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Natcore’s Latest PR- Black Silicon to Slash Solar Cell Production Costs by 23.5%

Reprint of Latest Press Release:

“Making plans to take our technology to market” -Provini

 Red Bank, N.J. — (October 30, 2013) — An independent study has concluded that Natcore Technology’s (NXT.V; NTCXF.PK; 8NT) black silicon technology could reduce silicon solar cell production costs by up to 23.5%.

The savings derive from a streamlining of the production process whereby a silicon wafer is processed into a black silicon solar cell.

To make solar cells, manufacturers typically acquire silicon wafers from an outside source. Since these wafers are cut from a large ingot, they usually have saw damage, which must be removed. To make a conventional solar cell, manufacturers must first remove the saw damage, then texturize the wafer surface, and then apply an antireflective coating.

To make a black silicon cell using Natcore’s proprietary process, manufacturers would be able to replace the texture etch with a black silicon etch which in itself would create a highly effective antireflective coating.

Thus the most expensive part of the solar cell process – the equipment and material costs associated with high-temperature chemical vapor deposition of a silicon nitride antireflective coating – is completely eliminated.

Natcore asked analysts at the country’s leading black silicon research facility to quantify the cost saving to be realized from omitting these steps. Using a “bottom up” manufacturing cost estimating methodology, the analysts calculate the production cost of a conventional silicon solar cell to be 17¢ per watt. In comparison, the study projected that cells made using Natcore’s black silicon process would cost about 13¢ per watt.

The resulting savings of 3¢/watt – 4¢/watt represent a production cost reduction of up to 23.5%. “When solar companies are scrambling to save fractions of a cent, a saving of 3¢ – 4¢ per watt is momentous,” says Dr. Dennis Flood, Natcore’s co-founder and Chief Technology Officer.

In addition to the dramatic cost reduction, Natcore’s test, which was conducted using monocrystalline silicon, had an important environmental benefit: it eliminated the need for silane, a highly toxic gas that combusts upon exposure to air. Natcore may plan a similar test using polycrystalline silicon at a later date.

“We knew there would be a cost saving,” says Chuck Provini, Natcore’s president and CEO. “We were surprised that it was so large. In fact, production-cost savings of this magnitude will likely overshadow any power gains of black silicon and will make Natcore’s technology a must-have for the world’s solar cell manufacturers.

“To put it into perspective,” he notes, “a recent article by Shyam Mehta, senior solar analyst of GTM Research (‘Technology not materials to drive down Chinese solar costs,’ August 2013), predicts that Chinese manufacturers will be able to cut prices by only one cent in the next year or so. We could quadruple those savings in one fell swoop. We feel so optimistic about this development that we’ve begun making plans to take our technology to market.”

“The full cost of a solar cell is the sum of two parts: the cost of the silicon wafer and the cost of the processing steps required to turn the wafer into a working solar cell,” says Flood. “Cell manufacturers have no control over the cost of the silicon wafers they buy. As a result they are always looking for ways to control their production costs, but with a very important caveat:  cost cutting must not lower cell performance in any way.  Natcore’s black silicon processing technology results in solar cells that meet or exceed the industry’s requirement and at the same time provide a spectacular reduction in finished cell cost. Natcore’s technology can easily be retrofitted into existing solar cell production lines and can just as easily be incorporated into a new line. Black silicon seems poised to become the industry’s standard approach.”

Message from Natcore’s CEO

Last post I wrote about Natcore Technology. The president wrote a message to shareholders on the website that I thought was important enough to share considering my previous post. Here it is below:

I think it was the 1970s when I first realized that it was no longer possible to buy a television set that was made in America.
As time went on, I began to notice other products that had suffered a similar fate: stereo equipment, digital cameras, and small appliances immediately come to mind. I’m sure you could add to the list.
And I realized this: Whoever owns the technology owns the industry.
We at Natcore are determined that the solar industry will not go the way of the transistor radio. For that reason, much of our time is spent in developing and protecting our solar technology. We are determined that the solar industry will be based on our home soil.
We’ll soon convene a series of meetings with our scientific brain trust, whom we believe are the greatest solar scientists in the world today. This distinguished cadre includes:
Dr. Dennis Flood, Natcore co-founder and Chief Technology Officer. A NASA veteran, with more than 30 years’ experience in developing solar cell and array technology for both space and terrestrial applications.
Dr. Andy Barron, Natcore co-founder. The Charles W. Duncan, Jr.-Welch Chair of Chemistry and Professor of Materials Science at Rice University, as well as a visiting Professor at the University of Wales.
Dr. David Levy, Natcore Director of Research & Technology. A Chemical Engineering PhD, with a minor in Electrical Engineering, from MIT, then 20 years as a research scientist at Eastman Kodak.
Dr. Daniele Margadonna, Chairman, Natcore advisory board. Chief Technology Officer of MX Group SpA in Villasanta, Italy. An international expert in the solar photovoltaic industry with extensive experience in the planning and construction of turnkey photovoltaic plants.
Dr. David Carlson, Natcore advisory board. Until his recent retirement, the chief scientist of BP Solar, for whom he managed future technology programs and the intellectual property system. He invented the amorphous silicon solar cell at RCA Laboratories
Our multitalented technicians—Ted Zubil, Rich Topel and Wendy Ahearn– will participate, too. They’re an impressive bunch: they have 26 patents among them.
The meetings will be held at our Research and Development Center in Rochester, NY. Their purpose can be expressed in these questions: What are the strengths of our technology? What are the weaknesses? How can we maximize the strengths and fix the weaknesses? How can we most quickly move our technology from the lab to the production line?
Incidentally, we’ve finally consolidated all of our R&D work in Rochester. So there will be no more need for routine travel to university labs in Ohio, Arizona, and Texas. (Just to let you know how much money this will save us, we’re paying for Dr. Margadonna’s flight from Italy with airline miles accumulated from our past travel.)
In my next President’s message, I’ll report on the results of these meetings.
Sincerely,
Chuck Provini, President, CEO & Director


Disclosure: Long NXT.V

The Paradox of Penny Stock Investing

A lot of investors keep a portion of their portfolios for speculating in the stock market, often referred to as “fun money” by many.  This percentage generally ranges from 1-5% of an investor’s portfolio.  This is the portion of a portfolio that you’d use to bet on stocks that usually have more potential than actual substance; this often times means betting on penny stocks or stocks trading on the OTC market or pink sheets.  Keeping a portion of your portfolio dedicated to this endeavor is like having a release valve for your portfolio.  Many investors may find it to be quite cathartic.  It should be noted, however, that this is not for everyone.  You still have to remain extremely disciplined and, in a sense, compartmentalize the speculative portion of your portfolio to some extent.

Now, you’re not going to read about how to invest speculatively in “The Intelligent Investor” or “One Up on Wall Street,” two of my favorite books, as you might recall from this post.  However, this does not mean that speculative investing shouldn’t be part of your portfolio and shouldn’t be taken just as seriously as your overall investing philosophy.  A sound philosophy should be developed for the “fun money” portion as well.  The goal, just as with the larger portion of the portfolio, should be to minimize risk.  Just because you are speculating with this small part of your portfolio doesn’t mean you want to lose the money any more than you normally would.

There are many types of ways to speculate in the stock market but generally I tend to think of this as focusing on stocks at the low range of the micro cap world, or penny stocks (those interested in options trading, commodities, currency speculation, and other activities such as these should look elsewhere).  These are companies usually trading for a market cap less than $100 million.  Although these stocks should be analyzed just like other stocks in your portfolio there are several particular areas you really need to go over using a fine-toothed comb:

  • Legitimacy
  • Management
  • Growth

The first portion is business legitimacy.  This means that you should be scouring the SEC (or other) filings of the company and looking for any red flags.  It means that you should be evaluating the company as if you were going to start working there the next day.  If you wouldn’t work there, you wouldn’t want to buy the company, surely.  This means you should be asking questions like:

  • Has this company been around for at least 3 years?
  • Does the product/technology/business make sense?
  • Does the company keep issuing shares only to line executives’ pockets and dilute existing shareholders?
  • Is there an inordinate amount of outstanding shares?
  • How is the company financing itself?
  • Does the company carry too much debt?
  • Do insiders own a large portion of the company?
  • How does the company treat its employees?
  • Is the company hiring a lot of new employees?
  • Does the company have reputable partners or do business with those of high repute?
  • Does the company provide sufficient information/transparency to its shareholders?
  • Are the small shareholders valued?

This is by no means an exhaustive list.  But questions along these lines should be asked and the answers you get to them should make you feel comfortable.  If you don’t find an answer you like, find out why and see if it makes sense.  If you find too many red flags in this portion of the process, don’t even move on to next examination step, just move on to the next company.

The next portion is management.  Many times with small companies it’s good to see management that has been around since the company’s inception.  It’s not necessarily a red flag if they haven’t, or the green light if they have, but as a general rule of thumb this should be the case.  Lots of times, with small companies, you can actually call the management and ask questions that concern you.  When speaking to the management try to get a sense of whether or not these are people you can trust.  You should ask yourself several questions after speaking to management:

  • Are they open to honest inquiry?
  • Do they evade or avoid certain questions?
  • Do the answers they give make sense?
  • Do the answers correlate with what you’ve read about the company?
  • Does what they say actually pan out? (wait a bit and see if what is said comes to fruition)

Other factors to consider when looking into the management of such companies are:

  • Have they invested their time, money, blood, sweat, and tears into the company?
  • Do they own a lot of the stock so that they eat their own cooking?
  • What are their credentials?
  • Are they accountable to anyone?
  • What is the track record of management, especially the CEO?
  • Is there sufficient diversity on the management team and BOD?

Again, this is not an exhaustive list, but gets you thinking along the lines you need to be thinking when looking into more speculative companies.  Act like you are a detective looking for any signs or hints of fraud and steer clear when things start to smell funny.

In the back of your head, you should have already considered the growth prospects of the company in question or it wouldn’t have even be worth looking into in the first place.  However, it should be noted that many micro cap or penny stock companies might look like good growth opportunities but the growth could actually be very limited.  For instance, the company could be in an extremely high growth market such as biotech or pharmaceuticals, but markets such as these mean that competition is going to make it very difficult for the company to actually succeed.  This means that the growth prospects should be tremendous (if you’re going to speculate, don’t speculate with a company that’s going to hit a home-run,  instead, think multiple grand slams).  Some aspects of growth you might want to look into are:

  • What are the odds of market penetration?
  • Are the competitive advantages big enough and sustainable?
  • Does the company have multiple patents? How solid are the patents?
  • Are there large partners aiding the company’s growth/penetration?
  • Does the company operate in a niche market within the growing market?
  • How does the company plan on funding growth?
  • Does the company have an expansion plan in place so that it can grow successfully?
  • If growth/market penetration has been proven already, how likely is it to continue?

Once again, this is not an exhaustive list, but how you should be thinking about the growth of the company.  Also, you should be comfortable with the answers to these questions and any other questions you decide are pertinent.  Above all, don’t make excuses for the company!  If you get answers that don’t jive with you, move on.

Last but not least, try to attend at least one shareholder meeting of the company.  This will give you a chance to get up-close and personal with management as well as bounce questions off of other shareholders.

A good example of an interesting speculation from my portfolio is Natcore Technology, a solar company headquartered in New Jersey.  While I won’t go into laborious detail about the company and how it fits the criteria mentioned above, I will mention some highlights.   The company was founded in 2009 when it bought out a company of the same name— thus clearing my 3-year hurdle.  The company trades on the TSX Venture exchange, a very well-regulated exchange, in Canada and the company reports regularly.  The company is headed by Chuck Provini, a former US Marine and graduate from the US Naval Academy.  He has at least 19 military decorations, was a captain in the Vietnam War, and has lived his whole life in the United States.  The rest of his bio can be found here.  The CEO has been very forthright with shareholders and encourages shareholders to call him if they have any questions.  He even issues regular statements via the Natcore website.  And, although he is surrounded by several other individuals with pretty extended resumes, the one that stands out the most is Dennis Flood.  Dennis Flood is the CTO of the company and has worked in the solar industry for over 30 years.  He worked at NASA where he developed photovoltaic power systems for space and planetary missions.  A more extensive bio is seen below:

“He received two Special Act or Service Awards from NASA for his pioneering work on advanced solar cells for space applications and for research that established the feasibility of powering a human outpost on the surface of Mars with solar energy.

Flood also served as chair of the IEEE Electron Device Society’s (EDS) photovoltaic device technical committee for seven years and as a member of the IEEE EDS education committee. He also participated in the EDS’s Distinguished Lecturer Series, a position he held for more than a decade.
He is a member of the international advisory committees of the European, the U.S, the Japan/Asia and the World Photovoltaic Conference organizing committees.

He is an inventor or co-inventor on several patents or patent applications in photovoltaics and nanotechnology and has over 100 peer-reviewed publications and presentations in solar energy, electron devices and materials science.”

Source: PV-Tech.org

Natcore has several patents.  It has also been granted a license to use the Department of Energy’s black silicon technology.  This allows more light to be absorbed so that solar cells are more efficient.  However, the patent which holds the most promise is the company’s Liquid Phase Deposition technology.  You can read more about this technology and the benefits here, but in a nutshell, this technology allows the company to manufacture solar cells at a much lower cost than they are currently being manufactured.  Combine that with the company’s latest selective emitter technology and the cost is further reduced.

The CEO explains the company’s technology here.

The company’s technology is breakthrough, to say the least.  It could completely change the solar industry.  If you research the company some more you’ll see a myriad of great accomplishments.  So, you might be wondering, with so many “great things” going on, why is this company speculative?   Well, the company has yet to generate any revenue.  It is still working on commercializing the technology and proving the cost benefits of the technology.  The company has reached several milestones and has been making forward progress but it has nothing to sell as of yet.  Although it is working on what it calls the “AR-BOX” as its first commercialization effort, it is not ready for commercialization yet.  So questions remain.  Will the company prove that its product is commercially viable?  When will it be ready?  Will the company produce significant enough revenue with large enough margins if/when the product is ready?  Will the market adopt the product even if the company does prove it?  Several more questions like this remain.  That’s why this is speculative.  There is nothing to go off of except for future hopes and dreams of revenue.  Although the company has been marching towards that territory, there is nothing to sink your teeth into as an investor to figure out what the margin of safety is here.  This is why a small percentage of my portfolio is dedicated to this type of investing.

At the end of the day, many investors should avoid speculating.  It can be tempting to get carried away and not keep the speculative portion of the portfolio below 1-5% and sell when the speculate portion rises well above this point (assuming you adopt the 1-5% strategy).  Investors often ride a speculative investment up just to ride it back down again.  There is often times more discipline involved in speculation than there is with regular investing and many investors have enough trouble maintaining discipline with their regular strategies.  So, this is only for the bold, disciplined, and cautious investor.  It almost sounds like a paradox, being disciplined to be speculative, but it’s impossible to be successful at speculation without the discipline.  Otherwise, your “fun money” will be “dumb money,” which defeats the whole purpose of allocating a portion of your portfolio to speculation in the first place.  You might as well just cash out 1-5% of your portfolio a year and burn the money if you aren’t going to follow a disciplined approach.

Disclosure: Long NXT.V

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