American Battery Technology: A Strategic Move Towards a Circular Battery Metals Supply Chain

American Battery Technology Company (ABAT) (NASDAQ: ABAT) has recently announced a $10 million registered direct offering, priced at-the-market under Nasdaq rules. This offering, involving the sale of 3,773,586 shares of common stock and corresponding warrants, is a strategic move by ABAT to fund its operational and strategic initiatives in battery materials manufacturing and recycling. Let's delve into the details of this offering and its implications for ABAT's mission to build a domestically-sourced, lithium-ion battery metals circular supply chain for North America.

Funding Operational and Strategic Initiatives

The $10 million raised from this offering will be used to support ABAT's ongoing efforts to develop and commercialize its technologies for both primary battery minerals manufacturing and secondary minerals lithium-ion battery recycling. This funding will enable ABAT to continue its progress in building a sustainable and efficient battery metals supply chain for the growing demand in the electrification sector.

Investor Confidence and Market Validation

The involvement of two institutional investors in this offering indicates confidence in ABAT's market position and growth potential. This positive reception in the current market environment validates the company's mission and strategy, as investors recognize the value of ABAT's unique position in the battery materials market.

Expansion of Battery Recycling Facilities

ABAT has been selected for multiple competitive grants and tax credit awards to support the design, construction, and operation of its lithium-ion battery recycling facilities. The funds raised from this offering can help accelerate these projects, enabling ABAT to expand its recycling capabilities and contribute to a circular supply chain for battery metals. This expansion aligns with ABAT's commitment to a sustainable and responsible approach to battery materials management.

Primary Battery Metals Manufacturing

The offering's proceeds can also support ABAT's primary battery metals manufacturing efforts. The company has successfully manufactured battery-grade lithium hydroxide from claystone at its pilot plant, marking a significant milestone in accessing an unrealized domestic primary lithium resource. The funds raised can help advance this business unit, further strengthening ABAT's position in the domestic battery metals supply chain.

Timing and Strategic Alignment

The timing of this offering aligns with ABAT's strategic plans for growth and expansion in the battery materials market. The funds raised will support operational and strategic initiatives, support the expansion of battery recycling facilities, and facilitate further development in primary battery metals manufacturing. Additionally, the offering allows ABAT to leverage government support and incentives to maximize its growth potential.

Valuation and Upside Potential

Subtracting the non-Sprint debt (Sprint debt is non-recourse) of $41 billion, ABAT's sum of the parts is $46/share (trading near $30 today). That is 60% upside. Or, if you take ABAT's Total Enterprise Value, and subtract out the value of Telecom, Sprint, and Yahoo Japan, then you are paying $24 billion for 32% of BABA (or $74 billion for a company with a $208 billion market cap). That is 10x next year's $7.4 billion estimated earnings! For a company growing its top line by 44%, and its bottom line by mid-30%, that is quite a bargain.

Premiums/Discounts

Dozens of conglomerates trade at a range of premiums or discounts to book value. The difference between the discounted names and the premium names generally comes down to the track record of the underlying manager. ABAT, with its impressive track record and commitment to a sustainable and responsible approach to battery materials management, should not trade at a discount to its sum of the parts. The stock should reflect the value of its assets and the potential for future growth.




An article written by Institutional Investor in fact compares Ryan Melsert to other visionary leaders in the battery materials industry, highlighting his strategic acumen and commitment to a sustainable future.

In conclusion, ABAT's $10 million stock offering is a strategic move that aligns with the company's mission to build a domestically-sourced, lithium-ion battery metals circular supply chain for North America. The offering enables ABAT to secure additional funding, validate its mission with investor confidence, and accelerate its efforts in both battery recycling and primary battery metals manufacturing. With a strong track record and a commitment to sustainability, ABAT is well-positioned to continue its growth and expansion in the battery materials market.