Member Info for BigBiteNow

I agree this is a solid appointment and in my mind goes a long way towards putting investors' minds at ease following Christian Dennis (Optivia Securities) leaving in July.

When it comes to TGR I don't have any real concerns about the level of resource experience in the business. My concerns sit around corporate governance, the lack of an experienced CFO and their strategy for financing Montepuez once the final costs to complete are revealed.

"Murat brings deep knowledge and expertise across corporate finance, project finance and financial and business strategy."

The hints are there in the RNS with the added benefit that Mr Erden also brings significant CFO experience if required later down the line. It takes more than just resource experience to run a significant mining business which is what TGR is planning to be in the next few years.

Happy.

Yes and along with the hydro power there is much to like about TGR's ability to drive their costs lower or at the very least keep them stable.

Looking forward to learning more tomorrow.

To clarify the Brent oil price demonstrates that TGR was paying elevated oil prices for the first 5 months of their FY23 compared to H2 2023 and more importantly HY24 (April to Sept 2023).

Then the pre-concentrate units kicked in.

What is also worth noting is all the disruption the operations had in HY23 as TGR upgraded infrastructure and relocated what is a substantial part of their processing. We are told things are now running smoothly with H2 FY24 base case production of 7,500 tons. That's a further 65% uplift in output + it's being produced in a more stable environment.

Again, I am not going to claim that the production cost will drop significantly nor is it easy to claim that it will jump higher than FY23. I would gladly take that cost vs. the basket price achieved in HY24 given the expected uplift in output. But perhaps we might get a nice surprise in December.

Worth noting my post from 20th Oct.

"I ran some calculations on the HY23 and FY23 costs of production and they clearly demonstrate that in H2 2023 TGR's cost of production was running at £250/Mt when producing 3,039 tons.

They just produced 4,508 ton in the first 6 months of FY24. So even with inflation that £250 should be further under pressure. But at the very least it should be fairly stable."

TGR haven't demonstrated it yet and there may indeed be more costs coming through now but anybody can break down the FY23 figures and see that the above H2 2023 production cost figure is valid.

Also, FY23 ran from April 2022 to March 2023. Take a look at where Brent oil was trading during HY23. It started at +$100 and didn't fall to HY24 (April to Sept) peak of c. $94 until early August. With the peak at $122.

Furthermore, take a look at when the pre-concentrate units for Vatomina were completed. Those being the ones that were designed to save considerable amounts of fuel.

The first one completed in August 2022 and the second between October and December. See pages 17 and 18 below.

https://www.tirupatigraphite.co.uk/images/TGPLC%20-%20AR%202023%20(Signed).pdf

Meaning that the effect of these pre-concentrate units only truly came through in H2 2023 (October to March 2023).

There is a question mark over the running costs of Sahamamy which came online in calendar year Q1 2023. But it cannot in my eyes outweigh the above. Fuel costs in HY24 ran at sub $90. The PCU units were in full service saving fuel and production (the most important element here) almost matching FY23.

It's difficult to conclude that the H2 2023 production cost would rise by much but even if we are missing something it certainly should be very healthy.

Morning all,

If you haven't read it then the TGR FY23 report on the company website is well worth your time. I have been sleeping on it thinking the RNS version captured the majority of the detail. I was so wrong.

It's packed with details on the path to date. Exploration. Hydro. Cost breakdowns etc.

IMPORTANT NOTE - The history line on CAPEX spending in the period clearly demonstrates that TGR built two PCUs at Vatomina for c. £200,000. See pages 16-18 followed by page 22. One was built from parts on site but still, we are talking pennies to achieve significant further production uplifts. Note also there are plenty of hints around the level of investment interests by outside parties too.

The report also identifies several times the need for these additional PCUs to achieve 100% capacity production. So they aren't new or a reaction to Q2. Investors including my good self simply haven't read enough.

Understood Genghis15 and appreciated.

Yes, more commentary from Simon Moores of Benchmark here. In days gone by this announcement would have added 20% to TGR's MC. In the current market it just gets a shrug.

Time to keep a close eye on graphite prices but at the very least it is difficult to conclude that graphite prices won't at least find support. The current $820 range as a base going forwards is just fine for a successful TGR. But of course, more is always welcome.

It surely also strengthens the hand of ex-China producers who are seeking financial support such as debt.It was a critical mineral after all even before this move by China.

https://x.com/sdmoores/status/1715359654094475664?s=20

I would just like to add that yes the cash position should be made more readily available to investors.

I also agree that risk remains until the funding is secured. But the current run rate in Q3 is also a major inflexion point that should not be so easily sidelined just because its current and not yet banked in a financial report.

Hi Genghis15,

You make some valid points. The head grade is not new and whilst this may be difficult to appreciate I am actually glad that they have finally accepted that 3% is the norm and are doing something about it.

I agree with TGR that one must extrapolate figures more than should be required. Corporate governance has lacked at times and really does need to be improved. But personally with my approach to investing such shortfalls can be very lucrative if I am able to de-risk them. What I also see is a lot of hard work from the CEO and the management team to get to where they are at ridiculously low cost and dilution. That doesn't make up for the lack of info but it certainly gives me more comfort than most.

That said we are in the first active year where production will see a marked uplift. HY24 results aren't due until December when more detail will be available. In the meantime, it is clear that money is tight but as I posted just before the messaging coming from the company is that non-dilutive debt options are being sought. But I do recognise your points about late accounts and the potential risk there. Still, the messaging came post that issue which I also have to respect.

As I demonstrated earlier with the recent quotes the messaging around non-dilutive debt came in the RNS that delivered the pre-payment. So there was no assertion on it being sufficient. But as always it is about we as individuals interpret what we read in the context of what we know to date.

The same goes for the Q3 50% rated capacity during Q3 statement which for me was clear. I never expected 50% rated capacity for the whole of Q3. But then nor did I expect a small reduction in production vs. Q1.

If TGR sticks to its word and raises debt for its working capital and planned CAPEX then there was never a need to raise funds 6-9 months ago. If not then of course this can be criticised. But the messaging to date says non-dilutive debt and their needs aren't great.

Lastly, I will happily talk about the downside. I will happily debate any negative points of which there are a good few but nor will I ignore the fact that TGR is trading at sub £15m MC. The downside is directly relatable to the current valuation.

I look at the risks and the progress achieved to date. Yes, I extrapolate the figures which say TGR does +10,000 tons in FY24 perhaps 12,000 tons. I see healthy prices being achieved. I see low costs to produce. That points me to a future outcome that is far stronger and more stable than a £15m MC demonstrates. That's investing in small caps in a nutshell. Find out what the majority don't know or don't wish to believe in and back it.

This market is barking mad at the moment and constantly looking for blood but it isn't always right.

Re-reading the messaging from the 8th and 10th Aug RNSs it is clear that TGR is going for non-dilutive debt.

From the #TGR 8th August Q1 FY24 RNS,

"In the meantime, the Company continues to engage in securing non-dilutive working capital arrangements to improve cash resources on the back of its strongly improving performance and order book."

The CEO also had this to say,

"We chose the tough but prudent path of refraining from a dilutive equity raise in the current subdued capital markets, managing our operations and growth within our available resources."

Then following the $1m pre-payment agreement on 10th Aug TGR said this,

"Going forward the Company will continue to focus on strengthening its cash position through other non-dilutive opportunities."

Yesterday in an interview the #TGR CEO said this.

"We have reached a stage as a company where we have a respectable revenue. We've a proven history of operating margins."

We've demonstrated our performance and we'll go for debt funding."

How much more clear does it need to be said?

https://x.com/BigBiteNow/status/1715324240403087467?s=20

I ran some calculations on the HY23 and FY23 costs of production and they clearly demonstrate that in H2 2023 TGR's cost of production was running at £250/Mt when producing 3,039 tons.

They just produced 4,508 ton in the first 6 months of FY24. So even with inflation that £250 should be further under pressure. But at the very least it should be fairly stable.

So £658/Mt achieved prices is very healthy. hence the positivity from TGR management on progress and debt options. But its been completely lost because of fear of a discounted raise(still possible but I don't believe it) and production that is deemed to have gone backwards in Q2. Meaning forecasts were wrong.

@MasterMetro I wouldn't put down the current achieved prices as a negative.

If anything the £658/Mt was one of the biggest positives out of the update. It is well known that graphite prices have pulled back significantly this year. So still achieving such a figure between April to Sept given the majority of the world's manufacturing base has been in recession for over 12 months now was impressive. With shortages expected in 2024 graphite prices may now not be too far off from bottoming if they haven't already.

It must be said that TGR does still achieve a large discount to what it should given how much jumbo and large flake are in its basket. My theory for some time has been that TGR can close this gap as it improves the quality of its final products. This was indicated in the 4th April 2023 RNS ( completely ignored by the market) which talked about,

"TG's first container of 97% jumbo flakes >50 mesh size has now been produced for a German manufacturer of speciality graphite products;"

"Targeting c.10% uplift in basket price realisation from Madagascan production to between US$910 - US$935 per metric tonne in the fiscal year to March 2024."

A clear sign that whilst graphite prices in general fall back TGR as a new producer that is bedding in can counter this in part by improving the quality of its overall offering.

At those sorts of price levels or even 10-15% lower TGR can still progress and expand (wth debt agreed of course) and be ready for what will be an inevitable surge in graphite prices as manufacturing once again moves into expansion + EV demand rises + the hole left by delayed new one construction is felt in the supply/demand dynamic.

Aploogies fat fingers. I trust you understood what I had to say.

This news out of China only compounds my argument. Producing graphite mines are few and far between. New mines are trying to get built but finance is hard to come by and takes far longer to achieve. Plus, costs have gone through the roof. At some point in the near future that will start to show itself in ex-China graphite prices (driven by the call to find non-China supply) if not all graphite prices full stop.

TGR is one debt deal away from delivering +20,000tpa or even more and is saying it will be in place by March 2024. Yes it may take longe than that but who cares because even 20,000tpa is a big operation that should demand a MC 3x what we see today.

This is a crazy market doing crazy things with valuations and there lies the opportunity if one is prepared to read and understand things properly.

Morning all,

Here's a thread I have put together that highlights just how insignificant the cost would be to introduce two more PCUs. Plus, it (hopefully) demonstrates just how much room TGR production has to grow without these units which would be designed to get TGR beyond 20ktpa.

It certainly isn't easy being a TGR holder or believer these days. Yes they have let shareholders down with their forecasts but I am strong in me belief that it is not down to a lack of effort. That shows itself in the limited CAPEX and costs it has taken TGR to reach 30,000tpa capacity. In hindsight perhaps more spend would have led to less problems but that is the past now. It is also certainly not down to bleeding shareholders dry through large placements.

These guys run a right ship costs wise and have now finally reached a plateau that allows them to leverage their revenues to fund the next stage. Which is why I find the idea of a big discounted placement so unlikely. It simply does not fit the MO here. Especially when it isn't required to keep the lights on or deliver first production. It is for future higher production that is well beyond the point that TGR can be profitable.

I am happy to focus more time to this one for the foreseeable because I think TGR and their loyal shareholders are getting a rough time. The market has become very lazy and is too easily tarring companies with the same brush. That is not to say that TGR need to get its house in order and improve corporate governance and communication. 100% they do. But nor does it justify pushing the valuation down to such deflated levels when despite the shortcomings real progress is being made on a show string budget.

https://x.com/BigBiteNow/status/1715274521932968031?s=20

Don't forget the +£1m VAT refund that was overdue as of 31st July.

Receipt of those monies puts all concerns over cash on hand well and truly to bed.

(Apologies I have re-posted and changed to production because that is all that matters on the cost side of things).

@Andii.

I will chip in here if I may.

FY23 saw cost of sales running at £1.531m based on 4,770 tons of production.

Admin costs were £2.44m

Finance costs at c. £250,000 and depreciation at £1.024m were non-cash items

Production cost for FY23 was £321/MT but that gives a false impression of what TGR can achieve at higher production levels.

HY23 production costs were £787,312 against 1,731 MT of produciton. H2 2023 delivered 3,039 tons of production at a total production cost of £744,037.

Meaning H2 2023 unit cost of production was around £245/MT.

I wonder how many have even bothered to run that calculation when presented with an average sale price in HY24 of £658/MT. Because having produced 4,508 MT in HY24 (as disappointing as it is given we were promised more) that cost must surely be being pressured to the downside. At the very least even with yearly inflationary cost pressures (which were much higher last year remember) it should be standing still.

So £245 vs. £658. Hence why TGR's statement that 800-900 tons of sales per month leads to the company being cash flow breakeven at the corporate level.

Also, because the 18,000 epxansion at Vamtomina has been in production for all of this calendar year so far it is likely that the running costs were also already in play.

This is why TGR doesn't need 30,000 tons nor even better than 3% grades. Because they have more than enough capacity even with this slower ramp up to amake solid enough posiitve cash flows to ensure a debt package can be agreed and financed moving forward.

It is mystfying to me that these numbers aren't better understood because they eradicate the majority of the negative arguments and concerns being put forward by persons who haven't researched TGR enough.

TGR management have guided too high and promised too much in the past but nobody should be doubting their commitment to cost controls and ability to produce graphite profitably. This company is safe at 15ktpa and that is where they are today. That should be clear for those that are prepared to run the numbers properly.

@Andii.

I will chip in here if I may.

FY23 saw cost of sales running at £1.531m based on 3,982 tons of sales.

Admin costs were £2.44m

Finance costs at c. £250,000 and depreciation at £1.024m were non-cash items

Production cost for FY23 was £321/MT but that gives a false impression of what TGR can achieve at higher production levels.

HY23 production costs were £787,312 against 1,731 MT of produciton. H2 2023 delivered 3,039 tons of production at a total production cost of £744,037.

Meaning H2 2023 unit cost of production was around £245/MT.

I wonder how many have even bothered to run that calculation when presented with an average sale price in HY24 of £658/MT. Because having produced 4,508 MT in HY24 (as disappointing as it is given we were promised more) that cost must surely be being pressured to the downside. At the very least even with yearly inflationary cost pressures (which were much higher last year remember) it should be standing still.

So £245 vs. £658. Hence why TGR's statement that 800-900 tons of sales per month leads to the company being cash flow breakeven at the corporate level.

Also, because the 18,000 epxansion at Vamtomina has been in production for all of this calendar year so far it is likely that the running costs were also already in play.

This is why TGR doesn't need 30,000 tons nor even better than 3% grades. Because they have more than enough capacity even with this slower ramp up to amake solid enough posiitve cash flows to ensure a debt package can be agreed and financed moving forward.

It is mystfying to me that these numbers aren't better understood because they eradicate the majority of the negative arguments and concerns being put forward by persons who haven't researched TGR enough.

TGR management have guided too high and promised too much in the past but nobody should be doubting their commitment to cost controls and ability to produce graphite profitably. This company is safe at 15ktpa and that is where they are today. That should be clear for those that are prepared to run the numbers properly.

But you've been told today that TGR is producing at 40-45 tons per day. So my question to you is why are you ignoring that? Because that substantially affects cash flows now and going forward. Even a rudimentary review of the FY23 accounts will demonstrate that.

That news has pushed the SP to below 15p. Is it better or worse to be producing at +70% more than you were in Q2?

Agreed ID78. It is not a blockbuster RNS by any means but when read carefully and compared to previous available info it clearly demonstrates that cash is not an issue.

The focus seems to be on Q2 when the costs associated with that time are already behind us. We are now well into Q3 and production is already at a completely different level. Not blockbuster. But not problematic enough to warrant a 16% drop from such deflated levels either.

The head grade issue is not new news. It was being highlighted in RNSs as far back as last year.

It is not a reduction because they have never achieved it. So the production and indeed financials to date are based on that level of grade. After all the feed capacity is running at 75% of the nameplate and rising and the plant is designed for 30,000 tons. So there are no problems with the overall operation. It is merely the grades.

But even with that issue in play TGR can produce 15,000 tons rising to 20,000 tons and can counter it with additional pre-concentrate units which if you look back at TGR's history do not cost very much to install. So whilst disappointing it is not an unmitigated disaster which is highly inflammatory wording.

15,000 tons easily deliver positive cash flows and so a debt package. This is as I have said a producing company. Not a junior going cap in hand to keep the lights on. I am flabbergasted as the response and the comments here. But it is where this market is right now. Nobody trusts anything they read. Positives are ignored and certainly drowned out by an interest to only find what is a potential problem or negative.

That time will pass though and then the real influences on graphite and ex-China producers will once again come through, and despite what so many wish to strongly indicate TGR will be around to take advantage of it be it they ave work to do to counter the long-standing issue they have had with lower grades.