NEO Battery Materials Provides Letter to Shareholders – 2024 Strategy & Outlook - Seite 2

2024 Strategy & Outlook: An Efficient Route-to-Commercialization
Over the forthcoming 12 months, the Company has configured the commercialization strategy to emphasize prudent operational execution, capital efficiency and conservation, and business risk mitigation: NEO Battery Materials will prioritize optimizing NBMSiDE electrochemical performance and cost competitiveness to establish advanced commercial agreements (i.e., joint development agreement or collaboration agreement) with testing partners in the global EV battery supply chain.

With unanimous consensus, NEO’s management, engineering team, and scientific advisors judge that this revised primary milestone and overarching strategy will pave a route-to-commercialization with lowered capital and sunk-cost requirements, reduced financial and operational risk, and a more efficient timeline. NBMSiDE performance that fulfills testing partners’ standards will generate long-term value creation. Further agreements/contracts in the battery supply chain will also serve as independent validation for NBMSiDE, effectively reducing technology risk.

Our 2024 strategy will be executed through a 5-pillared approach. In no specific order, these 5 pillars will guide the overall direction and outlook of the Company and will act synergistically to create sustaining shareholders’ value.

Pillar 1: Fulfilling Growing Silicon Anode Need by Expanding Supply Chain Network
In 2023, NEO Battery Materials executed a record number of non-disclosure agreements (NDA) with global battery cell manufacturers, EV original equipment manufacturers (OEM), and chemical material companies. Technological breakthroughs primarily drove battery supply chain interest and demand for NEO’s silicon anode materials.

The need for silicon anodes in EV lithium-ion batteries is also escalating. The global EV adoption rate will depend on battery cost reductions and performance enhancements. Accordingly, EV OEMs are prioritizing EV price cuts by offering more low-cost, short-range lithium-iron-phosphate (LFP) cathode batteries in the place of high-cost, long-range nickel-manganese-cobalt (NMC) cathode batteries.

Silicon anode demand is becoming prevalent as it is the most promising and feasible material that can compensate for the capacity and range loss of LFP cathode batteries. Compared to current graphite anodes, silicon anodes can theoretically store 10 times more specific capacity with ultra-fast charging capabilities. However, silicon expands 300% in volume during charging/lithiation, and natural silicon will experience particle fracture, delamination, and thick solid electrolyte interphase (SEI) growth, rendering the material obsolete in only 100 charging cycles. Current technologies that resolve silicon’s volume expansion problem utilize energy-intensive manufacturing methods with high-cost inputs, limiting scalability and mass implementation due to cost constraints.