Montepuez Project Funding Update
Battery Minerals Limited (Battery Minerals, ASX: BAT) advises that its US$30 million debt and equity funding agreement with Resource Capital Funds (RCF) (see ASX release dated May 3, 2018) has been terminated.
RCF has advised Battery Minerals that despite first-phase due diligence being completed successfully, the graphite market no longer meets its investment criteria and therefore it will not seek the approval of its Investment Committee for investment in Battery Minerals. In light of this advice, Battery Minerals and RCF have mutually agreed that it was in the best interests of both parties to terminate the arrangement immediately.
Battery Minerals Managing Director David Flanagan said while he respects RCF’s decision, the latest graphite market intelligence available to the company and the broader market clearly demonstrates that the outlook for graphite prices and demand remains highly attractive.
“Our view is that the graphite market outlook continues to strengthen, driven by the impending surge in demand for graphite from lithium battery manufacturers as well as refractory products and the rapidly growing expandable graphite market.”
“In the absence of any further increase in graphite prices and based on costs derived from detailed definitive feasibility and value engineering studies, the company would generate strong operating margins of ~US$500 a tonne at it’s Montepuez Project.”
“Our stage one project delivers 50,000 tonnes of graphite concentrate a year, this would deliver operating cashflow of ~US$20 to $25 million a year. It’s a very strong project, and that’s just the start.”
“With improving graphite market conditions, a quality project, strong balance sheet, experienced team and excellent offtake partners we are very confident of accessing a funding solution on improved terms for the benefit of shareholders.”
Alternative Financing To Be Progressed
The termination of the RCF arrangement leaves Battery Minerals able to pursue alternative financing options for its Montepuez Graphite Project.
Battery Minerals will recommence discussions with other potential debt and other financiers immediately. Depending on the timetable for these discussions, the first shipment of graphite concentrate from Montepuez is likely to be deferred from June 2019 for at least 3 months, but in any case approximately 12 months after project financing is completed.
Battery Minerals remains committed to completing the initial and subsequent share placements and securities purchase plan to raise up to approximately $25 million (Capital Raising) as announced on 17 May 2018, subject to receipt of all requisite shareholder approvals at the general meeting on Wednesday, 27 June 2018.
Battery Minerals currently has cash on hand of $14.8 million and expects to receive a further $9 million to $14 million in proceeds post the general meeting. Collectively this ensures the company has sufficient funds to progress other financing arrangements and to continue to steadily progress its Montepuez Graphite Project, where Stage 1 earthworks are nearing completion.
Funds raised via the Capital Raising will primarily be applied to advance development of Battery Minerals’ Montepuez Graphite Project in the Cabo Delgado Province of Mozambique. The Board of Battery Minerals’ will regard the indicative use of funds table detailed in the notice of meeting dated 18 May 2018 as a proposed budget (subject to any variations considered prudent by the Board of Battery Minerals’ and to prevailing operational and development activities, additional financing arrangements, regulatory developments, market and general economic conditions and environmental factors (among other things)) for the development of the Montepuez Graphite Project and will apply the funds raised from the Capital Raising in accordance with the prevailing needs of Battery Minerals.
Battery Minerals raises $20m to continue building Montepuez Graphite Project
Over-subscribed placement ensures Battery Minerals continues to be on track for commissioning in Q1 CY2019
Battery Minerals Limited (ASX: BAT) is pleased to advise that its strategy to develop the Montepuez Graphite Project in Mozambique is well on track, with the Company receiving firm commitments for $20 million in a share placement.
The placement was at 6 cents per share with a free one-for-two option exercisable at 10c with an expiry date of July 2023. The Placement will be done in two tranches, with the second tranche of shares and all options subject to shareholder approval at a meeting to be planned for next month.
The proceeds of the raising will be used to continue the construction of the Montepuez Graphite Project, where commissioning is set for the March quarter of next year. Stage One at Montepuez will produce 45,000 to 50,000 tonnes a year of graphite concentrate, which will generate ~US$25 million of net operating cashflow a year, based on currently published prices.
Battery Minerals Managing Director David Flanagan said the highly successful raising marked another step towards commencing production and cashflow from the Montepuez Graphite Project.
“We were overwhelmed with offers from investors who were attracted to the short lead time to production and cashflow,” Mr. Flanagan said.
“Construction at Montepuez is already well-advanced. We have ordered our long lead items and these will be delivered over coming months. We commissioned our crushing circuit last week.”
Battery Minerals’ largest shareholder, Farjoy Pty Ltd, has committed to subscribe for A$5 million in the Tranche 2 of the Placement. Morgans Corporate Limited and Hartleys Limited acted as Joint Lead Managers to the Placement.
In addition to the Placement, Battery Minerals will undertake a Securities Purchase Plan (SPP). This will enable all eligible Battery Minerals shareholders to apply for up to A$15,000 of shares on the same terms as the Placement.
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