IKNX Stock Price Increased 64.25%: Why It Happened

By Amit Chowdhry ● Jun 25, 2021
  • The stock price of IKONICS Corporation (NASDAQ: IKNX) increased 64.25%. This is why it happened.

The stock price of imaging technology company IKONICS Corporation (NASDAQ: IKNX) increased 64.25%, going from a previous close of $11.30 to $18.56. Investors were responding to bitcoin mining company TeraWulf announcing it expects to become a Nasdaq-listed company through a business combination with IKONICS Corporation. The companies had entered into a definitive merger agreement to combine under a new holding company, which will change its name to TeraWulf Inc. and is expected to be listed on The Nasdaq Stock Market LLC under the trading symbol “WULF.”

TeraWulf is positioned for generating environmentally sustainable bitcoin at an industrial scale in the U.S. using over 90% zero-carbon energy. And with 60,000 state-of-the-art miners on order, TeraWulf expects to have 50 MW of mining capacity online this year and expects to have 800 MW mining capacity deployed by 2025, enabling over 23 EH/s of expected hashrate.

TeraWulf is utilizing its management team’s decades of experience in energy supply optimization, operations, and engineering for creating a premier platform for sustainable cryptocurrency mining. And TeraWulf plans to implement its proven model for large cryptocurrency mine development and operations — which will help ensure TeraWulf can scale efficiently. Through an institutional commitment to ESG principles and a target of 100% zero-carbon energy utilization, TeraWulf is positioned to be a leading miner of sustainable bitcoin globally.

TeraWulf is aiming to be the most environmentally sustainable bitcoin mining company focused on ESG through its purpose-driven business practices, determined clean energy goals, and support for its communities. And TeraWulf said it is committed to diversity, equity, and inclusion at all levels of the organization.

As an industry-leading producer of bitcoin with a targeted path of zero-carbon energy utilization, TeraWulf plans to maintain a high level of transparency, reliability, and environmental stewardship across its operations and throughout its supply chain.

Under the terms of the deal — which has been unanimously approved by the Boards of Directors of both companies — each outstanding share of IKONICS common stock will receive $5 in cash, one CVR, and one share of the combined company’s common stock. 

Through the CVRs — which will not be publicly traded — the IKONICS shareholders will be entitled to receive 95% of the net proceeds from any sale of IKONICS’s legacy business completed during the 18 months following the closing of the business combination, and will expire at the end of such 18 month period with respect to any portion of IKONICS’s legacy business which has not been sold. 

The shares of the combined company’s common stock to be received by the IKONICS shareholders will collectively represent 2% of the combined company’s pro forma common equity ownership. And as of March 31, 2021, IKONICS had a net book value of $11.6 million, cash of $4.4 million, and working capital of $4.1 million.

Following the consummation of the transaction, the legacy business of IKONICS will be operated consistent with past practices but will be positioned for sale on terms that are acceptable to the Board of Directors of the combined company.

The deal is expected to close in the second half of 2021, subject to the receipt of regulatory approvals, the approval of IKONICS and TeraWulf shareholders, and other customary closing conditions.

The combined company is going to be led by Paul Prager as Chairman and Chief Executive Officer. And in addition, several members of the existing TeraWulf leadership team are expected to serve on the combined company’s management team, including:

— Nazar Khan, Chief Operating Officer;

— Kerri Langlais, Chief Strategy Officer;

— Ken Deane, Chief Financial Officer; and

— Stefanie Fleischmann, Chief Legal Officer.

TeraWulf’s executive team worked together for nearly 15 years in the energy infrastructure space with a proven track record of risk management and investment performance. And upon completion of the deal, all members of the IKONICS Board of Directors will resign and be replaced by persons to be designated by TeraWulf.

KEY QUOTES:

“TeraWulf represents an exciting new paradigm for cryptocurrency mining, which is built on a significant strategic advantage to utilize reliable, secure and low-cost sustainable energy sources to support our bitcoin mining activities. We have a talented management team with a proven track record and we are ready to rapidly scale due to an established supply chain and strong partner relationships. Site work is underway at the Company’s mining facilities in New York and Pennsylvania with competitive power supply agreements already in place. As we prepare TeraWulf to trade on the public market, we are confident that we have the in-house technology, infrastructure and operations expertise to deliver unparalleled value for shareholders.”

— Paul Prager, Chairman & Chief Executive Officer of TeraWulf

“Our team’s unique access to energy assets and deep sector expertise in the wholesale electricity markets allows us to quickly develop a large-scale cryptocurrency mining platform that can help facilitate and can expedite the electric grid’s transition to a zero-carbon future. Sited and managed appropriately, mining operations provide resiliency to the electric grid while leading the rapid development of the global fintech infrastructure.”

— Nazar Khan, Chief Operating Officer of TeraWulf

“We are pleased to have reached this agreement with TeraWulf and look forward to partnering with them. This transaction provides ideal outcomes for our shareholders, customers and employees. It delivers our shareholders the opportunity to realize a substantial upfront cash payment while continuing to benefit from the value of our legacy imaging business, and provides them with the opportunity to participate in the potential upside of TeraWulf at an exciting time for the cryptocurrency mining space. The agreement will be instrumental in securing the long-term viability of IKONICS’s legacy business, allowing it to continue to meet the needs of our customers with a secure supply of our high quality products in addition to continued employment opportunities for our workforce.”

— Glenn Sandgren, Chief Executive Officer of IKONICS

“Our core focus on ESG sets us apart from our competitors and ties directly to our business success. We are confident that by integrating flexible baseload energy demand into the electric grid, we will accelerate the transition to a more resilient, stable and sustainable energy future while generating attractive investor returns and tangible benefits, including job creation, for our communities.”

— Kerri Langlais, TeraWulf’s Chief Strategy Officer

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.