Graphite exploration and development company, Volt Resources Limited (ASX: VRC) has announced its Quarterly Activities Report for the three months to 31 December 2019.
Bunyu Stage 1 Development Funding Update
Volt Resources has been focussed on advancing development of its flagship asset, Bunyu Graphite Project (100%-owned) with supportive infrastructure in place, located in south-east Tanzania that has a well-established mining and services industry with political stability and a robust economy.
During the quarter, the Company and its advisors Alphier Capital (formerly Exotix Capital) accomplished considerable progress regards to the Stock Exchange of Mauritius (SEM) Note Issue and listing, that is essential to its funding strategy to raise the targeted USD 40 million for Stage 1 development of the Bunyu Graphite Project.
A private placement of Notes to be listed on the Development and Enterprise Market (DEM) of the SEM is being undertaken by Volt Graphite Tanzania Plc (Volt’s 100%-owned subsidiary). The application for the same received SEM listing executive committee’s approval in December 2019. The Note offer is seeking to raise USD 15 million via issue of Senior Notes with a greenshoe option of up to USD 15 million to raise up to USD 30 million.
After having received the approval, Volt Resources and its advisors commenced planning for VGT’s Note Issue roadshow at the end of the quarter. Subsequently, the Note Offer opened on 27 January 2020 with Volt’s CEO, Trevor Matthews, and Alphier Capital Managing Partner, Andrew Moorfield, commencing the Note Offer roadshow investor meetings.
The Mauritian Note offer is scheduled to be closed on 20 February 2020 and the Notes are expected to start trading on SEM’s DEM on 26 February 2020 onward.
Moreover, simultaneous talks are being advanced with government officials for VGT’s proposed Tanzanian Note issue and listing on the Dar es Salaam Stock Exchange. Other development funding discussions and project due diligence processes are also ongoing with North America, Middle East and African based institutions via Alphier Capital.
Non-Renounceable Rights Issue
Volt Resources executed a 1 for 12.9 non-renounceable Rights Issue of ordinary shares, which closed in December 2019, raising AUD 1.251 million following the underwriting and placement of all shortfall shares. Subsequently, Volt received an additional $ 638,055 upon issue of 63,805,449 ordinary shares after the underwriting and placement of the shortfall shares. The capital placement was strongly supported by Volt’s Chairman, Asimwe Kabunga, who contributed in excess of $0.5 million of the total amount raised.
A further $ 638,055 were received upon issue of 63,805,449 ordinary shares after underwriting and placement of the shortfall shares.
Funds raised were indicated to be directed towards progressing the DEM listed Note issue, discussions with other development funding sources and for general corporate and working capital purposes.
Extension of Binding Offtake with Tianshengda
A binding sales agreement between Volt Graphite Tanzania and Qingdao Tianshengda Graphite Co. Ltd. was executed on 1 August 2019, for 9,000 tpa of Bunyu Graphite Product over 5 years.
Tianshengda, based in Laiki City, Shangdong Province, China, is an integrated graphite processor and distributor across China and internationally, with a substantial annual capacity to further process graphite via production of value-added products.
The agreement, however, was conditional to the Company accomplishing construction and commissioning of Bunyu Stage 1 including mine development and completion of the processing plant to treat sufficient ore from the Project by certain pre-defined milestone dates, due in the coming quarter.
Recently, both the parties signed an amendment to the Agreement extending these milestone dates by a further 2 years, demonstrating strong support and confidence being shown by Volt Resources’ offtake partner, Tianshengda. It is also a testimony to the high quality of Volt’s graphite products as well as indication of the expected rise in the flake graphite demand in coming years from the electric vehicle (EV) and grid energy storage, flame retardant building materials and other new industrial applications industries.
Besides the Tianshangda Offtake Agreement, there is another binding offtake agreement in draft entered into by VGT. The second agreement has to be executed once development funding is obtained. It is noteworthy that the combined offtake quantities under the existing and planned offtake agreements have completed the sale of product forecast to be available from Stage 1 production.
The Company closed the December quarter with ~$ 120k of cash and received a further $ 638,055 subsequent to the quarter.
Stock Performance: Volt Resources’ has a market capitalisation of ~ $ 20.87 million with ~ 1.74 billion shares outstanding. On 31 January 2020, the VRC stock closed the day’s trading at $ 0.011, with ~ 2.23 million shares traded. VRC has generated a positive YTD return of 9.09%.