electrolyte. This effectively produces a lower cost battery that is higher capacity, higher density, higher performance, and with significantly reduced charging times than existing battery solutions. Further, C4V’s battery does not require cobalt which contributes to the reduction of costs and an increase in scalability of production without metals supply constraints.
The prototype Solid State Battery demonstrated in New York has volumetric capacities of 380Wh/kg and 700 Wh/L which is expected to increase to 400Wh/kg and 750 Wh/L through optimisation over the coming months prior to production for commercial availability by Q2 2019.
As an example of the capabilities of this battery in current implementations, the C4V Solid State Battery will be capable of delivering a 70% increase in range for electric vehicles when compared to other batteries, allowing an electric car with a current 400km range to be able to run 680km on the same single charge. C4V is working alongside commercial supply chains to further refine and optimise compositions, chemical structure, particle morphologies, and electrode processing techniques to develop solutions for tailored applications including electric vehicles, grid backup solutions, aviation, and portable electronics.
Figure 4: C4V Third Generation Solid State Battery
Townsville Battery Plant
The Company updated the market and shareholders in late August that iM3 Townsville (“iM3 Townsville”), the subsidiary of Imperium3 Pty Ltd, has formally received government approvals for the $3.1M grant supporting the feasibility study into the establishment of a 15 GWh Lithium-ion Battery (LIB) manufacturing plant in Townsville, Queensland.
The Jobs and Regional Growth Fund Assistance Agreement for the Feasibility Study into the Townsville Battery Manufacturing Facility was formally signed by iM3 Townsville directors and the State of Queensland, acting through the Department of State Development, Manufacturing, Infrastructure and Planning.
The feasibility study for the 15 GWh LIB manufacturing plant in Townsville commenced following the agreement to fast track development in June this year. Initial work has focused on selection of equipment vendor partners and the development of the manufacturing design concept. In parallel, Townsville City Council has been compiling site information and discussions with major infrastructure providers and funders have commenced. From this work, iM3 Townsville has composed a Project Description Report that backgrounds key project details, including: site specifications, battery product specifications and the manufacturing process concept.
Feasibility Study lead construction partner Probuild has established project offices in Brisbane and Townsville from where the Feasibility Study will be delivered. Planning meetings with the main study participants were recently held to map out the feasibility study process and to establish project systems and schedule future work programs.
Imperium3 Pty Ltd is an Australian unlisted company, comprised of three equal shareholders, ASX listed Magnis Resources Limited, US based Charge CCCV (C4V) and Australian unlisted company Boston Energy and Innovation (BEI).
The $3.1M Assistance Agreement is confidential between iM3 Townsville and the Queensland Government. It should be noted the Assistance Agreement has several obligations on iM3 Townsville that must be delivered, to meet the key terms of the Assistance Agreement.
The Assistance Agreement defines three distinct payment milestones associated with the staged delivery of components of the feasibility study and supporting information with the aim to have the Feasibility work fully completed in the first half of 2019.
Dendrobium Joint Development Agreement
The Company signed a Joint Development Agreement (JDA) with Dendrobium Automotive Limited (DAL), Dendrobium Advanced Technologies Limited (DATL) and Charge CCCV LLC (C4V) to produce the next generation high performing batteries including semi-solid state batteries.
Under the agreement, a working group has been created to develop and produce the next generation high performance batteries using technology developed by C4V and Magnis. Areas of co-operation include battery packaging solutions, battery hybrid systems, battery management software, battery performance testing and battery development materials.
C4V’s Generation II and semi-solid state battery technologies are targeted for DAL. C4V has been at the forefront of developing and acquiring technologies that are drop-in to existing supply chains as well as manufacturing footprints to improve performance and reduce cost to make them commercially viable.
DAL is an electric vehicle (EV) and plug-in hybrid vehicle (‘PHEV’) development and production company with an all- electric hypercar (D-1), which was engineered to an advanced concept stage by Williams Advanced Engineering
Limited part of the Williams Formula1 Group, to demonstrate its advanced technologies through dynamic performance.
DATL is an advanced engineering company specialising in performance technology and component design and development including battery development and packaging systems for EV’s and PHEV’s.
Funding and Significant Investment
The Company announced in early September that AL Capital Holding (“ALC”) had invested $11.1M in Magnis for a 4.98% equity holding in the Company. The investment was via a placement of 30,000,000 shares issued at $0.37 per share.
A few weeks following this investment, ALC advised the market that it had increased its holdings in the Company with an initial substantial holding notice to indicate their investment holding had increased to 5.5% in Magnis through some on-market purchases. Magnis welcomes the ALC investment and support as it is a testament of the projects and technologies that the Company is attempting to develop.
The cash position for the Company at 30 September 2018 was A$8.5M. On 12 September 2018, the Company announced to the ASX that it had completed the transaction to acquire a 10% interest in battery technology group C4V. As part of the completed transaction, US$1M in cash was paid to C4V.
Further to the recent news on the placement to ALC, The Hon. Warwick Smith, AM was appointed as a non-executive
director of the Company. Warwick is Executive Chairman of ALC.
Mr Smith has extensive public policy and commercial acumen and a wealth of experience from national and international business relations in a variety of industries including property, financial services, natural resources, energy, transportation, heavy machinery and equipment, health, media, technology and entertainment. He is currently a director of Seven Group Holdings (ASX: SVW) and director of Estia Health Ltd (ASX: EHE). He is currently Chairman of the Australia China Council, Chairman Emeritus of the Asia Society Australia and Global Trustee of the Asia Society, Chairman of the Advisory Board of the Australian Capital Equity Group of companies, and a director of Coates Hire, ANZ Bank China and Chair of ANZ Bank Thailand.
Tanzania – Nachu Graphite Project (NGP)
The NGP in Tanzania continues to progress. During the quarter, re-demarcation of the Special Mining Licence area for the NGP in order to be compliant with the new mining regulations requirements was completed. The pegging included setting two metre high posts and short trenches in the directions of the boundary and updating peg details to include owner, mineral and licence number information.
As part of Corporate Social Responsibility, the Company through its subsidiary, Uranex Tanzania Limited, prepared and presented maps to the Ruangwa District Authority. The maps highlight the location of all schools in the District and will assist with planning and fund distribution by authorities. An assessment of schools in terms of materials and infrastructure continued during the period with the support of the District school officers.