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Perth, Australia-based metals and mining sector player, Volt Resources Limited (ASX: VRC) is engaged in the exploration of graphite deposits and currently focussed on the advancement of its flagship asset Bunyu Graphite Project (wholly owned), located in south-east Tanzania.
Alongside, Volt Resources is also engaged in the evaluation and identification of additional prospective deposits around the world, to add more value to its shareholders.
Annual Report 2019 â Overview
On 25 September 2019, Volt Resources released to the market its Consolidated Annual Report for the year to 30 June 2019 (FY19), which turned out to be quite dynamic for the company.
Operational Highlights:
The company completed the Feasibility Study (FS) into the development of Bunyu Graphite Project Stage 1 and announced the results on 31 July 2018, which presented a compelling economic and financial case based on an annual throughput rate of 400,000 tonnes of ore for the production of 23,700 tonnes per annum of graphite products on an average over a period of 7 years.
Source: Company Presentation July 2019
The Key positive outcomes of the FS include:
- Pre-tax NPV at 10% discount rate of USD 18.6 million, after tax USD 14.7 million;
- Pre-tax IRR of 21%;
- Payback period of 4.4 years;
- Start-up Capital cost estimate of USD 31.8 million;
- FOB operating costs averaging USD 664 per tonne;
- Average annual EBITDA of USD 13.1 million over 7 years;
- USD 96.3 million in total.
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- In August 2018, the companyâs wholly owned subsidiary Volt Graphite Tanzania (VGT) was granted the Environmental Impact Assessment (EIA) Certificate from the National Environment Management Council of Tanzania.
- Besides, on 22 October 2018, Volt Resources formally received two Mining Licences (MLs)- ML 591/2018 and ML 592/2018 covering Bunyuâs Stage 1 and Stage 2 developments respectively from the Mining Commission of the Ministry of Minerals of Tanzania.
The company continues to seek potential offtake contracts and in August 2018, a binding offtake agreement was successfully reached with Qingdao Tiangshengda Graphite Co. Ltd. for 9,000 tonnes per annum of Bunyu Graphite product;
Further in late August 2018, a co-operation agreement was signed with HAIDA Graphite to conduct testing on VGTâs graphite product samples for the future supply and purchase of Bunyu graphite;
In the last quarter of the calendar year 2018, Volt commenced the selection process to appoint an engineering firm to the role of Project Management Contractor (PMC). Reportedly, a recognised engineering services firm has been selected and the contract negotiations are underway.
Bunyu Stage 1 Development Funding Progress:
Volt has been working in partnership with Exotic Capital to undertake a USD 40 million Tanzanian Note Issue with funds raised to be directed towards Stage 1 development. Through the financial year 2019, the important developments in this regard include â
- On 17 August 2018, Volt lodged an updated Prospectus with the Tanzanian Capital Markets and Securities Authority (CMSA) and the Dar Es Salaam Stock Exchange (DSE). Based on the feedback and request received for additional information, a more updated Prospectus was submitted on 28 September 2019.
- While the company continued discussions with the CMSA and DSE on a positive note, it also progressed, in parallel, discussions for alternative funding options including a Note Issue and Listing on the Stock Exchange of Mauritius (SEM) with the same Tanzanian Note Prospectus. Besides, several discussions with North American institutional investors are also ongoing.
- Subsequent to the end of FY19, Volt Resourcesâ proposed Bond Issue and listing on the SEM was lodged for approval.
Community Engagement Overview:
In September 2018, the Lindi District Councilâs Economic, Work & Environmental Committee visited the Bunyu 1 site and they were impressed with the planned developments while VGT initiated and sponsored the development of a formal Village Land Use Plan (VLUP). The District Council had approved the report on 31 July 2018, which was then registered with the Land Use Commissioner.
On 26 and 27 May 2019, Volt Resourcesâ Chief Executive Office Trevor Matthews and VGT management attended a mining exhibition in the parliament grounds of Dodoma.
They took the opportunity to present the Bunyu Project, along with elaborating on graphite mining and processing, product markets and project development activities to the Speaker of the House and members of parliament.
Corporate Overview:
- In January 2019, the company secured a 6-month funding facility of AUD 1.3 million, providing additional funding flexibility to the company while it focussed on development funding activities.
- Volt Resources also lodged its income tax return and supporting R&D Tax incentive claim for FY18, whereby the company received a 43.5% cash rebate on eligible R&D expenditure. As a result, an R&D cash refund of $ 641,173 was granted from the Australian taxation office in late December 2018, following which Volt repaid the $ 512,000 R&D loan received from the R&D Loan funder Radium Capital earlier in the December quarter;
- Moreover, the company also completed investor meetings in North America and an investor roadshow in East Africa, and reported strong interest received from a number of investment funds and banks;
Board and Management Changes:
On 9 July 2018, Mr Matthew Bull resigned as the companyâs Non-Executive Director. Subsequent to the end of the year, on 1 July 2019, Volt Resources appointed Mr Giacomo (Jack) Fazio to the position of Non-Executive Director, following the resignation of Mr Alwyn Vorster.
More on the management could be read here.
Financials:
For FY19, Volt Resources reported a net loss of $3.48 million. The companyâs financial position remained stable, with total assets of $23.73 million and total liabilities of $2.94 million. The net assets as of 30 June 2019, stood at $ 20.79 million including cash and cash equivalents of $ 1.17 million.
There were cash outflows of ~$3.204 million from operating activities which were balanced over and above by cash inflows of $59,697 and $2.123 million from investing and financing activities respectively.
Stock Performance:
Volt Resourcesâ market cap is ~AUD 16.05 million with ~ 1.61 billion shares outstanding. On 30 September 2019, the VRC stock settled was trading at AUD 0.011 (AEST: 10:51 AM).
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