Australian-headquartered Kibaran Resources Limited (ASX: KNL) is developing vertically integrated businesses to manufacture battery graphite for the lithium-ion market. It holds 100 per cent interests in a combination of appealing upstream and downstream graphite businesses poised for highly lucrative and scalable development.
The company operates its downstream graphite business, EcoGraf project in Western Australia, through which it plans to produce spherical graphite for batteries (lithium-ion) by applying an environmentally friendly process. Also, the company intends to bring scalable mining projects online for the continuing supply of graphite via its upstream business, TanzGraphite in Tanzania.
The company has recently released its activities and cash flow report for the quarter ended 30th September 2019 on the ASX, highlighting significant developments across all its key business areas, that are discussed below:
Developments at Epanko Graphite Project
Kibaran progressed with the debt financing activities at the development ready Tanzanian natural flake graphite project, Epanko Graphite Project during the quarter. The company held meetings with KfW IPEX-Bank in Germany to assess commercial due diligence activities for the Untied Loan Guarantee process, targeting total project debt finance of up to USD 60 million.
The company expects the resolution of remaining Tanzanian regulatory matters for Epanko debt financing shortly.
Developments at EcoGraf Battery Graphite Project
Kibaran made substantial progress at its Kwinana-based EcoGraf Battery Graphite Project during the quarter, reporting the following developments:
- The proposed Kwinana battery graphite processing plant was granted "Lead Agency Support" by the Western Australia Government. The plant has a projected up-front capital cost of USD 22.8 million for an initial 5,000tpa, followed by an additional USD 49.2 million to expand production to 20,000tpa of battery-grade graphite.
- The company reported about advancing pre-development activities in the Kwinana Industrial Area with its planned battery graphite production facility.
- The company undertook testwork to produce suitable samples for third party vendor testwork and to obtain independent verification of the process flowsheet. The testwork is underway and is expected to be completed shortly.
- The work programs were commenced with government departments with regards to securing approvals and licenses to develop the processing facility.
- The Kwinana development schedule was completed during the quarter and a Final Investment Decision is planned for the first half of 2020.
- The company continued advanced discussions with potential customers to secure sales and offtake agreements.
Source: Company’s Report (31st October 2019)
German Government Announced Support for Battery Manufacturing
The German Government announced support for three battery cell alliances during the quarter to support a battery industry in Europe and to reduce automobile manufacturers’ dependence on Asian markets. The company notified that investment is underway across the globe to transition towards renewable energy for vehicle and industrial applications.
Community Development Activities
During the quarter, the company continued to engage with community stakeholders, to actively work on fostering and building constructive relations. The company reported the following community development activities:
- Prime Minister Hon Kassim Majaliwa Kassim visited the Morogoro Region and cited the benefits that will come from the Epanko Graphite mine.
- The Chairman for Tanzania Minerals Commission, Professor Kikula visited the Ulanga District and met with the TanzGraphite community relations team.
- The Deputy Minister for Minerals, Hon Steven Nyongo launched the minerals market in Mahenge, facilitated with the assistance of TanzGraphite.
- A meeting was conducted at Luli hamlet in the Epanko valley to discuss the Resettlement Action Plan and the transfer of Luli based pupils to Kisewe primary school from Epanko primary school once the Epanko primary school is relocated.
Update on Demand and Price
Kibaran recorded a positive long-term demand for battery (spherical) graphite with EV penetration rates rising from 2 per cent in 2018 to 25 per cent by 2025, needing about 800,000 tonnes of spherical graphite, over six times the volume currently produced.
The company noted a strong demand for battery graphite from automobile and lithium-ion battery manufacturers in Europe, South Korea and Japan, who are seeking to diversify battery mineral supply chains to incorporate an environmentally responsible, alternate supply of battery graphite that lowers their dependency on Chinese supply and the associated environmental impacts.
The company notified that the standard grade price rose 20 per cent during 2019 from USD 3,000/tonne to USD 3,600/tonne, maintaining their 2018 increases.
Other Key Developments
Kibaran released an investor presentation detailing its recent developments and an updated website during the quarter. The website was updated to reflect the move towards downstream graphite processing.
The company has recently proposed to change its name to EcoGraf Limited (reserving its ASX code) to reflect its focus and strategy of, high-quality spherical graphite products. The company mentioned that the EcoGraf trademarks have been successfully registered in Germany, Australia, Japan, China, Korea and the USA.
Kibaran used $1.17 million in operating activities during the quarter and reported a cash balance of $1.42 million at the end of the quarter. The company has estimated a cash outflow of $850k for the next quarter, with $250k likely to be spent on exploration and evaluation activities.
The company also completed a share placement to raise $1.3 million during the period via placement of fully paid ordinary shares at an issue price of $0.09 per share. The placement was strongly supported by Kibaran director John Conidi and major shareholder Mitsubishi UFJ Financial Group Inc.
One can infer that Kibaran is on track to become a preferred partner for the long-term supply of eco-friendly, high-quality, responsibly produced spherical graphite products to customers in both established and emerging global markets.
As on 4th November 2019, KNL last traded at $0.082, with a rise of 17.14 per cent relative to the last closed price.
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