Raising Capital for Candiac - A lesson from Formidable Here is a link to show how Formidable handled the news circa March 2021 when Nano One raised $25MM in capital by issuing new shares:
https://www.formidableam.com/nano-one-update-after-the-capital-raise/?gf_protect_submission=1
As you can see, Formidable was unaware of Nano's plans to raise capital by issuing shares and were not happy at first. But they did come around to understand the motives of Nano management and ultimately Formidable was aligned with the decision to raise capital.
"Nano One recently issued stock at $5.35 Canadian to raise a total of $25M. While we were first concerned about this decision, after speaking to the company, we feel more sanguine about the prospects for this capital. Obviously, dilution is nothing we cheer, especially as shareholders of a company without earnings currently."
Now this was capital raised when Nano share price was above $5!! And to raise only $25 million!
Now think of where we are today. Again, absolutely a great justification to raise more capital in the very near term to fund construction of Candiac #2. But in all likelihood, Nano will need to somehow raise about $150 million dollars USD. And there share price is under $2.
We do not presently know how Nano will come up with the ~$200USD to build Candiac #2. We can hope that the governments (federal and provincial combined) gives Nano upwards or what maybe $75 million USD if we're lucky (and recall that Quebec made NorthVolt give up equity in the company when they provided funding for NorthVolt 6).
A partnership/JV would be a best case scenario where the partner (say SMM or Unicore for example) foot the bill to pay for Candiac #2 and they get exclusive rights to all 25,000 tpa offtake at a very good licensing rate. Not sure this is ideal for Nano since they would be giving up long term royalty revenue by needing to provide the partner with a great deal on licensing.
Issuing stock at $2 might be catastrophic for current shareholders but might in fact be the best long term decision for the company. And Nano management get lots of options each year so if share price crashes, strike price on next year's options will be fantastic.
Taking on debt would be a great solution if they can get a line of credit that large. Perhaps with government support and based on the current success of Candiac pilot, a line of credit is possible.
In any case, we will know very soon the answer to the BIG question about funding Candiac #2 and other potential expansion projects Nano is planning.
Last time a major raise was done by Nano, Formidable was left in the dark. Formidable should not have more knowledge than the public, but perhaps with this looming capital raise, Formidable decided to walk away from their Nano One investment. It's just speculation and there could be an infinite of reasons Formidable has decided to abandon Nano One. But the fact is, Formidable who have done excellent research on Nano One and who understand Nano's potential as good as anyone else in the market, is longer a shareholder having sold off all of their 4 million ++ shares.
Looking forward to hearing from Nano on these items.
I remain long Nano One.
good luck to all the longs.