Good morning!

Ilika (LON:IKA)

There's a positive-sounding update on the technical progress being made by this blue sky innovative materials company. I visited them in Southampton a while back, and found their activities fascinating. The most commercially promising new material they have invented facilitates the production of solid state batteries, with dramatic advantages over conventional batteries.

So it's one of the "this could be HUGE!" type of shares that investors get terribly excited about in bull markets. Personally I'm sitting this one out for the moment, as the euphoric phase of the bull market has fizzled out in the last couple of months, with many valuations coming down to earth with a bump.

However, Ilika is still riding high, indeed has hit a new high this morning, currently up 8p to 70.5p. With 65.1m shares in issue, that values the company at £45.9m - quite a hefty valuation now, although that figure is either far too high, or far too low, we just don't know which yet!

Key points from today's update are that the battery size has been increased (which is a technical challenge), although still quite small by the sounds of it. Commercially, things are looking potentially promising, with this comment made today;

Initial commercial discussions have progressed and Ilika has entered into confidential disclosure agreements (CDAs) with commercial partners across the globe. In total, since January, Ilika has entered into ten CDAs to facilitate ongoing discussions with OEMs and suppliers of manufacturing equipment located in Europe, USA and Japan.

So they are talking to 10 companies about commercialising this technology basically. One of the Ilika's strengths has been its blue chip existing client base, although that has not translated into any commercial success to date. Although on that front, it looks as if licensing revenues could start to flow next year, so a reasonable timescale;

The progress we have made in terms of both technology and understanding of our unique processes since January is substantial and the interest from our potential commercialisation partners is increasing significantly. Both these factors encourage us that we are on track to commercialise our stacked thin-film battery technology in 2015.

Management here are (in my opinion) straightforward, and seem to have a good blend of technical expertise and commercial savviness. It will be interesting to see how this pans out, but for the time being it's one I'm happy to watch from…

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