REG - Tirupati Graphite - Upstream Flake Graphite Development Strategy

Tirupati GraphiteAnnouncement

10/07/2024 07:00

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RNS Number : 7662V  Tirupati Graphite PLC  10 July 2024

The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014 which is part of UK law by virtue of the European Union (Withdrawal)
Act 2018. Upon the publication of this announcement, this information is
considered to be in the public domain.

 

10 July 2024

Tirupati Graphite plc

('Tirupati', 'TG' or the 'Company')

 

Upstream Flake Graphite Projects Development Strategy

 

Tirupati Graphite plc (TGR.L), the specialist flake graphite company and the
supplier of a critical mineral for the global energy transition, is pleased to
announce the development strategy for its current projects to achieve its aim
of reaching production capacity of c.400,000 tons per annum of flake graphite
to serve c.8% of forecast global demand in the next decade, subject to ongoing
and future financing requirements and market demands over the course of the
next few years.

 

Strategic positioning of the Company

·    As announced on 4 July 2024, the Company and its financial advisers
are progressing funding discussions with potential strategic partners and
financial institutions.

·    Although there is no guarantee that funds will be raised, discussions
are ongoing for near term raising of up to £3 million to streamline the
current operations in Madagascar. The Company intends to raise, in due course,
Project Finance of up to £80 million from Financial Institutions for
expansion of the Company's Madagascan projects to a combined 54,000 tons per
annum production capacity, and development of a first 50,000 tons per annum
module at its Mozambican projects.

·    Since 2021, the Company has developed two flake graphite projects in
Madagascar into production, and acquired additional large-scale projects in
Mozambique, thereby laying a solid foundation for growth.

·    Unlike most peers, the Company is independent of Chinese technologies,
with no Chinese sourcing requirements for its plant and equipment for the
development of its projects.

·    TG's Madagascan projects provide a favorable jumbo and large flake
graphite product basket.

·    TG's Mozambique projects are set to provide a higher proportion of
small-fine flake graphite, typically used in the growing battery anode market
segment.

·    The mining codes of both Madagascar and Mozambique provide security of
tenure and a conducive environment of investment for development and
operations.

·    Its global resources under JORC 2012, as contained in Annexure 1
below, provide sufficient deposits to support the Company to develop up to
400,000tpa of flake graphite production capacity. It should be noted the
projects all remain open to further exploration and expanded future resource
upgrades.

·    As a publicly listed Company on the London Stock Exchange, the Company
benefits from greater visibility and transparency for customers and investors.

 

Strategy for reaching 400,000 tpa annual production

·    Given the Company's internal expertise in flake graphite mining and
processing and its advantageous relationships with related parties, the
Company has developed a plan for the further modular development of its
projects to reach its objective to supply 400,000 tpa flake graphite,
representing an estimated 8% of global flake graphite consumption by the turn
of this decade. This strategy considers:

○     Certain variables that influence the capacity split composition that
is prudent between its projects in Madagascar and Mozambique.

○     The market evolution, which may result in additional capacity
creation in Madagascar on top of the envisaged development in Mozambique.

 

 Module                Project                               Capacity     Start        Completion   Aggregate capacity
 Current Optimisation  Madagascar (Vatomina & Sahamamy)      36,000       Sep-24       Jan-25       36,000
 Module 3              Vatomina (Madagascar)                 18,000       Dec-24       Dec-25       54,000
 Module 4              Montepuez (Mozambique)                50,000       Jan-25       Feb-26       104,000
 Module 5              Balama Central (Mozambique)           50,000       Sep-26       Oct-27       154,000
 Module 6              Montepuez (Mozambique)                100,000      Jul-27       Dec-28       254,000
 Module 7              Balama Central (Mozambique)           50,000       Jul-29       Dec-30       304,000
 Module 8              Montepuez (Mozambique)                100,000      Apr-29       May-30       404,000
 Total Target Primary Flake Graphite Mining Capacity*                                               404,000

 

·    As per plans and financial model prepared by the Company:

○     The total investment required, including fixed and working capital,
for reaching production capability of 404,000 tons per annum is estimated as
equating to £363 million.

○     The Company anticipates to re-invest its organic internal cashflows
for the required investment beyond 2026 and is in the process of progressing
strategic discussions for facilitating the first modular steps of this
development strategy.

 

*Each part of the development plan and strategy is dependent on financing and
market demands.

Next Steps

·    As previously announced, the Company, supported by its financial
advisers, is in advanced stages of engagement with potential financiers for
arrangements of immediate working capital finance needed for its current
operations, and for the development of Module 3 & Module 4 as contained in
the table above.

·    The Company is also engaged with prospective financial institutions
and multilateral inter-governmental bodies facilitating financial arrangements
for securing critical minerals.

·    The Company will fast track the final test work for the optimisation
of sand removal technology in the updated flow sheet for its projects in
Mozambique and progress the release of an updated resource statement for its
Madagascan projects via a Competent Person's Report under preparation by SRK
Consulting.

·    The Company is simultaneously looking to continue evolving the
composition of its board and management and it is expected that these
appointments will be fast-tracked upon financing.

·    The Company's board has initiated a review of its Downstream prospects
and arrangements as a priority and will provide an update in the near term.

·    The Company will keep the markets updated as these plans are
furthered, and engagements related thereto are progressed.

Material Risks to the prospects

The key material risks identified by the Company to the ability to progress
its business as per the aforementioned plans are:

·    The growth and rate of growth in consumption of flake graphite is
materially lower than estimates, which may result in the Company considering
slowing the pace of its developments.

·    The security situation in the areas of the location of the Company's
projects materially deteriorates, thereby impacting the Company's ability to
execute its developments.

·    Financing arrangements for its current needs and further development
are not achieved.

·    Any significant change in the leadership team of the Company including
its Board.

 

The Market Opportunity

·    Flake graphite is classified as a critical mineral by nations around
the world including but not limited to the United Kingdom, the United States
of America, the European Union and India.

·    Amongst energy transition materials, flake graphite constitutes the
largest constituent of a lithium-ion battery by volume and is a key material
in various other applications including fire safety, thermal management,
hydrogen power generating fuel cells and conductive polymers.

·    Various market commentators have forecast global flake graphite
consumption to increase from current levels of c.1.6 million tons per annum to
more than 5 million tons per annum by 2030. Links to some of these forecasts
are provided below:

○     Benchmark Minerals Intelligenc
(https://source.benchmarkminerals.com/article/flake-graphite-needs-more-than-7-5-billion-to-meet-2035-battery-demand)
e Flake Graphite Global Investment Requirement

○     International Energy Agency's Global Critical Minerals Outlook 2024
(https://iea.blob.core.windows.net/assets/ee01701d-1d5c-4ba8-9df6-abeeac9de99a/GlobalCriticalMineralsOutlook2024.pdf)

○     World Bank report: Minerals for Climate Action - The Mineral
Intensity of the Clean Energy Transition
(https://pubdocs.worldbank.org/en/961711588875536384/Minerals-for-Climate-Action-The-Mineral-Intensity-of-the-Clean-Energy-Transition.pdf)

○     Fastmarkets Graphite Market Outlook
(https://www.fastmarkets.com/insights/graphite-market-outlook-five-key-factors-to-watch/)

○     Benchmark Minerals Intelligence 2024 Graphite Battery Landscape Map
(https://source.benchmarkminerals.com/downloads/special-issues/1313805)

·    According to Benchmark Minerals Intelligence, out of all critical
minerals, flake graphite demonstrates the highest level of global supply
dependence on China, with c.70% of upstream flake graphite production and
>95% downstream processed flake graphite products used in the energy
transition economy coming from China. This level of dependence is causing
geopolitical concerns and has resulted in the following regulatory measures by
various governments:

§ The Inflation Reduction Act of the United States of America, which provides
incentives for domestic development of manufacturing facilities for the US
battery supply chain and extends incentives to allied nations.

§ Imposition of import tariffs on graphite products of Chinese origin from
2026 by the United States of America, announced in May 2024.

§ The European Unions' Critical Raw Material Act 2023, presented in parallel
to the EU's Net Zero Industry Act.

§ Multiple Critical Minerals Strategies published by countries such as the
UK, Canada, Korea, India, and more.

§ Creation of a multi-lateral grouping "Mineral Security Partnership", a
collaboration of 14 countries and the European Union to catalyse public and
private investment in responsible critical mineral supply chains globally.

§ Imposition of graphite export restrictions by the Chinese government having
taken effect from 1 December 2023.

●     Based on growing consumption trends, various market commentators
forecast that a potential supply deficit may start by the end of the current
year. Signs of a market turn-around and graphite pricing rebound after
oversupply over the past few years are becoming visible as is also recognised
by independent market commentators.

 

Commenting on the development plans Shishir Poddar, CEO. said:

"The Company has developed a detailed strategy to execute its ambition of
producing c.8% of forecast demand by the turn of the decade. Subject to
current and future financing efforts, this strategy update is key for defining
the path for the evolution of TG on the upstream side of the business and has
been shared with interested prospective strategic partners to demonstrate how
the Company plans to achieve its upstream ambition. We continue to review
options for the path forward for the downstream side of the business and will
keep shareholders updated.

"The appointment of Michael Lynch-Bell as Non-Executive Chairman has
strengthened the Company and further management appointments are planned as
the Company continues to enhance its corporate governance. We will provide
further updates in due course as appropriate."

 

Annexure 1

TG JORC 2012 Graphite Resources - Madagascar

The Madagascar projects provide 25.5 million tonnes at c.4.5% Total Graphitic
Content ('TGC'), and the projects remain open to further resource expansions.
For reference, the JORC Code 2012 resources published under the 2020 Competent
Persons Report ('CPR') across the Company's Vatomina and Sahamamy Projects are
as below. An updated CPR to upgrade the Madagascar resources is under
preparation by SRK Consulting following a drilling since December 2021 that
completed recently (see 11 March 2024 RNS). .

 

SRK Mineral Resource Statement Vatomina Graphite Project, Madagascar, in
accordance with the JORC Code (2012):

 Vatomina Project 2020 CPR Mineral Resource Statement
 Resource Category       Quantity  Grade
                         (Mt)      (GC%)
 Measured                -         -
 Indicated               3.2       4.3
 Inferred                15.2      4.7
 Total Mineral Resource  18.4      4.6

 

 

SRK Mineral Resource Statement Sahamamy Graphite Project, Madagascar, in
accordance with the JORC Code (2012):

 

 Sahamamy Project 2020 CPR Mineral Resource Statement
 Resource Category       Quantity  Grade
                         (Mt)      (GC%)
 Measured                -         -
 Indicated               1.4       4.1
 Inferred                5.7       4.2
 Total Mineral Resource  7.1       4.2

 

 

TG JORC 2012 Graphite Resources - Mozambique

The two complementary Mozambique graphite deposits add mineral resources of
over 152 million tonnes at 8.5% TGC (and remain open to further expansion with
strike remaining opening) significantly increasing the Company's JORC Code
(2012) mineral resource base.

 

 Project         Deposit   Group Total JORC (2012) Mineral Resources
                 Tonnes                    TGC             Cont. Graphite
                 Mt                        %               kt
 Montepuez       Elephant  76.9            7.3             5,620
                 Buffalo   42.6            9.5             4,050
 Balama Central  Lenox     21.9            10.2            2,230
                 Byron     11.0            10.2            1,120
 Total                     152.5           8.5             13,030

 

 

For further information, please visit https://www.tirupatigraphite.co.uk/
(https://www.tirupatigraphite.co.uk/)  or contact:

 

 Tirupati Graphite Plc                        

 Puruvi Poddar - Joint Managing Director     admin@tirupatigraphite.co.uk

                                             +44 (0) 20 39849894
 CMC Markets UK Plc (Broker)

 Douglas Crippen                              +44 (0)20 3003 8632
 Musst / ViTa-Connect (Financial Adviser)

 Tabrez Khan                                 tabrez@vita-connect.co

                                             +44 746 903 3573

 FTI Consulting (Financial PR)

 Ben Brewerton / Nick Hennis / Lucy Wigney   +44 (0) 20 3727 1000

                                             tirupati@fticonsulting.com

ENDS

 

 

About Tirupati Graphite

 

Tirupati Graphite Plc is a specialist Graphite producer and the supplier of a
critical mineral for a decarbonised economy and the energy transition. The
Company places a special emphasis on green applications including renewable
energy, e-mobility, energy storage and thermal management, and is committed to
ensuring its operations are sustainable.

 

The Company's operations include primary mining and processing in Madagascar
where the Company operates two key projects, Sahamamy and Vatomina with a
combined 30,000 tpa of currently installed capacity, producing high-quality
flake graphite concentrate with up to 97% purity and selling to customers
globally.

 

The Company also holds two advanced stage, world class, natural graphite
projects in Mozambique. Work has already commenced to optimise the economics
for development of the Montepuez graphite project, which is permitted for
100,000tpa production and where substantial construction work has already been
undertaken by the predecessor. A table of the Company's projects is provided
below:

 

 Country     Project         Stage
 Madagascar  Sahamamy        In production: 18,000tpa capacity
 Madagascar  Vatomina        In production: 12,000tpa capacity
 Mozambique  Montepuez       100,000tpa permitted, development-initiated
 Mozambique  Balama Central  58,000tpa permitted, development-ready

 

Forward looking statements and disclaimers.

The information contained in this announcement and others referred to here
have been prepared by Tirupati Graphite plc (the "Company") solely for
informational purposes. It has not been fully verified and is subject to
material updating, completion, revision, verification and further amendment.

While the information contained herein has been prepared in good faith,
neither the Company nor any of its directors, officers, agents, employees or
advisers give, have given or have authority to give, any representations or
warranties (express or implied) as to, or in relation to, the accuracy,
reliability or completeness of the information, or any revision thereof and
any liability therefore is expressly disclaimed.

Information contained herein does not purport to be complete and is subject to
certain qualifications and assumptions and should not be relied upon for the
purposes of making an investment in the Company's securities or entering into
any transaction. The information and opinions contained in this document are
provided as at the date of this document and are subject to change without
notice and, in furnishing the document, the Company does not undertake or
agree to any obligation to update or correct this document.

This document has not been approved by an authorised person in accordance with
Section 21 of the Financial Services and Markets Act 2000, as amended
("FSMA"). This document does not constitute, or form part of, an offer or
invitation to issue, sell or acquire, or the solicitation of an offer to
subscribe or purchase, any securities in the Company.

The Company's securities mentioned herein have not been and will not be,
registered under the U.S. Securities Act of 1933, as amended (the "Securities
Act"), or under any U.S. State securities laws, and may not be offered or sold
in the United States of America or its territories or possessions (the "United
States") unless they are registered under the Securities Act or pursuant to an
exemption from or in a transaction not subject to the registration
requirements of the Securities Act. Neither this document nor any copy of it
may be taken or transmitted into the United States, or distributed, directly
or indirectly, in the United States, or to any "US person" as defined in
Regulation S under the Securities Act of 1933, including US resident
corporations or other entities organised under the laws of the United States
or any state thereof or non-U.S. branches or agencies of such corporations or
entities. This document is not being made available to persons in Australia,
Canada, Japan, the Republic of South Africa or any other jurisdiction in which
it may be unlawful to do so and it should not be delivered or distributed,
directly or indirectly, into or within any such jurisdictions. Any failure to
comply with these restrictions may constitute a violation of the laws of the
relevant jurisdiction.

Certain of the information contained in this document has been obtained from
published sources prepared by other parties. Certain other information has
been extracted from unpublished sources prepared by other parties which have
been made available to the Company. The Company has not carried out an
independent investigation to verify the accuracy and completeness of such
third-party information.

This document may contain certain "forward looking statements". Forward
looking statements often use words such as "believe", "expect", "estimate",
"intend", "anticipate", "aim" and words of a similar meaning. There are
important factors, risks and uncertainties that could cause actual outcomes
and results to be materially different. Except as required by law, the Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. No statement in this document is intended as a profit forecast or
profit estimate nor the company undertakes any responsibility towards any such
information provided in this document.

 

 

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