Natcore Technology Inc (NTCXF)

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New article from Michael Allison Seeking Alpha

http://seekingalpha.com/article/3462366-natcore-solar-eliminates-the-need-for-silver-in-solar-cell-manufacturing?auth_param=2ka7p:1atpfa7:a12dbef8b454b9327c75b4efbd2246e9&uprof=45

Natcore Solar Eliminates The Need For Silver In Solar Cell Manufacturing

Aug. 24, 2015 3:08 PM ET | 2 comments | About: Natcore Technology Inc . (NTCXF)

Disclosure: I am/we are long NTCXF.
Summary
•Natcore Solar has eliminated the need for silver in solar cell manufacturing.
•The company's laser and back-contact HIT cell technology is leading edge.
•Natcore's technology drastically reduces manufacturing costs while significantly increasing the efficiency of solar cells.

My first article on Natcore Solar (OTCQB:NTCXF) was published almost two years ago, in October 2013. I would suggest you go back and first read it here in order to familiarize yourself with the company if you don't know what Natcore is involved with.

Since that first article, I also have published interviews I've had the pleasure of conducting with the CEO, Chuck Provini (here), wherein he explains a little about his background and how he became interested in Natcore Solar to the point where he presently devotes all of his time to the company.

Since that first interview in December, 2013, I've also published two more interviews with Chuck Provini and the company's director of research and technology, David Levy (here).

I have been following this company for several years and also own shares, having just made two recent purchases last week and earlier this week to add to a small position I already had.

Many other investors and potential investors also have been patiently waiting for Natcore to actually move from the research and development stage to commercialization of their technology to begin producing revenue. That stage in the company's progress is closer than ever after two important developments in the past six weeks.

On July 9, Natcore announced in a news release that they have successfully "developed a new solar cell structure that will simplify the production process, significantly lower costs, and speed the path towards ultra high-efficiency cells." (source)

There was another important piece of information included in that news release, which also stated: "Importantly, the new cell structure has the potential to completely eliminate high-cost silver from mass-manufactured silicon solar cells - an achievement that has been a long-time goal of solar science."

After that news release, the price of Natcore shot from the $0.47 level and hit a high of $0.80 and then settled back to the pre-news level within a week or so.

However, on Tuesday of this week (Aug. 18) Natcore released news that has the potential to change the manufacturing of solar cells. Here's part of that release:

"Working in their Rochester R&D Center, Natcore scientists have built an all-back-contact silicon heterojunction cell structure in which silver has been completely eliminated. It has been replaced by aluminum. This substitution has been accomplished with no loss of performance." (source)

This is exciting news for both the solar industry, in terms of reducing the cost of manufacturing solar cells and panels, as well as for Natcore Solar. The company is going to be filing for a provisional patent for their technology within the next two weeks.

The Investment Thesis for Natcore Is Better Than Ever

In order to provide you with an idea of why this achievement is so important in terms of the investment thesis alone, consider the following:
•Silver represents approximately 48 percent of the metallization costs in developing a solar cell.
•Currently silver is about $15.30/ounce while aluminum is $0.05/ounce.

To help potential investors appreciate what that translates to in real numbers, the following will help.

A 1 GW solar power generation plant requires about 1.5 million ounces of silver, which translates to about $23 million. With the elimination of silver from the process and replacing it with aluminum, the savings for a 1GW solar power generation plant will be approximately $22.8 million. Clearly, that's a significant savings in both capital and operating expenses.

Natcore has not lost any efficiency in moving from silver to aluminum. Eliminating silver is part of the evolution of the technology that Natcore has been working on with the high-efficiency heterojunction solar cells.

The industry is going to need to move away from traditional cells to the heterojunction cells, where the efficiency is in the 25 percent-plus range. The issue has been that HIT cells are approximately 50 percent more expensive to manufacture than traditional cells.

Natcore's laser and back contact technology has already reduced that 50 percent higher production cost down to numbers that are quite competitive with traditional solar cells.

Now adding to the cost reductions already achieved by Natcore for manufacturing HIT cells, the company has eliminated silver from the process, and in one move has dramatically reduced even further the costs of producing HIT cells, which it's important to remember are far more efficient than traditional cells.

So with Natcore's technology and process in place, solar cell manufacturers can dramatically reduce their costs while also significantly increasing the efficiency of solar cells.

Natcore has four manufacturers, two in the U.S., one in China and one in Australia which have been closely following the company as it has continued to work on the evolution of its technology. With this latest news on the elimination of silver it's highly likely that these manufacturers are going to be extremely interested in how they can implement the Natcore technology in their manufacturing processes.

However, in an email I received from Natcore's President and CEO Chuck Provini just this past week, he also stated: "We have been very protective of aggressively introducing this technology until we are confident that our IP is protected. We feel all the necessary patents covering this technology will be filed early next week (this week). At that point we will be more confident in approaching cell, module and equipment manufacturers."

Regarding how soon Natcore's fabrication process and technology would be ready for a manufacturer to actually put into commercial use in a factory or plant, Mr. Provini stated: "We have recently engaged a Swiss company to provide us with high-grade wafers that we can process into cells. We feel by utilizing these wafers we will be able to achieve the efficiencies necessary to make compelling presentations to manufacturers. We have also engaged companies to provide us with our proprietary aluminum component, at the same time, we are preparing to make 6 inch cells, which is what the industry would expect and manufacture. Our scientists tell me our timeline for this would be somewhere between two to three months."

Mr. Provini also has told me that Natcore's first revenue will "be in the form of some type of licensing agreement."

There are three potential sources for a licensing agreement.

1) Natcore's Best-of-Breed program.

2) A cell manufacturer interested in Natcore's back contact cell with no silver.

3) An aluminum manufacturer that would provide the material on an exclusive basis to whomever Natcore licenses their technology.

Regarding Natcore's Best-of-Breed program, the company has two potential projects in place.

The first has progressed to the governmental approval phase and Natcore's potential client feels that the government funding for the solar portion of that project is imminent.

The second project is at the point of developing engineering diagrams; the scientific team for that project will be visiting Natcore in Rochester, N.Y., at the company's Kodak facility in mid-September. At that time the company hopes to identify roles, functions and budgeting.

Both of the above programs are very far along and probably closest to some type of revenue at this point in time.

Additionally, Natcore recently brought Dr. Charlie Gay onto their advisory board. He and Dave Carlson, both of whom have extensive backgrounds and connections to the solar cell manufacturing industry, are going to be able to introduce Natcore to some of the people/companies they've worked with in the past as this latest development in Natcore's tech is going to have a major impact on the industry.

One of the big challenges that faces solar cell manufacturers is the variables related to the price fluctuations of a commodity, such as silver, which is presently required in the manufacturing process. How does a company hedge itself against the ups and downs of the silver price?

What Natcore has achieved by eliminating silver from the manufacturing process is a big step forward in the evolution of solar cell manufacturing technology. It removes the uncertainty of where the cost of a precious metal, in this case silver, is going to be in the future.

Although there have been several other companies that have tried to create solar cells with aluminum, they've faced some major problems.

Oxidation and loss of conductivity are major issues. Aluminum simply is not as conductive as silver. This requires thicker pieces of aluminum to obtain the same conductivity as a thinner amount of silver and this creates issues with oxidation and poor electrical properties.

Natcore's technology has successfully addressed all of these issues. The key point is this - Natcore has eliminated silver without adversely affecting the efficiency of their cells.

Natcore is now working with a couple of their joint partners on the operational/functional aspects to put their technology into use in real-world manufacturing of cells and panels.

In my opinion, I think there's a great risk/reward opportunity in Natcore. This stock could present investors with a very positive return on their investment.

Risks

Every investment especially when involving a micro-cap technology company carries risks. Natcore is no exception. In my opinion, some of the risks facing the company are:

1) The company is unable to transfer its technology and processes from the laboratory to the factory floor.

2) Competitors could create new solar cell technology that proves superior to Natcore's technology.

3) Natcore's management team fails to execute a successful business/commercialiaztion/marketing strategy for their technology and processes. You can have the best technology in the world, but if you don't know how to market or sell it, it's not going to be profitable.

4) Any number of factors could delay the patenting and/or commercialization process for Natcore, requiring investors to wait much longer than expected for revenue.

If you are going to invest in this company, you need to take these risks into consideration and be sure to do your own due diligence before you purchase Natcore's stock.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Additional disclosure: This article does not represent investment advice or a recommendation for anyone to invest in Natcore Solar. Please be sure to do your own due diligence on Natcore before you invest any money in this company.