Tirupati Graphite plc share price, company news, analysis and interviews

Alastair Bath, Executive Director of Tirupati Graphite plc, discusses his role, recent business developments, overall strategy, and provides a message to shareholders.

Tirupati Graphite plc (LON:TGR) Executive Chairman Shishir Poddar caught up with DirectorsTalk discuss the completion of Suni Resources, what the two assets will bring to the group and the massive global demand for graphite.

Q1: You announced the completion of the acquisition of Suni Resources, can you tell us a bit more about this acquisition and the rationale behind it?

A1: The projects that Battery Minerals was developing in Mozambique, these are projects that I had been watching in fact, prior to TG listed. This was with the view that while I was watching many other projects, I did see these projects as one of the better ones, firstly.

Secondly, I also saw that Battery Minerals was very systematically and properly doing their studies on exploration and development of feasibility studies of these projects.

So, with the vision in which we created Tirupati Graphite, we actually needed another good graphite project, outside of our Madagascan assets. I saw an opportunity when Battery Minerals decided to change their focus to gold exploration, from graphite.

I must say, I am extremely thankful to Battery Minerals and their management team for having understood what an acquisition of these assets by us would mean for the assets.   They, obviously, must have talked to more than just us, whilst coming to a conclusion on this, and they saw in us a team, a company that has the ability to develop these assets.

Now, coming to the rationale for us. Historically, Battery Minerals has deciphered 152 million tonnes of graphite reserves and resources in these two projects that Suni Resources holds. That’s about 12 million tonnes of contained graphite which is kind of 12 times of what we have in our Madagascan assets, as of their exploration outcome last announced. So, these are very large graphite projects, firstly.

Secondly, they are located in a jurisdiction the graphite of which is quite well established in the markets and which is quite complementary to what we have in Madagascar. Madagascar is a concentration of jumbo and large flakes, these are medium and small flake deposits.

So, we get the entire basket, we get diversity of location and we get a size  of resources with which we can take forward our vision of being 8% of global demand capacity by 2030, which is not a small quantum, it’s possibly about 400,000 tonnes of graphite.

So, these resources and acquisition, they put us on the front foot of taking forward what we intend to do or what we think of doing in our graphite space.

Q2: You’ve acquired two impressive graphite projects in Mozambique; the Montepuez and Balama Central projects. What do these add to your existing operations in Madagascar?

A2: I’ve already talked about the quality of these projects and how it helps us. Let me know come to specifics about these two projects.

So, the Montepuez project is a more advanced stage project where Battery Minerals actually, post completing their feasibility studies, started construction for a first 50,000 tonne module. It’s licenced for two modules of 50,000 tonnes each and I’m sure the Mozambique government will be more than happy to give us licence for more capacity if we look forward to creating that.

When they started construction of the first module, they finished a few activities:

• they finished building a base camp for 100 people, a very high quality base camp, fully secured, properly fenced, and it is an upmarket arrangement so that we can put quality human resources on the project and build it.
• The developed area for setting up of the processing plant needs quite an investment in earthwork and development of the location of that plant, that is all done.
• Detailing management arrangements so the tailing points, a dam is built for it, all arrangement of a high quality tailing dam which is actually made for 100,000 tonnes capacity in two modules, as the licence of the project is all ready.

So, we just thought let’s make an assessment of what it will cost us if we had to build these now, and it would cost us almost £10 million if we would have built all that we have got now. So, Montepeuz is ready to go now.

What difference will it make to the projects with TG acquiring it?

TG has its own technology for processing flake graphite and it has the ability to build flake graphite in learner process circuits. As a result, smaller investment on the capex side and it also helps us reduce the target or calculated opex for the projects because we can do things in a smaller circuit.

So, our approach right now for this project is that we will immediately embark on the tests that are required so that we can adopt our sand extraction technologies, which are used in Madagascar for these projects. Also, see the best flotation systems because we have two; one is the conventional flotation systems and second is the column flotation systems, both have developed. So, we will optimise the process flow sheet there and then get onto building the first module.

Coming to the Balama Central project, it is a feasibility study ready stage. Nothing has been built on the ground as yet but now it is fully licenced, the licence for Balama was granted a few quarters back. So, as we embark on continuing the development of Montepuez for the first 50,000 tonne, we will get into further planning for the Balama Central projects.

So, all put together, these assets they add to our kitty high quality top-end graphite resources, ready to build, very high quality exploration work done, mine plan development so that is where we are.

Q3: How big is the opportunity for the Company with the seemingly massive demand for graphite?

A3: On the back of the energy transition economy, as of today, the globe is consuming about 1.5 million tonnes of graphite, of which more or less anywhere around 25% is going to the energy transition economy, lithium-ion batteries primarily. The balance is into various other applications, many of which are also related to energy transition or energy efficiency.

Electrification of mobility,  grid storage of energy so that energy efficiency can be improved, and for others that are less visible like thermal management, composite materials, all these are growing. The result is that every forecast that you see, none says that graphite consumption by 2030 will be less than 5 million tonnes, globally, so from where we are, we’re going more than 3 times in the next 7 years.

Now, as a company, we want to play a vital role in securing the world’s need for this critical material, and also diversifying its location so currently China is the biggest source.

These resources, adding on to our Madagascan resources, give us all types of graphite in the basket, give us a huge size of the resource and give us advantaged stage projects by which we can take forward our plans to evolve into a 400,000 graphite company by 2030, 8% of the global demand.

Q4: The acquisition itself was first announced in August of 2021, could you just throw some light on what went through in this time to completion because it has been 19 months?

A4: This is a very very good question and something that possibly cannot be read between the lines and understood by people generally.

Historically, Battery Minerals may have spent no less than $40-50 million in bringing the projects to the stage it is. The first thing we broke as a barrier was when we agreed to a deal with Battery Minerals, which was far less than the amount they had historically spent on the project.

Having done that, once we announced the deal, there were two primary condition precedent that had to be achieved, one was the approval of shareholder of Battery Minerals for the transaction.

It took Battery about 3 months to get that and obviously I can see that they must have done a lot of convincing to their shareholders for approval. On the back of this, we as  a company are possibly the most exclusive on the globe on the ability to build graphite projects so even if the headline number as of today is lower, because they were getting a larger chunk of the consideration of equity, they had the possible upside for the future.

Once Battery Minerals completed their shareholders approval, what happened was in the interim, the licence for the Balama project was granted by the Mozambique government which was in process, that brought in another complication.

Whilst it was very good that the licence was granted, that brought an obligation on Battery or Suni to provide a bank guarantee according to law to the Mozambique government. So, we were in a catch-22 situation at that point.

Battery obviously would not invest £1 million for the bank guarantee required to be furnished and we didn’t have the assets in our hand so  we approached the government to allow us to finish the bank guarantee post-completion so it took a few months .

Simultaneously, there was a process of capital gains tax assessment so as I said earlier, Battery actually sold these assets at a price far less than they had invested in it but there was an assessment which made Battery liable to pay almost $2.5 million worth of capital gains tax. So, again we were in that catch-22 situation of how to fund it.

In between, our share prices fell so because we had a consideration with a fixed share price, base don what it was at the time of signing the agreement, the consideration effectively to Battery came down. So, that led to others possibly looking at opportunities, getting unsolicited offers back into Battery, and we had to battle around that.

So, I must say, Battery Minerals’ team and us have worked in very close coordination, beating every bump that came on the road for completing this acquisition with complete commitment and taking the right steps and right decisions at the right time, doing the completion in the right way.

Whilst I did see a lot of discussions on why it has taken so much time, people criticising about it all, as a management team leader of the company, it was my duty to ensure that this acquisition:

• remains on track, we did that.
• is completed with appropriate and required authorisation from the local government, we did that.
• happens in a manner that everything is clean, we’ve achieved that.

So, in a one-liner, “it’s easier said than done”. You’re dealing with multiple jurisdictions, you’re dealing with multiple laws, you’re dealing with an African national, you have to do it in a manner that you meet their expectations too.

What I would like to tell my shareholders and prospective shareholders is be sure that we are a team committed to our purpose, we have all the perseverance that is required, we have all the patience that is required and we have all the abilities to handle difficult and complex situations.

There is nothing I can remember where Tirupati Graphite has not delivered, there may have been bumps in the road but we have delivered the results that we have thought of delivering, always.

Tirupati Graphite plc (LON:TGR) Executive Chairman & Managing Director Shishir Poddar caught up with DirectorsTalk to discuss their successful and oversubscribed fundraise, the significance of the Battery Minerals acquisition and the next steps for the company.

Q1: First off, congratulations on a successful and oversubscribed fundraise. Could you just talk us through the logic behind the placing?

A1: I must first thank all the investors who subscribed to our placing and also Optiva, who were the sole bookrunner for this placing.

We all know that Tirupati has graphite projects in Madagascar, we’ve reached quite a threshold of operations there, and that’s growing to its 84,000 tonnes capacity but the way the graphite world is going, the way the energy transition requirements of graphite are growing, we have said that it is our aim to be more or less 8% of global graphite needs in capacity. That means we need to be at more or less 400,000 tonnes of production by 2030.

Now, our Madagascan assets had certain limitations, both on the resources and so many things, and it was our intention to diversify our geographical location also so that was the logic because of which we had entered into an acquisition agreement for two assets in Mozambique with Battery Minerals Limited, that was last year.

Over the months that have passed, all the requirements to complete this acquisition were kind of done and it was now time for us to give it the final blow so that we can complete the acquisition. The acquisition required more or less, £3.5 million pounds of cash outflow to be completed in different arenas, and this capital raise enables us the funding of this entire process to completion. It also gives us some additional working capital which will be very handy for the company to take the next steps also as it completes the acquisition.

So, overall, this capital raise, I think, brings us to a situation that we are fully funded to take the next steps forward for the growth of the company.

Q2: So, just judging by what you’ve said, all the hurdles are now complete for the acquisition in Mozambique, it’s all settled. Could you explain the significance of that then for the company?

A2: Let me first tell you what is the stage of these projects that we are acquiring from Battery Minerals.

So, Battery Minerals, through its subsidiary Suni Resources, owns two Mozambican graphite projects, which sit not too far away from each other, and they’re located in the same area as the world’s largest graphite producing project in the world is located, that’s the Balama region

Now, the stage of these two projects is that Montepeuz  has a fully licensed construction started project, which can go to 100,000 tonnes of flake production as per its current licenses approvals, and it has the capacity to go further, in my personal opinion. The second project, which is better known as Balama Central project, that has more or less a 50,000 tonnes of fully licensed construction to start permitting on all grounds.

This means what? We acquire two projects in a jurisdiction which is known to host good high quality graphite, which is actually the seat for the world’s largest graphite operation today and it is ready to go on. It’s not an exploration project, it’s a beyond BFS stage project that we have acquired so now we have the ability to just take it forward.

Now, the other important thing that is vital for us and for our investors to know that while we have all these studies and BFS’s and all the technical data, in fact even some offtake agreements that we inherit up upon completion of this acquisition, we have the ability to further optimise these projects economics, using the technologies, know-how everything that we have. That would mean that we can reduce the investment requirements most substantially in these, and also could optimise the operating costs. So, as we are going to be engaged with completion right away, we will go ahead and do the optimisation studies, and this will help us to go to the biggest names in the EV sector, in the battery sector, and even in other graphite consuming sectors.

Now, this is the project we have, it has 152 million tonnes of JORC 2012 resources and reserves, and we have the licenses to build it to 150,000 tonnes in three modules, which we can expedite if required, get into the big guys, which was difficult for us to manage through our Madagascan projects. 152 million tonnes of resources and reserves in the ground with contained graphite content of more or less 13 million tonnes plus, that’s a huge number. I’m not sure where this size will sit globally on the size of projects of graphite that are there today in the world, but definitely it’ll be one of the top league.

So, this actually transforms the company from being, you can say a smaller Madagascan producer going to 84,000 tonnes which is significant, no doubt, but this asset gives us the ability to go to hundreds of thousands of tonnes of capacity. The demand is growing, we see reports every day so it’s truly an acquisition that will help us take the level that we want to take it.

So in all of this, it’s quite a significant step in the company’s journey.

Q3: What are Tirupati Graphite’s near term milestones just moving forward?

A3: So basically, our Madagascan projects are reaching the 30,000 tonne milestone, the 30,000 tonne capacity milestone is quite a huge achievement, and that to more or less in two years with an established lowest capital cost globally. So, that is what brings us to the company where it turns to a stage that it becomes more or less bottom line positive, that’s a very big milestone for us.

The acquisition, which is now just a process, we have comfort letter from the Government of Mozambique in hand, there are two financial requirements to be met, which we have raised the funds for, and that acquisition is a process and we’ll complete that process. We have that acquisition coming to us as the second big milestone in the near term.

Apart from this, we are looking at working on different locations, geographically, to set up possibly downstream graphite processing for the high-end applications.

With these important things now set aside and completed, it gives us the time and resources to start working on those directions so we are in for a lot of things. There are a lot of smaller milestones like hydropower that we are generating and the next modules to come up in up in Madagascar, a lot of offtake agreements could be seen coming up in the near future but in developing capacities and building the base of the company, these are the significant things that you can see.

Tirupati Graphite plc (LON:TGR) Executive Chairman and Managing Director Shishir Poddar caught up with DirectorsTalk for an exclusive interview to discuss the infrastructure update at Vatomina, the impact on net zero goals, their Sahamamy hydropower plant, progress of the acquisition of Suni Resources and the company’s growth trajectory over the next few years.

Q1: First off, could you just talk us through your recent announcement around the infrastructure at Vatomina and what it means for operations there?

A1: We had a tough time in the rainy season this year and that led us to think out of the box in how we can mitigate our operations from difficult conditions of nature and as a result, we decided to split our processing plants in two parts.

The first going right at the pit head so that we avoid transportation of ore from the mine site to the processing plant site, it’s just a kilometre or two distance, but then it’s quite a heavy load because the quantum of all that has to go for every tonne of graphite is 25 tonnes so it amounts to a lot of movement of materials.

So, long story short, as an effect, now we have our first pre-concentrate plant running at Vatomina and we shifted the first part at the pit head. We are pumping the pre-concentrate to the main plant so we avoid total transportation of solids on road.

The roads did get destroyed quite a bit during the rainy season and we got a slot over the last couple of weeks where we have reconditioned all the roads and across both Vatomina and all our roads are now operational.

So, yes, it’s a big decision for the long term, I think, and it be applied across our projects.

Q2: What impact will it have on your net zero goals and how much progress have you made with those?

A2: So, we calculated that we would save 75,000 litres of diesel every year for a 9,000 tonne plant. Ultimately, it’s going to go nine times of that so more or less you can see that as we reach our 84,000 tonnes target capacity in Madagascar over the next couple of years, we will actually be reducing our consumption of diesel by almost six to 700,000 litres a year.

Now, that much of diesel, we would not need to mitigate the emissions of that much of diesel burning to reach net zero, we reduce our emission upfront so it’s quite an important impact there. It is also an important impact on cost in the sense that it’s not only diesel that you use when you’re transporting, there are vehicles that are used and there are so many other costs associated to it.

So this is a blessing in disguise. The existing fleet will now be able to cater to ore mining more than what our current operations are so with our existing fleet, we should be able to increase the capacity that at the plant. This is something that we are currently working at, at Vatomina, without a very huge further investment and we set up a second pre-concentrate plant and use our existing final concentrate plant to process both. Hopefully it works out but yes, we will get back to the markets further as we conclude our investigations on that.

Q3: Can you share any updates on the construction of the Sahamamy hydropower plant and what that will ultimately do for production?

A3: That plant, the turbine and generator, which is the main part, installation is completed, the penstock which provides the water from the source reservoir up to the turbine generator, all that is done, everything is being tested. The canals are done, there are some places where we found leakages, some pressure issues, which are all being addressed so a new hydropower plant will be fully operationally in a few weeks from now.

Q4: You recently released news around the acquisition of Suni Resources with projects in Mozambique. How is that progressing and what will that acquisition do to your production profile?

A4: Ultimately, where do we see Tirupati going? We intend to be more or less 8% of global graphite demand in our capacities.

With the way graphite markets are slated to grow, and that’s already started happening, we see ourselves to be looking at a 4,000 tonne total capacity by end of this, now, for that much of capacity, you need resources, first thing.

Second thing, we also wanted to diversify our country risk in the sense of being dependent of working only in one location or one country, we thought it will be wise to have our resource and country risk diversified.

Third thing, the quality of graphite from that region of deposits is well established in the market for the whole range of applications of graphite so that way it’s useful position.

The position as far as the acquisition completion is concerned, final approval from the Ministry of Mineral Resources is required in Mozambique, that has been in process. There were certain points around that which we are addressing with the government and we are hopeful that it should conclude very shortly.

Q5: Now, I think you’ve hinted at this already, but what’s your view on the current market for graphite and subsequently, how do you view Tirupati Graphite’s growth trajectory over the next few years?

A5: This is something very vital. With the incremental EV adaptation that has happened since last year so the EV markets grew to double in 2021 as compared to previous year, and this year also, the growth looks similar.

I’ve come across recent news which says that across the world, the US, Europe, UK, every part of the world, EV adaptation has increased because of increased oil prices. So, there was a time when cost effectiveness-wise, EV was not the best choice, now EV has become a good choice even on the economic side so that evolution is happening faster. This definitely would lead to consumption of graphite because anode is made out of graphite and graphite is the single largest component in a lithium-ion battery.

In addition to this, we see a lot of growth in various other applications of graphite like in flame retardants, in composites, in heat sinks which are used for managing heat generated in electronic devices and similar.

Projections from various sources say that the total global consumption of graphite should exceed 5 million tonnes from the current 1.5 million tonnes a year by 2030. 5 million tonnes of graphite means three times more you need than you currently produce.

Sources are limited. As of today, China produces 70% of graphite requirement of the world, more or less. We have some production in Brazil, we have some in Madagascar and some in Mozambique, these are the primary. So, ultimately, additional graphite sources have to develop if we have to meet our energy transition targets or in any format.

We do see that this is not an easy task, which doesn’t mean this is not doable, we see ourselves playing a very large role in this. As I said, our target is to be 8% but if the globe needs more for us, we will not shy away from stretching ourselves to even grow larger than that.

Overall, I do see an upward pressure on the prices of graphite also in the coming quarters and I see that there would be more projects coming up also with the change that has been happening. Overall, the world needs additional sources of graphite and South-eastern African nations I see them as the primary region from which the world will meet its graphite needs, thus Madagascar, thus Mozambique for us.