Renascor Resources (ASX:RNU) likely to benefit from rising demand for graphite

Highlights

• RNU’s BAM project has an NPV of AUD 1.5 billion, a 26% IRR, and an annual EBITDA of AUD 363 million.
• In FY24, RNU saw a 68.76% YoY increase in revenue, reaching AUD 5.01 million, with a 302.07% surge in profit after tax.
• The company expects growth on the back of rising demand for graphite in EV and energy storage sectors.

Renascor Resources Limited (ASX:RNU) is an Australia-based company which specialises in mineral exploration, development, and evaluation activities. Presently, the company is focused on advancing its Battery Anode Material graphite mine (BAM Project).

Notably, the feasibility study of the BAM project reported a post-tax net present value (NPV) of AUD 1.5 billion with an internal rate of return of 26% and average annual EBITDA of AUD 363 million, positioning it as a development-ready project. All major regulatory approvals concerning the project are in place along with a government loan of AUD 185 million.

RNU performance in FY24

In the financial year 2024 (FY24), the company recorded 68.76% YoY rise in its revenue to AUD 5.01 million and 302.07% YoY surge in profit after tax to AUD 1.71 million. The period saw significant progress at the BAM project with advancement in drilling activities and updating of the mineral resource estimate and ore reserves for Siviour. Moreover, in FY24, the company executed a non-binding MOU with Mitsubishi Chemical and licensing contract with Dorfner ANZAPLAN GmbH.

Key financial metrics for September 2024 quarter

In the three months ended 30 September 2024, the company achieved significant milestones including bulk sample collection, progress in the Early Contractor Involvement process, downstream equipment trials, the registration of an Indigenous Land Use Agreement and securing an Australian Government grant of AUD 5 million.

Outlook

The company expects to benefit from the increased adoption of electric vehicles and energy storage solutions as it will lead to increase in graphite consumption. Presently, the company is advancing early contractor involvement (ECI) process to conclude the EPC contract for the upstream mineral processing plant and infrastructure, with the aim to derisk execution and shorten the construction timeline.

The company is progressing discussions with lithium-ion battery market participants to secure binding offtake agreements and explore potential equity investments to meet the initial capital needs of the BAM project.

Share performance of RNU

RNU shares closed at AUD 0.07 apiece on 12 November 2024. Over the past one year, RNU’s share price has dropped by 57.58% and in the last three months, it has declined by around 13.58%.52-week high of RNU is AUD 0.17, recorded on 13 November 2023, while 52-week low is AUD 0.069, recorded on 12 November 2024.

RNU Daily Technical Chart, Source: EODHD/Others

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.
Note 2: The reference date for all price data, and currency, is 12 November 2024. The reference data in this report has been partly sourced from EODHD/Others.

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