THE PENNY STOCK, THE BAKER, AND THE FLOUR SUPPLIER: HPQ SILICON, IBU-TEC, AND AMG CRITICAL MATERIALS ARE SHAKING UP THE BATTERY MARKET

HPQ SILICON: MORE POWER FOR PROFESSIONAL DRONES

HPQ Silicon – never heard of it? That could change soon. Of all things, a Canadian penny stock is on its way to becoming the beacon of hope for the European battery industry. Behind the scenes, the company is working with its French partner Novacium on nothing less than reinventing the battery anode. The Canadian-French duo has just received its first order from a European manufacturer of industrial and military drones. The order involves fourth-generation battery packs (GEN4-21700 cells) designed for high-endurance drone applications and featuring a capacity between 10,000 and 13,400 milliampere-hours (mAh). The customer, who remains unnamed for confidentiality reasons, has also requested quotes for batteries capable of delivering an even higher capacity of 15,000 to 20,100 mAh. Even the lower limit of 10,000 mAh is considered a top-tier performance for 21700-format batteries (slightly larger than a standard AA battery); double that would be absolutely world-class. With the same battery weight, drones can stay in the air three to four times longer than before.

To understand what is happening here, one must look deep inside a battery. Until now, their anodes have consisted almost exclusively of graphite, which is now reaching its physical limits. The silicon extracted directly from quartz by HPQ using a patented process called PUREVAP, on the other hand, could theoretically store ten times more energy. The problem is that silicon is considered wild. When charging, it swells up like a yeast dough and destroys the battery from the inside. This is where the chemistry professors at Novacium come in. The Lyon-based startup has developed a chemical coating that tames HPQ's silicon. The first order proves that the new generation of batteries has now reached market readiness. For HPQ CEO Bernard Tourillon, it is "the first step toward commercializing the research work done so far." In other words: The days of negligible revenue and heavy losses are coming to an end.

WASTE TO ENERGY: BLACK SLAG TURNS INTO GREEN HYDROGEN

The HPQ/Novacium research alliance also has other aces up its sleeve. The second pillar is hydrogen. Novacium has developed a technology called METAGENE, in which green hydrogen is produced through the hydrolysis of a special silicon-aluminum alloy without requiring electricity or a complex on-site transport infrastructure. No pressure tanks or pipelines are needed. This is the perfect solution for mobile energy in remote areas. Novacium has therefore secured a prestigious partner: the French Ministry of Defence.

The military is keenly interested in hydrogen reactors to supply troops in the field with electricity silently and without the logistical burden of fuel. A positive side effect: Even black dross, a toxic waste product from aluminum production—the English acronym BAD for "black aluminum dross" speaks volumes—can be used to produce hydrogen through a process developed by Novacium that employs chemical activators. What remains after this W2E (Waste-to-Energy) process is a harmless mineral mixture that can be used, for example, as a cement additive in the construction industry.

GOVERNMENT AND MILITARY BACKING

The high-performance batteries are also being tested by the French military for use in soldiers' equipment. In Canada, HPQ is also operating with government support: In September 2025, the Montreal-based company received a commitment for CAD 3 million in funding. The Canadian government aims to play a central role in supplying the Western world with critical raw materials and sees HPQ as an opportunity to keep the entire value chain within the country. In addition to anode materials, the company has developed, in collaboration with PyroGenesis Canada, another technology partner, a reactor for the environmentally friendly production of pyrogenic silica—known in English as fumed silica. This is a white, extremely light powder that is used almost everywhere in industry as a kind of super-additive: in paints, tires, adhesives, and even in ketchup or toothpaste. Until now, this has been produced by converting high-purity silicon metal with chlorine into silicon tetrachloride and then burning it in an oxyhydrogen flame. This process consumes an extremely large amount of energy (100 to 110 kWh per kg) and produces highly toxic hydrogen chloride gas as a byproduct. In HPQ's Fumed Silica Reactor, however, quartz sand is converted directly into pyrogenic silica in a single step. This process produces no toxic waste products, and energy consumption is reduced by 85 to 90% compared to the conventional method.

Thanks to government grants and a private placement of 18 million shares for an additional CAD 3 million in early March, no major capital measures are necessary for the time being to finance research and business activities. In addition, the company was able to increase its stake in Novacium from 28.4% to 36.8% to further intensify the collaboration. The share price has not yet reacted to the latest news and has been hovering around the EUR 0.10 (CAD 0.16) mark since the start of the year. The question remains: what does this have to do with electric mobility? CEO Tourillon commented: "First and foremost, it is important to raise public awareness that our technology works. From there, it is just a small step to larger batteries."

IBU-TEC ADVANCED MATERIALS: THE BAKER OF BITTERFELD

The German mid-sized company IBU-tec is already several steps ahead. What is currently being built at the Bitterfeld-Wolfen site is more than just a factory building. It is the visible expression of the industrial shift into the battery age. An aspiration that Europe has often articulated but has so far barely fulfilled. Guests from politics and industry gathered last Wednesday for the topping-out ceremony of the new spray tower, where the necessary raw materials and chemicals will be processed, led by Saxony-Anhalt's Minister President Sven Schulze (CDU), who repeatedly emphasized the need for an independent European value chain for battery materials. The stated goal of policymakers, including in Germany, is to at least reduce dependence on China. Even lithium, an indispensable raw material that comes largely from South America, is typically shipped to China for processing before reaching Europe. Depending on the battery components in question, at least 80% of the materials have so far come from China; according to IBU-tec founder Ulrich Weitz, the figure for anodes is (still) as high as 99%. Unlike HPQ, however, IBU-tec focuses on cathodes, which, according to Weitz, account for two-thirds of the value added in drive batteries—and up to 60% of the manufacturing costs of an electric vehicle.

At its headquarters in Weimar, the company currently produces 3,300 tons of lithium iron phosphate (LFP) annually, which is the more cost-effective solution, at least for vehicles with a mid-range of 400 to 500 km, compared to the more expensive combination of nickel, manganese, and cobalt (NMC), which is typically used in luxury vehicles. This is also confirmed by Stefan Wolf, managing director of the Competence Network for Lithium-Ion Batteries (KLiB) in Berlin: For reasons of safety and longevity alone, he says, LFP is "the dominant cathode material of the future." He does not view the Chinese technological lead as decisive: "Japan was once 50 years behind Germany in the automotive sector, yet Toyota has long been the world's largest manufacturer." Thanks to the initiative of IBU-tec and VW's battery subsidiary PowerCo, he sees Germany on its way to becoming Europe's powerhouse.

STRONG GROWTH IN THE BATTERY BUSINESS

In fact, PowerCo played a decisive role in enabling IBU-tec to build the new factory. Once it is fully operational, starting in 2028, it will supply an additional 15,000 tons of LFP per year—using a rotary kiln, which is more energy-efficient and environmentally friendly than the tunnel kilns used by Chinese competitors. In addition to an unspecified financial stake in the project, PowerCo has also secured an option for the entire production volume of 18,300 metric tons for ten years. Should, contrary to expectations, not all of this volume be utilized, IBU-tec is free to supply other manufacturers with customized LFP blends. By 2030, the battery business is expected to grow from its current level of EUR 17.7 million to between EUR 85 and 90 million, accounting for 70% of total revenue of EUR 120 to 140 million.**

However, the transformation from a specialty chemicals supplier to a battery powerhouse costs money and ties up resources. Following a very successful fiscal year 2025, CEO Jörg Leinenbach expects revenue to decline from EUR 44 million to EUR 38-39 million in 2026 and does not wish to comment on whether a dividend (EUR 0.12), as paid in the previous year, can be maintained. Analysts even expect the company to post a loss for the transition year 2026 and a low earnings per share of EUR 0.19 for 2027. According to consensus estimates, high profitability is not expected to return until 2028 with a profit of EUR 0.49 per share—but even under this assumption, the stock is no bargain with a price-to-earnings (P/E) ratio of more than 30. This has by no means hurt the share price; on the contrary, immediately after the topping-out ceremony, the stock made a jump upward a week ago.

AMG CRITICAL MATERIALS: THE FLOUR SUPPLIER FROM THE NETHERLANDS

The dividend-paying shares of AMG Critical Materials are significantly more attractively valued. While IBU-tec is seen as the baker at the Bitterfeld-Wolfen Chemical Park, the Dutch company is something like the flour supplier. In 2024, the wholly-owned subsidiary AMG Lithium opened the EU's first lithium refinery in the immediate vicinity of the IBU-tec bakery. That is where the lithium hydroxide is produced, which is absolutely essential for the manufacture of battery materials. The raw material comes from the group's own Mibra lithium mine in Brazil and is not transported to China, but rather processed in Saxony-Anhalt. However, the group led by Austrian industrial manager Heinz Schimmelbusch (CEO of Metallgesellschaft from 1989 to 1993) also has other raw materials in its portfolio that are indispensable for the battery industry, such as graphite and vanadium. In addition, the technology division builds high-vacuum furnaces in which, for example, aircraft engine parts are forged. "Schibu," as the CEO is known in industry, also aims to make the Western battery industry less dependent on China, if only because AMG Critical Materials' headquarters are located not in Amsterdam but in Wayne, Pennsylvania, and the Trump administration strongly supports such plans.

Consequently, the group reports its financials in USD. Although analysts estimate that AMG will likely post only a meager earnings per share (EPS) of USD 1.73 this year, that figure is expected to nearly double to USD 3.41 by 2027. The resulting P/E ratio of about 13, combined with a market capitalization exceeding one billion, makes the stock a safe haven in the industry. However, fluctuations in raw material prices can certainly cause sharp price swings. Over a ten-year period, the share price surpassed the EUR 50 mark during two bull markets, only to plummet to as low as EUR 12 both times afterward.

CONCLUSION: NO BATTERY WITHOUT CHEMISTRY

Whether the baker and the flour producer in Bitterfeld are already mixing dough together remains a well-kept secret. Given their geographical proximity alone, it would make sense. One thing is certain: the European battery value chain does not begin with cell manufacturing, but with chemistry. Investors have three options here: AMG Critical Materials as a moderately priced core investment, IBU-tec as a higher-valued but more dynamic chemical company in transition, and HPQ Silicon as a newcomer with the potential to revolutionize the industry. In a comparison of the trio, the Canadian penny stock offers the greatest potential, but also the highest risk, solely due to its low share price. Although all business segments target multi-billion-dollar markets, CEO Tourillon estimates that the break-even point is unlikely to be reached before 2029. To bridge the gap until then, the company can rely on support from the Canadian government and the French military.