Your October issue of Southbank Growth Advantage

• Big rig nuclear is the key to our next big nuclear star
• Big breakthroughs
• Buy List update
• Inside the lives of James and Sam
• Crypto Corner
• What else we’ve been looking at this month

Big rig nuclear is the key to our next big nuclear star

Sam:

I’ve been in Australia now for about a month and a half. One of the things I have really noticed is the size of the trucks on the road.

They are, quite frankly, terrifying.

I got so used to quaint little lorries tottering about the British countryside that I forgot what real TRUCKS are like.

It’s hard to explain until you’re in a car next to one. The big suckers they call “B-doubles” that can stretch as much as 26 metres long, with a main truck, plus two extra trailers, and as many as eight or nine axles. They can carry two 40-foot containers in a cinch and can weigh over 78 tonnes.

Source: Australian Roadtrains

A few times when I’ve been alongside these giants of the road, I’ve wondered what’s inside them. Maybe just big pallets of products heading off to Bunnings (the Australian version of B&Q, but bigger!), maybe building supplies, maybe people (OK, probably not that one). But these things are of a size that you could pretty much put anything you wanted on the back and take it to any part of Australia.

And I do mean any part. If you get a chance (on Channel 5 and Discovery in the UK) try to watch a show called Outback Truckers and you’ll get a much closer flavour of what I’m talking about.

These trucks would be ideal for transporting something like… a small nuclear reactor to a community, city or data centre. As wild as that idea might be, maybe it won’t be too long before I’m pulling alongside a similar sized truck that looks more like this:

While the idea of driving next to a nuclear reactor might seem a touch… risky, the truth is that if this potential future comes to reality, you might have made so much in your portfolio from the company behind it that you won’t be bothered in the slightest.

Your latest recommendation: NANO Nuclear Energy (NASDAQ:NNE)

NANO Nuclear Energy Inc. (NASDAQ:NNE) is a company that’s working on bringing “advanced nuclear technology” to the world. Sure, that’s a bit “buzzwordy” but this is another up-and-coming nuclear company that could prove to be a vital cog in the US nuclear rollout.

I should say at the top that when it comes to nuclear opportunities, I’d love there to be a splattering of ones in the UK, but there isn’t. We’ve pretty much already covered those plays.

There is higher risk development around the technology. It’s all US based because clearly the US wants to a) secure its own reliable energy supply and not rely on Russia or China for anything, b) it desperately needs to help “the Magnificent Seven” fuel their ambitious AI data centre plans.

And that’s where NANO steps right into the mix.

What does NANO Nuclear Energy do?

At its core, NANO Nuclear Energy is all about making nuclear power safer, more efficient, and easier to move around. But there are two key areas (maybe three depending on how you look at it) that I think give this company much more potential to run higher in price.

1. Microreactors, or as the company calls them, NANO Reactors

We’re talking here about a reactor that’s small enough to be transported on something like a B-double. NANO has its “ZEUS” and “ODIN” projects. Zeus is referred to as a “solid core battery reactor” and ODIN as a “low pressure coolant reactor”.

2. HALEU and HALEU Transport

   NANO isn’t just about building reactors; it’s also developing the specialised fuel for these reactors – high-assay low-enriched uranium (HALEU) – and ways to transport this fuel across country.

For me, I think that it could be the HALEU side of the business that provides the most upside potential.

What is HALEU? High-assay low-enriched uranium (HALEU) is a type of nuclear fuel that is enriched to a higher level than traditional low-enriched uranium (LEU) but still below the levels used in weapons-grade uranium. Specifically, HALEU is enriched to between 5% and 20% uranium-235 (U-235). This higher enrichment level allows for more efficient and compact reactor designs, making it ideal for advanced reactors that are smaller, more flexible, and less expensive to build and operate. HALEU is crucial for the US because it supports the development and deployment of advanced nuclear reactors. These reactors are expected to play a significant role in the nation’s clean energy future by providing carbon-free electricity. The Energy Act of 2020 directed the establishment of the HALEU Availability Program to ensure a domestic supply of this critical material, reducing reliance on Russian HALEU which traditionally has dominated the market.

As we covered in our recommendation for Centrus Energy, the US Department of Energy has made a particular point of pushing forward the US development of HALEU fuel for new and high-tech nuclear reactors.

The US cannot meet energy targets and energy demands by building traditional nuclear reactors. Big Tech – like Microsoft, Amazon, Google and Meta – cannot power their AI-enriched data centres waiting for traditional reactors to get built (albeit they’re tapping into whatever existing ones they can).

Google, for example, though has already signed one power purchase agreement from SMR tech through Kairos Power. This is one example of Big Tech already signing up for SMR power, and yet the SMRs aren’t even built…

But they will be.

And they will rely on HALEU fuel. But of course, if there are reactors in Ohio that need HALEU, and then in Michigan that require HALEU and then in South Carolina that require HALEU, you can’t expect a HALEU plant in every US state now, can you?

That’s why the transportation of the fuel is also so important. But it’s not like you can just plop it into some barrels and head on over. No, it requires specialised transportation equipment. And thankfully, as NANO explains,

Through NANO Nuclear Energy Inc., [Advanced Fuel Transportation (AFT) a subsidiary of NANO Nuclear] is the exclusive licensee of a patented high-capacity HALEU fuel transportation basket developed by three major U.S. national nuclear laboratories and funded by the Department of Energy. Assuming development and commercialization, AFT is expected to form part of the only vertically integrated fuel business of its kind in North America.

I believe these factors, and the potential (as they say) of being a fully vertically integrated nuclear fuel business, makes it unique in this market. With ongoing demand for nuclear, it is the perfect stock to add to our buy list.

Potential and risk

The company is cased up, which is why now is a good time to add it to the portfolio. NANO just announced closing an upsized $40 million underwritten offering. This is both crucial money for expansion plans and also a vote of confidence from investors.

I note this “vote of confidence” because the company has been the target of short-seller reports, notably one form Hunterbrook, whose piece titled, “Fission Impossible: Nano Nuclear Has No Revenue, No Products, “Laughable” Timelines, Part-Time Executives, and a $600 Million Market Cap” helped the company on its way down from a high of $34 in July to $6.30 by mid-August.

Since then, the company has employed lawyers to more or less take on Hunterbrook. It’s also added a former commanding general of the US Marine Corp and the former chief financial officer of the US Department of Energy to its Executive Advisory Board. It has also got a grant from the US Department of Energy and of course the substantial capital raise.

The stock price is also now back around $20.

NANO is likely to be a rollercoaster ride. It will ride the nuclear momentum that is currently in the market. When our nuclear stocks like Oklo and Centrus are popping higher, NANO is likely to head in that direction too.

Risks

But as noted, the heat came right out of the market from July to August and the stock tanked. Add to this that it became the target of short-sellers, and the acceleration of sharp moves lower is a real possibility.

You need to be confident and comfortable with that kind of volatility in the stock. As well as the fact that it doesn’t have meaningful revenues. NANO’s August quarterly report (before the $40 million fund raise) had a net loss of $4.6 million. For the nine months ended 30 June it was a net loss of $7.6 million.

Admittedly, it’s not a horrific cash burn for the industry it’s in. NANO is now cashed up again and it’s got plenty of runway here. But again, there is no meaningful income at this point – so this is trading a lot of hope, hype and potential.

But there’s enough there, with support from the US Department of Energy, the development of both its NANO reactors and the HALEU development and transportation. I think there’s a strong case to be made that the company retests and surges past its 52-week (and all-time) highs of $37.51.

We will have a stop exit in place as usual if enough bad news flows through or the short sellers get their way and the stock craters.

Buying instructions

Action to take: buy NANO Nuclear Energy (NASDAQ:NNE). It has a current market cap of around $651 million and a stock price around $20. Buy up to $21. Set a stop exit under the stock at $10.

Be aware that as it’s a smaller stock, not all brokers may offer this for trading. We have checked some of the major brokers, of which some are offering NANO for trade, some do not. We can’t unfortunately ensure that all brokers cover all stocks, and we do try to ensure that there’s sufficient coverage.

Big Breakthroughs

James:

There’s been lots of justified talk – some of it by us – of Big Tech driving a nuclear power revival.

In the last two months, tech giants Amazon, Google and Microsoft have all penned deals to generate more power from nuclear plants in the US, helping to ignite a surge in stock prices in the sector.

Amazon has agreed with utilities in Washington state to support development of four next-generation small modular reactors (SMRs), with a similar deal in Virginia, and took a stake in X-energy, an SMR developer.

Meanwhile, Google agreed to buy power from SMRs to be built by a start-up, Kairos Power. Microsoft has also struck a 20-year agreement with Constellation Energy to restart a reactor at Three Mile Island in Pennsylvania, the site of the most serious nuclear meltdown in US history in 1979.

As you’ll know, the explosive growth of generative AI, as well as cloud storage, has increased tech companies’ electricity demands.

This has generated headlines around the world and helped propel some of our holdings, such as Oklo, to fresh heights.

But what has gone much more under the radar is Big Tech making similar if not bigger investments in renewables to also help power their data centres.

Just last week, a massive solar farm opened in Texas, adding 875 MW of capacity to the state grid to help power Google’s growing data centre presence in the state.

As per the article on E&E News: “The project from California-based SB Energy, named the Orion Solar Belt, includes over 1.3 million solar modules located in Buckholts, Texas, which is about 70 miles north of Austin. To harness the project’s electricity, Google signed its largest-ever solar power purchase agreement.”

This was by no means an isolated deal.

In May, Microsoft struck a landmark deal with Brookfield Asset Management, committing to back an estimated $10 billion in new renewable energy projects to address the ever-growing power demands of AI and data centres.

In fact, so far in 2024, Microsoft has bought 850 MW of new wind and solar just in Texas alone. The Seattle-based tech giant is also buying 12 GW of US-made solar panels from Qcells.

In addition to Microsoft, Brookfield has also announced power purchase agreements with Amazon.

Corporate power purchase agreements covering a record 46 GW of solar and wind capacity were announced in 2023, with Amazon the top purchaser, according to figures published in February by Bloomberg New Energy Finance.

Companies have now signed nearly 200 GW of corporate PPAs in total since 2008, more than the power generation fleets of countries such as the UK, France and South Korea.

You see, while Big Tech is certainly investing in nuclear, they are actually making even larger investments in wind and solar – and have been for years.

Of course, before you ask, they’re certainly aware that solar power doesn’t generate 24/7, but it hardly needs to in places such as Texas.

There is currently an excess capacity at night from wind that sees prices often fall near to zero. So Google, for example, can simply go to the market and purchase all the cheap nighttime power it needs – even before it starts thinking about pairing this abundance of cheap power with batteries.

But, yes, Texas is also building a whopping 30 GW of batteries that will help the grid provide generation when and where the grid needs it, including to power its data centres.

In fact, according to the federal Energy Information Administration (EIA), the US is now adding utility-scale batteries at a dizzying pace. It’s installed more than 20 GW of battery capacity to the electric grid, with 5 GW of this occurring just in the first seven months of this year.

This means that battery storage equivalent to the output of 20 nuclear reactors has been added to America’s electric grids in barely four years. What’s more, the EIA predicts this capacity could double again to 40 GW by 2025 if further planned expansions occur.

In fact, with lithium-ion battery prices falling to their lowest level ever, it’s becoming increasingly clear that we can get a resilient, clean and affordable energy grid with solar, wind, storage and, where required, nuclear too.

What’s interesting is that the E&E News story on X has generated just 250 likes at the time of writing and seemingly wasn’t picked up by the mainstream press at all. This highlights that nuclear – and not renewables – is the current flavour of the month.

But it’s our job to tell you things the mainstream press might not tell you about.

And that is, despite what you have been led to believe elsewhere, Big Tech is not just looking to build AI with nuclear, but with other energy sources, too.

Inside the lives of James and Sam

Sam:

Lessons learnt from being a foreigner

After 11 years of absence, I returned to Australia. A decade in the UK, a year in Portugal, a long time away, but also no time at all.

The inevitable questions come thick and fast, but most notably people here ask, why?

Ultimately it matters little as to why. The thing, however, is that there was no singular reason, but stacked up, a bunch of smaller things adds up to a lot.

One big thing was the ridiculousness of legal immigration. You’d have thought that after ten years in the UK, paying a lot of tax, having two children and a wife that are all British citizens by birth, my pathway to permanent residency and then citizenship myself would be a bit of a slam dunk.

No. Not at all. When time came (five years) to apply for those things, apparently my original entry into the country was on the “wrong kind” of visa. A perfectly legal visa, yes. But the “wrong kind” to enable permanent residency. Hence my application was too early.

Therefore, in the infinite wisdom of UK Visas and Immigration (UKVI), instead of just saying, apply again in a month, they bumped me onto a ten-year pathway to staying in the country long term. That of course required an extension of 2.5 years (plus all fees and charges and “health surcharge” payments which each visa renewal/extension tallies into the thousands of pounds) plus another extension (plus all fees and charges and “health surcharge” payment).

And these are all still in addition to the regular taxes that I, like you, are required to pay. Of course, the threat that looms over my head in such situations of noncompliance is deportation.

I don’t want to slide down the pathway of whingeing. But Holy Moses, getting legal permanent residency as a higher rate tax payer, who’s deeply entrenched in the British culture and lifestyle, is contributing to society, trying to carve out a positive life for the family is far too filled with BS red tape, government bureaucracy, expenses and complexity.

And that’s just the visas and immigration department. Then you get to the fact that you pay more and more and more in taxes every year and get less and less and less and less. But the real kicker (I won’t go into excessive detail here because it’s a highly private matter) is that when you need the NHS in one of life’s most precious moments (like the birth of a child) and they fail you, not just in a little way, but in a serious wa,y it’s hard not to be filled with extreme frustration, disappointment and, yeah, a bit of anger.

I’m lucky enough that when you’re failed time and time again by the system, be it immigration, taxation, healthcare, I can pick up stumps and go somewhere else. So we did. But when you read in the paper that there’s a drain of people from the UK who you’d think on the balance are a net positive to the country, you can count me as one of them.

I’ll keep the Portugal part of this tale for another time, but parts were very much the same, parts much better. I know that people will also say that Australia is very much politically heading down the same path as the UK. To an extent it is, and it’s sad to see.

But there are also some things that work. Like the healthcare system (where around 2% less is spent as a share of GDP than the UK, but life expectancy at birth is around eight years higher), immigration (so long as you’re trying to get here legally) and housing where you get more bang for your buck (so to speak).

[Side note: the IEA did a balanced research paper on the Australian healthcare system, if you want to understand a bit more how it works and why it works, this is worth a read.]

Sure, there are shortcoming here in “Oz” too, but when kids are involved in the decision-making process (i.e. about what’s best for them) it’s sad to say but the UK kind of pushed us out. My kids are still British, my wife is too, and I genuinely love the country and the people. But by-jingos (I picked up the lingo back here quick-sticks) I’m very glad we left because it’s hard to see all the reasons we left getting any better anytime soon.

Crypto Corner

Sam:

The Crypto IPO could be great or the biggest top signal of all…

In 2021 the crypto market was going through another of its infamous blow-off-top, FOMO-induced cycles higher.

It was wild, fun, terrifying, exhilarating and depressing (out the other side). Money was made, money was lost, as is the case with the crypto market.

Amidst the mania of NFTs, P2E gaming and altcoin-szn, there was another story playing out, but in the traditional markets.

Coinbase, one of the most long-standing companies in the entire crypto world, had over time raised a truck tonne of capital to grow and become a stalwart of the industry.

Even today, while it gets a fair share of backlash (mostly unfairly in my book) it keeps trucking on, innovating, developing and being a net benefit for the crypto industry.

I like Coinbase because when I first came across it, I think it was around a decade ago now, I had always wanted to invest in it whilst it was a private company. But I didn’t have the hordes of capital of a VC and as such, I had to wait like most people.

And then in 2021 Coinbase did its IPO – and it was HUGE.

Coinbase had a reference price of $250 per share on the first day of trading and then traded up to like $330. Then the arse fell out of the crypto market, the stock market and devastation ensued.

Coinbase has not yet reached the highs of 2021 and its IPO since. I expect it will, but it’s still a little way off yet – at least, I reckon, until bitcoin heads past $100K (more on that in a second).

But Coinbase is also around six-times higher than the low it hit in 2022. So, things are at least trending up.

However, this is all relevant now, not for Coinbase, but for one of its biggest competitors, Kraken.

You see, I have an account with an equity funding platform. And recently an opportunity popped up to invest in Kraken. It’s worth noting that offer is still open. I have not yet invested, and I’m not sure if I will or not.

But the expectation is that this might be the final round of private investment in Kraken until it goes public.

There is talk that Kraken is looking to IPO off the back of this round of investment, so you’d expect some time in 2025.

If that is true and it’s on the hunt to IPO, then I think the market is going to really fire up and shoot higher. Because these companies have a knack of timing their IPOs to maximise existing investors’ portfolios… just not so much the public market.

Therein lies the downside. While Kraken might be a HUGE IPO like Coinbase, doing great things for early investors, it may also be a raging sign of a market top – like Coinbase was.

Or maybe I’m being too harsh on Coinbase – that it wasn’t the top signal, it was just an unfortunate passenger on a ride always destined to be rocky?

Point being that if a company like Kraken is ready to IPO or is seriously considering it, then I’m mega-bullish on the market into 2025.

That brings me to bitcoin. It’s doing what we expected. It’s ever-so-close to its all-time highs. While it is not exactly perfect timing, it’s right back to where we said it would get to. I still expect it to break into $100,000 and then higher towards $500,000 and higher again.

A million dollars? Possibly, but if not this cycle, my view is at some point in the next few years, yes. If you don’t believe me about it, then look at what Michael Saylor continues to do at MicroStrategy. The company is now planning on buying as much as $42 billion of bitcoin in the next three years.

Maybe I’m not bullish enough!

What else we’ve been looking at this month

James:

CATL announces EV battery with 600,000 miles warranty

We might just have heard the last of the “how long do the batteries last?” type of arguments.

In September, Contemporary Amperex Technology (CATL) – the world’s largest battery maker – announced it will supply an EV battery that can last 15 years and nearly one million miles.

CATL is selling the battery with a 10-year or 600,000-miles warranty, guaranteeing it will have 85% capacity retention at that stage (and close to zero battery degradation in the first 1,000 charge-discharge cycles).

In fact, CATL’s R&D labs have shown that the lithium iron phosphate (LFP) batteries of this type can actually last 16 years before their capacity drops to 85% of the original, so more than on the warranty. The batteries’ life expectancy is 900,000 miles.

As per an article in Battery Industry: “For comparison, current batteries in Teslas and other EVs only come with eight-year warranty and 70% capacity retention. This means that CATL’s new battery can nearly double the worry-free lifespan of an EV.”

The long-life batteries in question are now moving from the R&D and prototype stage to the launch phase. The LFP battery will operate in buses, light trucks and heavy trucks.

This, truly, is a game-changer – one that shows the now unstoppable pace of progress in batteries.

Man who accidentally sent £440 million in bitcoins to dump now suing local council

The decade-long saga of a man who accidentally discarded a hard drive containing 8,000 bitcoins worth over half a billion dollars has taken a further twist.

A mix-up saw James Howells’ hard drive dumped at a recycling centre in 2013 causing him to lose access to cryptocurrency coins that have since rocketed in value.

He said it was worth £4 million when it was mistakenly binned, though current market estimates value the coins at around £440,000.

Howell – now 38 – has spent the subsequent years petitioning Newport council to grant him access to the dump to search for it.

He even assembled a team to carry out a £10 million excavation of the landfill – at no cost to the council – which would take between 18 and 36 months to carry out with a further year of remediation work.

But Newport council has steadfastly refused his requests out of environmental concerns, despite Howells offering them 10% of the coins’ value if recovered.

In the latest twist, Howells is now suing the council for £495,314,800 in damages, which was the peak valuation of his 8,000 bitcoins from earlier this year.

The case is due to be heard in December this year, but Howells said that his aim is to “leverage” the council into agreeing to an excavation of the site in order to avoid a legal battle, according to a report by WalesOnline.

“I’m still allocating 10% of the value for the council even though they have been problematic throughout,” he said.

“That would be £41 million based on today’s rate but in the future it could be hundreds of millions. If they had spoken to me in 2013 this place would look like Las Vegas now. Newport would look like Dubai. That’s the kind of opportunity they’ve missed.”

Howells says this is his “final shot” to try to locate his hard drive and I for one am rooting for him.

There’s a new natural gas top dog in town

You might be surprised to read that the largest natural gas producer in the EU is not Germany or the Netherlands, but – as of Q2 this year – Romania.

According to a recent report from the European Commission, the eastern European country became officially the EU’s biggest gas produce between April and end-June, producing 2.3 billion cubic metres, a rise of 1% year on year.

In doing so it surpassed the Netherlands, which produced 2.2 billion cubic metres, a fall of 17% from the same quarter in 2023.

The third largest producer remained Germany (0.9 billion cubic metres), followed by Italy (0.7 billion cubic metres) in fourth place and Hungary (0.4 billion cubic metres) in fifth place.

Source: European Commission

The increase in Romania’s production is attributed to strategic investments and new drilling projects in the country.

Meanwhile, Netherlands’s drop reflects the fact it closed down its massive Groningen field in October 2023 due to concerns over earthquakes.

Romania’s growth is particularly notable given the overall decline in gas production across the EU, which saw an 18% year-on-year decrease in 2024.

It’s likely Romania’s rise to the top is no flash in the pan. The country is set to become an even more significant natural gas producer from 2027 when the Neptun Deep field becomes operational.

Sam:

Earnings and more earnings

It’s earnings season, and while it’s notably good for short-term noise, it doesn’t change much of my long-term view on AI and nuclear energy. But still, it’s important to read because you very quickly realise how massivethese companies could get if their big and expensive bets on AI actually pay off down the track like they think it will.

So, here’s what I’ve been reading…

(Note you’ll probably need to add your email to get all these.)

Google – seekingalpha.com/article/4730692-alphabet-inc-goog-q3-2024-earnings-call-transcript

AMD – seekingalpha.com/article/4730678-advanced-micro-devices-inc-amd-q3-2024-earnings-call-transcript

Meta – seekingalpha.com/article/4731243-meta-platforms-inc-meta-q3-2024-earnings-call-transcript

Microsoft – seekingalpha.com/article/4731223-microsoft-corporation-msft-q1-2025-earnings-call-transcript

And just because this guy is a full-blown bitcoin maximalist…

MicroStrategy – seekingalpha.com/article/4731304-microstrategy-incorporated-mstr-q3-2024-earnings-call-transcript

It’s not glamourous work but it sure is fascinating!