K2 Energy Ltd: Trading at a Significant Discount to Core Investment
K2 Energy Ltd
Trading at a significant discount to core investment
K2 Energy (NSX:KTE) listed on the NSX on June 29 with a market capitalisation of $5.7m. The company was previously listed on the ASX from 2004 until early 2021 operating as a US oil and gas explorer. In 2010, K2 Energy provided critical funding to Atomera Inc (NASDAQ:ATOM) in its research and development phase as it developed patentable technology for the silicon chip industry, with energy saving and performance attributes. This funding converted into shares when Atomera listed on NASDAQ in August 2016. K2 delisted from the ASX in early 2021, after the ASX advised it was unable to change its classification to an investment company. The company’s main focus now is its investment in Atomera, in which it holds 523,846 shares or 2.3% of the company. As at 7 July, this holding had a market value of US$11.05m (A$14.75m),
compared to the company’s current market capitalisation of A$5.7m. K2 Energy also owns the exclusive worldwide rights to MEARS Silicon Technology (MSTTM) for all solar energy applications which it has secured from Atomera. K2 Energy is seeking a solar group to joint venture or collaborate with, in order to commercialise this technology.
Business model
K2 Energy is currently focused on its investment in NASDAQ-listed tech stock, Atomera Inc, and has the exclusive right to commercialise technology developed by Atomera for solar technology applications. Atomera’s MSTTM is a patented, quantum-engineered material that enhances transistors to deliver significantly better performance, allowing semiconductor manufacturers squeeze up to a full node of power and performance improvement within the same geometry. K2 Energy held net cash at March 31 of $0.57m and has no ready source of operating cashflow bar selling shares in Atomera.
Recent News
Given K2 Energy’s fortunes are inherently intertwined with Atomera’s, news flow from the US tech company will likely drive KTE’s share price in the near term. In January 2021, Atomera announced that it had entered into a Joint Development Agreement (JDA) with a leading semi-conductor provider to integrate Atomera’s Mears Silicon Technology into the silicon fabrication process. Atomera subsequently announced in March that it had advanced its JDA customer to the fourth phase of its six-phase customer engagement process with Atomera delivering its MST IP transfer package in accordance with the contract. Atomera also noted that it currently has 25 engagements in its customer pipeline with nine in phase one, 15 in phase three and one in phase 4. The sixth phase culminates in the commercialisation of MST-enabled wafers.
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