Magnis Energy Technologies brings in new certifiers as approval delays weigh on battery sales

Magnis Energy Technologies is yet to post revenues from the sale of batteries from its New York gigafactory, months after chair Frank Poullas told shareholders they would see results.

Long-promised revenues from ASX-listed energy and graphite play Magnis Energy Technologies remain elusive, as certification delays on its flagship battery factory continue to erode the firm’s cash.

In its latest market update, Magnis revealed it brought in an additional certifier as it struggles to get sign-off on its lithium batteries from its flagship New York factory, with sales stagnant.

In the March quarter, Magnis banked no money from customers, but burned through $13.4m.

This included $2.2m spent on property, plant and equipment, and $237,000 on payments to related parties, including directors’ fees, consulting fees and “payments made for services provided by an associate of a related party”.

Magnis said it had raised $25m in the period from SBC Global’s Capital Global Opportunities Master Fund, with the possibility of a further $25m.

Magnis estimated it had 3.2 quarters of funding available.

The company said it had appointed an additional independent certified in the quarter to “accelerate the certification of cells” to an international standard, indicating they are safe to transport.

This reflects the risk of lithium cells rupturing or catching fire.

A cargo ship carrying 4000 vehicles, The Felicity Ace, sank last year after a fire onboard fuelled by the highly reactive lithium cells in electric vehicles.

Magnis said it has sent some cells to customers for assessment “to ensure they meet their individual requirements”.

The cells are being produced at the Imperium3 battery plant in Endicott in upstate New York. Magnis holds a controlling stake in the plant and largely bankrolled its construction.

Battery company Charge CCCV, in which Magnis holds a 9.65 per cent stake, has givnd Magnis exclusive use of its technology in the US market.

Geelong-based Recharge Industries, which bought collapsed battery play Britishvolt in February this year, has announced plans to use similar C4V technology in Australia and Britain.

Magnis said once it secured independent certification it would ship “commercial quantities” of cells from the Imperium3 battery plant to customers.

In a statement to investors, Magnis said its customer Sukh Energy would take delivery in the second half of 2023.

“The sales team has continued to focus on obtaining deposits and locking in initial delivery dates once the customer has completed their internal testing,” Magnis said. Magnis has previously flagged that Sukh energy would be the biggest buyer of its batteries as part of $655m in offtakes announced for the gigafactory.

This included $4.68m in sales to Sukh Energy from the plant in the 2022 financial year.

Magnis has faced questions from the ASX over Sukh Energy’s ability to pay, after The Australian revealed the business had no revenue and assets of just $70,000, but the firm told the market operator the Indian energy business “will be able to satisfy its contractual obligations to (the plant)”.

Magnis chair Frank Poullas has repeatedly promised investors “money will be flowing through the door”.

“We would expect some time in December as soon as we get certification … we will see revenue coming in,” he told investors at Magnis’s annual general meeting.

“There’s no shortage of customers right now.”

He told investors in November technical sign-off would be achieved in two to three weeks.

Mr Poullas told the ASX Investor channel in January 2022, “within six months there will be revenues coming through”.

Magnis is pushing forward with a planned expansion of the battery plant, almost doubling its headcount.

Shares in Magnis have slumped from their peak earlier this year, falling from 25c from their January peak to 20c by Friday’s close.

Magnis did not respond to requests for comment.