Battery tech company, Novonix [ASX:NVX], saw operating cash outflows reach $20 million for the quarter.
Despite being up over 110% in the last 12 months, the NVX share price has been in a correction recently. Year-to-date, NVX shares are down 40%.
Is Novonix’s cash burn an issue for investors?
Source: TradingvVew.com
Novonix’s March quarter
Across the year, Novonix has seen several changes and in-house transitions, including new board recruitments, a five-year sponsorship passed with Dalhousie University, new lithium-ion anode agreements with Phillips 66 and a US Department of Energy grant of US$5.57million.
During this quarter, Novonix also listed on the Nasdaq.
As Novonix’s CFO Nick Liveris commented in February:
‘Listing on the Nasdaq Stock Market is a natural next step for Novonix, and a significant milestone.
‘The listing expands our audience of worldwide institutional investors, improving the liquidity in the trading volume of our stock, allowing Novonix to continue to create long-term shareholder value.’
In other news, Novonix signed agreements with KORE Power this year, enabling NVX to become the main graphite anode supplier of the power company.
Novonix also invested US$25million for a 5% stake in the power company.
Agreements with Samsung SDI and Sanyo are also ongoing.
Novonix burns cash
During the March quarter, Novonix generated $2.1 million from customer receipts.
That wasn’t enough to cover its other operating expenses, with NVX reporting operating cash outflows worth $20 million for the quarter and $35.8 million for the nine months year-to-date.
Surprisingly, Novonix spent more on administration and corporate costs ($15.8 million) than research and development ($2.2 million) during the quarter.
The company spent a further $25.8 million on investing activities.
Novonix ended the quarter with $211.8 million in cash, thanks to $208 million raised from issuing shares in prior quarters.
NVX share price outlook
Last year was a big year for emerging lithium companies like Novonix and Vulcan Energy Resources [ASX:VUL].
Both VUL and NVX reached their all-time highs last year, with Novonix peaking in November at $12.47 and Vulcan peaking in September at $16.65.
Since then, however, the two then-leading lithium stocks entered a correction.
NVX is trading 58% below its peak.
And VUL is trading 49% below its own.
Attention turned to new lithium stocks. Juniors like Lake Resources [ASX:LKE] and Sayona Mining [ASX:SYA], for instance.
But is Novonix’s recent correction a cautionary tale for LKE and SYA? Are the latter reaching their top?
Both are currently trading below their 52-week highs, with LKE shares down 25% from its peak.
But if LKE and SYA may be reaching the top, are there other lithium stocks that have yet to reach their potential?
Are there ASX lithium stocks the market is overlooking right now in favour of high-flying juniors?
Our team at Money Morning believe so. Check out the latest free report that profiles three such stocks here.
Regards,
Kiryll Prakapenka,
For Money Morning
