The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Arguably yes Astro - LFP is becoming a more dominant battery chemistry for mass produced vehicles so more of these batteries will be produced - however the incredible thing right now that is under appreciated across the market is that Graphite is used in all current mass deployed Lithium battery chemistries, including all those you mentioned as well as just LFP!
GLA
Solid interview by Shishir there - glad he suggests further production upside possible mentioning the 7,500MT per quarter production potential, aside from current 6,100-6,500MT guidance for this April-June quarter...
Company seems to be working v hard with 2 projects expanding production in Madagascar and developing plans for new massive world class projects in Mozamqbique. Currently permitting allows total production of 158ktpa in Mozambique and 84ktpa in Madagascar for a total of 242,000tpa for the company to develop of the course of the next few years.
GLA
The point is as sales volumes rise then those growing margins and higher prices have an out-sized impact and what would have been achieved before at lower prices and lower margins is massively improved upon by higher prices and better margins.
Essentially as TGR scales now, its average prices achieved have been guided as increasing, we should get economies of scale, on top of those margins normalising and costs are expected to drop per MT produced as a result, producing much strengthened results - and that is before the price of Graphite has started to rise in a significant way as is expected once the widely suggested impending Graphite deficit kicks in.
GLA!
Gets better and better now as TGR matures its operations
- higher production is happening, albeit it slightly disrupted by the temporary short precautionary shut downs - still production trending much higher now; 2,400MTs in Q1 is 50% higher than in the entire 6 month period of the first half of the year, and guidance remains for Q1-FY24: at between 6,100 - 6,500 tonnes.
- the real fantastic news is two-fold however. 1st the company has achieve 97% high purity production and sales out of Vatomina, that's huge because it means higher prices; TGR is 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(!) - that will have a massive impact on financial performance if as expected margins were normalising following the pandemic and the adverse weather impact mitigation work last year.
Secondly, as mentioned in the RNS these type of high purity products help open up a range of new customers for TGR and the fact we have commenced selling to them like the German specialist is very significant as we ramp up production - could see news of commercial agreements soon as mentioned there are qualification processes underway with potential customers across a range of sectors.
And actually will throw in a third - all of this demonstrates the hugely significant advantage TGR has over other players in the Graphite space that are yet to mine anything and are still years from producing, and also the benefit of the modular design approach. As TGR is producing and actively expanding, it is able to gain market share much easier by demonstrating itself RIGHT NOW as a reliable partner and supplier, and can actively sell and market material to different customers rather than simply rely on a single group or one or two groups to qualify material before anything can happen as is the case at other Graphite companies right now across the ex-China space. TGR is THE place to get your Graphite from RIGHT NOW if you want it urgently and potentially secure long term supply as one of only <3/5 ex-China listed Graphite producers of significance imo
GLA!
The value of lithium projects that will be developed within the European mainland will attain a significant premium imo exactly because of the high value they will represent for the future European economy in the age of increasing competition for vitally important raw materials like Lithium globally imo
GLA
Excellent news this morning
TGR have shown they are savvy corporate operators with how this deal has been structured, limiting its cost (the acquisition cost is cheaper than the value of the work completed to date at the projects, including exploration&drilling AND construction) in this significant bit of M&A. We are now an international, multi-jurisdiction graphite producer.
Don’t let the size of these projects pass you by - we’ve got something like 152MT of tonnage, with a total increase by a factor of 12X in contained Graphite with a lot of mine planning, infrastructure and development. Work already commenced. On top of this, our projects sit in the largest ex-China Graphite province in the world, straddling Syrah Resources which has a mcap of £500m+!
Very exciting time a ahead as TGR now propels above from its solid Madagascar platform imo
GLA
Very impressed by SAV's submission here, there's a lot of detail, and clearly they have adjusted their plans to better meet the needs and requirements of stakeholders, local and national, as well as to allow Portugal to have as much ecological sovereignty as possible at the start of the potential domestic European Lithium supply chain.
A redo of the scoping study is a smart move in my opinion as well - very quickly update the headline figures provided in such a scoping using new metrics available - hopefully cheaper opex with greater clean electricity providing by a growing proportion of hydropower that makes up Portugal's electricity grid supply, and something I think all will agree on here: updating the assumed spodumene price. In the previous scoping study the price used was $685/t which provided for a 48.6% IRR on an initial capex of US$109m. While I expect the capex will likely have moved up to probably $125-140m(?), we know for sure that spoduemene price assumption can be almost tripled if not more with the current prices being achieved of around $5,000/t and others using conservative long term pricing of around $2,000/t - having said that I wonder if domestically produced spodumene may have attached a slight premium over material requiring huge distances for transportation for processing?
All in all, very excited, well done Dale and the team at SAV !
GLA
Well said BBN and Mccquares
strong reversal here when it comes, as alluded by how quickly this moves, lot of the shares are in sticky hands so doesn't take much to move it in either direction.
We hit this level last June/July and proceeded to bounce to 50p - would expect any such bounce to go much higher this time given the progress to date that's been confirmed, the fact there has been NO weather disruption this year compared to last year, and the fact TGR is now in a position to build its cash from its completed 30,000tpa capacity.
GLA
I think some are getting the situation quite wrong - there is no meaningful downstream yet up and running that is producing and resulting in value for management. It’s been stated that the downstream arm needs capital, how does that translate into what those below are claiming?
The first step here having achieved the 30,000tpa capacity and that the company is doing is ramping up production and sales of graphite concentrate so that this primary arm of the business is cash generative and earning, enough to support itself and leverage for expansions.
In the current climate this is the most important aspect and the company has announced it can turn its attention to Moz+the downstream now its scale achieve significant cash flows has been achieved.
Agree the company can be more transparent in how it provides guidance and future plans, however, I expect this will soon follow as it has now got to the stage where it is comfortably on its feet.
GLA
Probs best just to post Tweet with link - let’s see
https://twitter.com/savannahres/status/1636679700159295489?s=46&t=Kd9oN7lEXrwqvOg2hyHmPg
Starfox (and others) - thank you for your posts, extremely well researched and massively appreciate sharing on here.
SAV looks as though it will be Portugal's flagship new project to demonstrate its amenability for mining and supplying Europe with Lithium it will desperately need.
And as others have also alluded to, the monetary reward, as well as the reward to the planet in the form of the material being used to reduce the lifetime emissions of vehicular transportation, are significant and will be enjoyed by all stakeholders and beyond imo.
GLA
Would hesitate to say that RiR - we know positive bottom line is achievable at the capacity of 30,000tpa which the company is now at - it seems to me that TGR may not be immediately at that level up to March 2023 when the end of the Financial Year concludes and is reported on but I’d expect the internal numbers generated by the company at that 30,000tpa rate will be used for any financing activities once it has demonstrated the higher levels of production and sales, hence the company’s focus on announcements on ramping up which will see cash positive bottom line.
Just patiently holding and not listening to the noise for now while the company proves itself as we are all hoping to see over the next few months.
GLA
However, because they timed the market years too early, Syrah have only been operating at about 50% capacity for 4 years or so at 175ktpa. Syrah single-handedly demonstrated to the rest of the market the importance in the Graphite industry of having your material qualified to the extent that for whatever stage you are planing there is sufficient consumer interest, otherwise a project is essentially hung out to dry and will be a massive drain on cash and resources until the market grows enough to want your produce (in competition with other projects also vying to sell the same/similar material). Syrah has never turned a consistent operational profit/nor had positive cashflow as far as i'm aware. There has been noise to indicate they might be able to operate above that 175ktpa as obviously Graphite demand has risen and looks continue to rise.
I think it's feasible that with approval of the project and the green light from regulators and stakeholders with a clear sign the project is supported and will go ahead (with indicated support from central EU funds to match the type seen in the US and its IRA) then being where it is, as SAV could represent a first major step forward for Europe, in light of challenges faced elsewhere on the continent, then SAV could see a very significant premium to others listed in South America + Africa, maybe even Australia (relative to size) given the v short shipping distances and processing + EV makers wanting to be on the front door. I wouldn't put on a number forward myself just yet, but much further north I would think the closer to certainty of production we get.
GLA
Good luck to Europe which needs this project urgently to reduced dependency on external nations and demonstrate a domestic mining and supply capability, to Portugal and local stakeholder swhich this project will benefit massively, bringing jobs and investment and help contribute to the country + continent net zero agenda, and of course to Savannah which has worked hard with APA and national figures to get this project over the line!
Good luck all!