TLG Ann: Verkor signs non-binding LOI for Talga Anode Supply - 11th Jan 2023, 8:19am

[annb0t]

TLG Ann: Verkor signs non-binding LOI for Talga Anode Supply
Price Sensitive: Y
Date: 11th Jan 2023, 8:19am

>>> Read announcement: Google: TLG Market Announcements

 

[JNRB]

Whoop whoop!

 

[WheresTheMonkey]

We even made The Australian newspaper today........

34 MINUTES AGO

Talga lines up EV group Verkor​

VALERINA CHANGARATHIL
Perth-based Talga has lined up Renault-backed Swedish EV battery maker Verkor as a potential customer for its graphite anode from its proposed Vittangi development in Sweden.
The groups signed a non-binding letter of intent, which comes as Talga gears up for a key environmental permit hearing on the project later this month.
Talga's environmental permit and exploitation concession application for a graphite mine and concentrator at the Nunasvaara South deposit at Vittangi was submitted in 2020. The month-long hearings in the Swedish Land and Environment court will be key to Talga's goal to produce 19,500 tonnes per annum of the battery anode product, Talnode-C, over 24 years.
Verkor, backed by multiple prominent partners including Renault Group, EQT Ventures, Demeter FMET and Sibanye-Stillwater, is targeting opening its first Li-ion battery gigafactory in 2024 in Dunkirk, France.
The letter is part of Talga's plan to allocate its planned anode production across offtake supply agreements in support of project financing, primarily focusing on European customers. Talga, which has a market capitalisation of $527m, last traded at $1.58.

 

[WheresTheMonkey]

This is a bit of a coincidence in the announcement

First this bit............................

The Vittangi Anode Project
Talga is building Europe’s first battery anode plant in Luleå, Sweden. The initial operation, fed from the Nunasvaara South graphite mine, will produce 19,500tpa (~16 GWh/annum) of Talnode®-C for the fastgrowing Li-ion battery market.

Then this as well.................

Verkor’s goal is to open its first Li-ion battery Gigafactory in 2024 in Dunkirk, France, with a 16 GWh/annum capacity, followed by long-term expansion to 50 GWh/annum by 2030.

 

[JNRB]

Nice pickup.
Could just be coincidence.
But then again....

 

[WheresTheMonkey]

Nice pickup.
Could just be coincidence.
But then again....

Just coincidence I think

 

[WheresTheMonkey]

Note that there are no quantities mentioned in this latest LOI.

Should ACC start getting nervous ?

Remember that article from the Australian Financial Review that was posted a month ago ?

Inside the Swedish shed that might upend the battery market

In far northern Sweden, Talga Group is closing in on a decade-long goal: to mine and manufacture battery materials for Europe, in Europe.

www.afr.com

Here's an Extract

But Talga missed a November 30 deadline to nail down its first binding offtake agreement for its flagship anode product, Talnode-C. That would have been a full-fat version of a September non-binding deal with ACC, a battery maker owned by Mercedes-Benz and Stellantis, which makes brands including Fiat, Peugeot and Chrysler.

“Talga and ACC expect to finalise negotiations and definitive documentation shortly,” Talga said in an ASX statement last week. But it added a rider: “There can be no guarantee the documentation will be finalised.”

Thompson says Talga has “a bunch of other customers that are interested”, and the ABCD sample production process is “starting to mature now” with some of those.

 

[Semmel]

Interesting development. Though, it seem Verkor is quite a junior company. Founded in June 2020. The earliest article I could find on them:

Verkor, Europe’s new battery cell producer, begins its industrial journey - European Battery Alliance

Verkor, a French industrial company, is set to amplify battery cell production in Europe, with the support of EIT InnoEnergy, Schneider Electric and the GROUPE IDEC. The new venture will accelerate the production capacity of low-carbon batteries in southern Europe to meet growing demand for...

www.eba250.com

It doesnt sound like a company that Talga should be basing its future on at this stage. As a customer for a small part of the production, sure. But Verkor seems to be too small and too early to be a reliable first customer. Their production is projected to start in 2024, their first ever factory no less. They can be lucky if they dont go out of business trying to get that thing going. Verkor as a company doesnt have experience. Cant have, they never produced anything beyond lab scale. They might have experienced employees, but who knows? Due to the lack of experience, I do not trust their ability to tell whether Talnode-C is any good. Sure I also hope it is killing it performance wise, and for all we know, at least on lab scale, Talnode-C is superb. However, the proof by fire comes when it is accepted by a high volume manufacturer. Verkor is not that manufacturer.

Non-binding agreements were hot air in the past and I grew extremely skeptical on them in general. But this one in particular is not even hot. This LOI has 0 value.

Please dont get me wrong. I said this in the past, I am not here to shit on Talga or its achievements. I just refuse to be wear everything-is-perfect-glasses. For the record, I continue to hold my shares and havnt sold any ever. But I hold them for collection of good reasons, empty promises like this one are not part of it though.

 

[SoundandtheFury]

Interesting development. Though, it seem Verkor is quite a junior company. Founded in June 2020. The earliest article I could find on them:

Verkor, Europe’s new battery cell producer, begins its industrial journey - European Battery Alliance

Verkor, a French industrial company, is set to amplify battery cell production in Europe, with the support of EIT InnoEnergy, Schneider Electric and the GROUPE IDEC. The new venture will accelerate the production capacity of low-carbon batteries in southern Europe to meet growing demand for...

www.eba250.com

It doesnt sound like a company that Talga should be basing its future on at this stage. As a customer for a small part of the production, sure. But Verkor seems to be too small and too early to be a reliable first customer. Their production is projected to start in 2024, their first ever factory no less. They can be lucky if they dont go out of business trying to get that thing going. Verkor as a company doesnt have experience. Cant have, they never produced anything beyond lab scale. They might have experienced employees, but who knows? Due to the lack of experience, I do not trust their ability to tell whether Talnode-C is any good. Sure I also hope it is killing it performance wise, and for all we know, at least on lab scale, Talnode-C is superb. However, the proof by fire comes when it is accepted by a high volume manufacturer. Verkor is not that manufacturer.

Non-binding agreements were hot air in the past and I grew extremely skeptical on them in general. But this one in particular is not even hot. This LOI has 0 value.

Please dont get me wrong. I said this in the past, I am not here to shit on Talga or its achievements. I just refuse to be wear everything-is-perfect-glasses. For the record, I continue to hold my shares and havnt sold any ever. But I hold them for collection of good reasons, empty promises like this one are not part of it though.

Wonder if these smaller players are more amenable to paying what Talga is asking...they desperately need anode and Talga has it all wrapped up in a bow. That way Talga doesn't have to be strong armed by big players.

 

[TentCity]

Interesting development. Though, it seem Verkor is quite a junior company. Founded in June 2020. The earliest article I could find on them:

Verkor, Europe’s new battery cell producer, begins its industrial journey - European Battery Alliance

Verkor, a French industrial company, is set to amplify battery cell production in Europe, with the support of EIT InnoEnergy, Schneider Electric and the GROUPE IDEC. The new venture will accelerate the production capacity of low-carbon batteries in southern Europe to meet growing demand for...

www.eba250.com

It doesnt sound like a company that Talga should be basing its future on at this stage. As a customer for a small part of the production, sure. But Verkor seems to be too small and too early to be a reliable first customer. Their production is projected to start in 2024, their first ever factory no less. They can be lucky if they dont go out of business trying to get that thing going. Verkor as a company doesnt have experience. Cant have, they never produced anything beyond lab scale. They might have experienced employees, but who knows? Due to the lack of experience, I do not trust their ability to tell whether Talnode-C is any good. Sure I also hope it is killing it performance wise, and for all we know, at least on lab scale, Talnode-C is superb. However, the proof by fire comes when it is accepted by a high volume manufacturer. Verkor is not that manufacturer.

Non-binding agreements were hot air in the past and I grew extremely skeptical on them in general. But this one in particular is not even hot. This LOI has 0 value.

Please dont get me wrong. I said this in the past, I am not here to shit on Talga or its achievements. I just refuse to be wear everything-is-perfect-glasses. For the record, I continue to hold my shares and havnt sold any ever. But I hold them for collection of good reasons, empty promises like this one are not part of it though.

Yeah I tend to agree with you Semmel on this one in respect that I had hoped Talga’s 2nd customer was going to be another major OEM/Cell Maker. Instead, I had to Google Verkor to find out who they were!! I am of course familiar with Renault and also Sibanye-Stillwater, but the other JV partners, not so much.

I think the fact that ACC has completed qualification for Talnode-C and is backed by Mercedes & Stellantis removes any doubt regarding the quality of Talga’s technology. I’m sure Verkor via Renault similarly have a thorough and robust testing regime, but I agree their endorsement is not as powerful as from ACC or say a VW or Tesla.

I think Sound and Fury may have a good point and that perhaps several of the big OEMs (in my opinion Tesla in particular) would not be that eager to enter a binding deal with a start-up like Talga whereby the terms are not heavily in their own favour. I think they are so used to prospective customers throwing themselves at their feet - just to have the brand name association with a Tesla or VW, that they will be less willing to sign an off take agreement whereby the floating price mechanism is in our favour as Talga shareholders, not locking in a rock bottom price in favour of the OEM.

Anyway, time will tell as I would expect Talga to sign at least 3-4 off take deals, just to ensure there is competitive tension between the customers. Hopefully we also get a nice bit of press coverage associated with the European Commision visit to Kiruna over the next few days. MT hasn’t bobbed up on Twitter saying he’s back in Europe, so perhaps unlikely, but would be a nice surprise nonetheless!

 

[Vigdorian]

Having this announcement is better than not having this announcement.

First of all , I’ll just say that LOIs don’t excite me like they used to but we are reaching the pointy edge and with the shortened timeframe of these LOIs , the likelihood of conversion rises.

Maybe I’ve got my rose colored glasses on but I don’t mind this LOIs for several reasons.
1)We’re sticking with the theme of providing anodes to Europe which has to be looked upon favorably from a permit and financing perspective (e.g. Loans and subsidies)
2) We’re diversifying our customer base
3) We’re also potentially diversifying our product range (for example it might be easier to work with verkor on energy storage or introducing cathode additive down the road)
4) creating price competition
5) increasing our bargaining power

We don’t know yet the terms of the LOI. What if we’re looking at 10,000 tonnes of Talnode C for a kick ass price.

The best analogy is when you build a shopping center . You need 1 or 2 anchor tenants dependent on size e.g woolworths/coles or a Myers (Talga might have ACC) and the anchors generally dictate the terms or receive concessions. The rest is filled with boutique shops (in our case verkor) who usually accept the terms dictated by the developer/owner (I.e Talga). I’m expecting a pyramid shape price guide with ACC at the bottom and players like velkor being charged premium prices.

Ill reserve passing judgement until I see the agreed terms of the deals that are inked … but I’m ok with Talga’s strategy of building and diversifying the client book.

 

[Affenhorst]

Interesting development. Though, it seem Verkor is quite a junior company. Founded in June 2020. The earliest article I could find on them:

Verkor, Europe’s new battery cell producer, begins its industrial journey - European Battery Alliance

Verkor, a French industrial company, is set to amplify battery cell production in Europe, with the support of EIT InnoEnergy, Schneider Electric and the GROUPE IDEC. The new venture will accelerate the production capacity of low-carbon batteries in southern Europe to meet growing demand for...

www.eba250.com

It doesnt sound like a company that Talga should be basing its future on at this stage. As a customer for a small part of the production, sure. But Verkor seems to be too small and too early to be a reliable first customer. Their production is projected to start in 2024, their first ever factory no less. They can be lucky if they dont go out of business trying to get that thing going. Verkor as a company doesnt have experience. Cant have, they never produced anything beyond lab scale. They might have experienced employees, but who knows? Due to the lack of experience, I do not trust their ability to tell whether Talnode-C is any good. Sure I also hope it is killing it performance wise, and for all we know, at least on lab scale, Talnode-C is superb. However, the proof by fire comes when it is accepted by a high volume manufacturer. Verkor is not that manufacturer.

Non-binding agreements were hot air in the past and I grew extremely skeptical on them in general. But this one in particular is not even hot. This LOI has 0 value.

Please dont get me wrong. I said this in the past, I am not here to shit on Talga or its achievements. I just refuse to be wear everything-is-perfect-glasses. For the record, I continue to hold my shares and havnt sold any ever. But I hold them for collection of good reasons, empty promises like this one are not part of it though.

Some good points. However, I'm not sure im very comfortable with ACC in that regard either. Their main backer seems to be Stellantis. Regular statements by their CEO reek of pessimism, unpreparedness and lack of vision with regard to the EV transition. My hope would be that Stellantis' stake can somehow be spun off or sold if/when Stellantis eventually goes bankrupt in a few years. Should be possible, as demand for ACC's batteries should still be there elsewhere in the market.

 

[scep]

“starting to mature now” with some of those.
This statement tells me that ACC is ahead of the pack, followed by Verkor to some extend (ref Semmel), but others are still busy with the qualification process. It will take a lot of time as Mark has stated a number of times. ACC has a first mover advantage, but it's loosing this over time. So far, I like it that Talga has not committed itself yet and calling the other party(s) out to show their cards.

My best guess, stated before, it that the EU committee's meeting in Kiruna will be used to announce a big deal.

Also, using same pink colored glasses, the coming up resource upgrade may be huge and Talga does not want to 'dilute' their near term scarcity position.
Of course, just my opinion.

 

[Semmel]

Having this announcement is better than not having this announcement.

First of all , I’ll just say that LOIs don’t excite me like they used to but we are reaching the pointy edge and with the shortened timeframe of these LOIs , the likelihood of conversion rises.

Maybe I’ve got my rose colored glasses on but I don’t mind this LOIs for several reasons.
1)We’re sticking with the theme of providing anodes to Europe which has to be looked upon favorably from a permit and financing perspective (e.g. Loans and subsidies)
2) We’re diversifying our customer base
3) We’re also potentially diversifying our product range (for example it might be easier to work with verkor on energy storage or introducing cathode additive down the road)
4) creating price competition
5) increasing our bargaining power

We don’t know yet the terms of the LOI. What if we’re looking at 10,000 tonnes of Talnode C for a kick ass price.

The best analogy is when you build a shopping center . You need 1 or 2 anchor tenants dependent on size e.g woolworths/coles or a Myers (Talga might have ACC) and the anchors generally dictate the terms or receive concessions. The rest is filled with boutique shops (in our case verkor) who usually accept the terms dictated by the developer/owner (I.e Talga). I’m expecting a pyramid shape price guide with ACC at the bottom and players like velkor being charged premium prices.

Ill reserve passing judgement until I see the agreed terms of the deals that are inked … but I’m ok with Talga’s strategy of building and diversifying the client book.

This is a good analogy. As a small customer, Verkor is valuable. But that requires a binding offtake before I spin these thoughts. I dont know what the point of the LOI is, as I think both Talga and Verkor would be totally capable of developing a binding offtake without the LOI first. Even a small contract, say, <1kt/year. That would totally fit the bill. Why do the LOI? No idea. Maybe for publicity of both companies, as both need it to be honest.

Some good points. However, I'm not sure im very comfortable with ACC in that regard either. Their main backer seems to be Stellantis. Regular statements by their CEO reek of pessimism, unpreparedness and lack of vision with regard to the EV transition. My hope would be that Stellantis' stake can somehow be spun off or sold if/when Stellantis eventually goes bankrupt in a few years. Should be possible, as demand for ACC's batteries should still be there elsewhere in the market.

I like Talgas focus on European customers as well. A big part why I am invested in Talga. However, both ACC and NV dont have only car OEMs as partners, they also have stationary storage. Which is a huge market as well. As much as I see almost all car OEMs going through violent restructuration this decade, I dont think politics will allow the companies to die. Most, maybe all of the legacy OEMs might go bankrupt and be reinvented as EV only companies as part of the restructuring / government support. There is going to be a lot of blood, but no lack of customers for Talga. What we need is someone dependable, even if it gets violent. And ACC and NV both (and Tesla obviously) can provide that stability. Of course, Talga should not sell it self out for cheap.

I see both ACC and NV plus some smaller companies (like Verkor) as customers of Talnode-C. Tesla might go for the Talnode-Si before Talnode-C, simpley due to the volume involved. Once Niska is running, I guess Talga will supply almost everyone to some degree. But lets not get ahead of ourselfs.

@Vigdorian said it well, Verkor is a small boutique customer to Talga, but a I dont see a binding contract in Q1. As I see it, a binding offtake in Q1 has value to Talga obviusly. the LOI does not. Lets hope the volume is small but juicy.

 

[anbuck]

Interesting development. Though, it seem Verkor is quite a junior company. Founded in June 2020. The earliest article I could find on them:

Verkor, Europe’s new battery cell producer, begins its industrial journey - European Battery Alliance

Verkor, a French industrial company, is set to amplify battery cell production in Europe, with the support of EIT InnoEnergy, Schneider Electric and the GROUPE IDEC. The new venture will accelerate the production capacity of low-carbon batteries in southern Europe to meet growing demand for...

www.eba250.com

It doesnt sound like a company that Talga should be basing its future on at this stage. As a customer for a small part of the production, sure. But Verkor seems to be too small and too early to be a reliable first customer. Their production is projected to start in 2024, their first ever factory no less. They can be lucky if they dont go out of business trying to get that thing going. Verkor as a company doesnt have experience. Cant have, they never produced anything beyond lab scale. They might have experienced employees, but who knows? Due to the lack of experience, I do not trust their ability to tell whether Talnode-C is any good. Sure I also hope it is killing it performance wise, and for all we know, at least on lab scale, Talnode-C is superb. However, the proof by fire comes when it is accepted by a high volume manufacturer. Verkor is not that manufacturer.

Non-binding agreements were hot air in the past and I grew extremely skeptical on them in general. But this one in particular is not even hot. This LOI has 0 value.

Please dont get me wrong. I said this in the past, I am not here to shit on Talga or its achievements. I just refuse to be wear everything-is-perfect-glasses. For the record, I continue to hold my shares and havnt sold any ever. But I hold them for collection of good reasons, empty promises like this one are not part of it though.

This is actually a negative value announcement in my book. If demand for Talga anode is so high, Talga should be able to secure offtakes with market leaders, not startups. And the fact that qualification isn't even completed yet means that it can't be just that smaller companies are getting through qualification faster.

 

[Semmel]

This is actually a negative value announcement in my book. If demand for Talga anode is so high, Talga should be able to secure offtakes with market leaders, not startups. And the fact that qualification isn't even completed yet means that it can't be just that smaller companies are getting through qualification faster.

In my book, its not negative.. Its neutral. I have no idea how talks with other, larger, manufacturers is going, and I dont think this announcement changes anything we know on these. And I dont think qualification timing could be gauged either since Verkor would likely not be first in line to receive samples. Who knows how long qualification takes for the various companies?

 

[anbuck]

In my book, its not negative.. Its neutral. I have no idea how talks with other, larger, manufacturers is going, and I dont think this announcement changes anything we know on these. And I dont think qualification timing could be gauged either since Verkor would likely not be first in line to receive samples. Who knows how long qualification takes for the various companies?

Why bother to put out an announcement with a startup who hasn't finished qualification yet if you've already got big companies in advanced talks?

 

[Monkeymandan]

Having this announcement is better than not having this announcement.

First of all , I’ll just say that LOIs don’t excite me like they used to but we are reaching the pointy edge and with the shortened timeframe of these LOIs , the likelihood of conversion rises.

Maybe I’ve got my rose colored glasses on but I don’t mind this LOIs for several reasons.
1)We’re sticking with the theme of providing anodes to Europe which has to be looked upon favorably from a permit and financing perspective (e.g. Loans and subsidies)
2) We’re diversifying our customer base
3) We’re also potentially diversifying our product range (for example it might be easier to work with verkor on energy storage or introducing cathode additive down the road)
4) creating price competition
5) increasing our bargaining power

We don’t know yet the terms of the LOI. What if we’re looking at 10,000 tonnes of Talnode C for a kick ass price.

The best analogy is when you build a shopping center . You need 1 or 2 anchor tenants dependent on size e.g woolworths/coles or a Myers (Talga might have ACC) and the anchors generally dictate the terms or receive concessions. The rest is filled with boutique shops (in our case verkor) who usually accept the terms dictated by the developer/owner (I.e Talga). I’m expecting a pyramid shape price guide with ACC at the bottom and players like velkor being charged premium prices.

Ill reserve passing judgement until I see the agreed terms of the deals that are inked … but I’m ok with Talga’s strategy of building and diversifying the client book.

Nice analogy.

 

[ACinEur]

Interesting to see them EMN signed a similar deal with Verkor today…More detail in that announcement, but gives some clues as to what pricing structure might be for TLG…Seems like Verkor are out of the blocks and locking in supply…the advantage of being a ‘new’ company maybe? Without the ‘Procurement Departments’ and the bureaucracy of the bigger players…?

 

[Coolbeans]

I think it is more to do with EU funding, and maybe the big OEMs playing hard ball so it's mk saying we will sell to anyone willing to pay our price. Bottom line there will be not shortage of demand for our anodes