logo-loader

Tirupati Graphite all set to ramp up production in Madagascar, eyes London listing early next year as a producing company

Published: 09:36 11 Dec 2018 GMT

1544544810_Tirupat--Shirish
Executive chairman Shishir Poddar

“Graphite is a speciality material,” says Shishir Poddar, the executive chairman of Tirupati Graphite.

“It’s the allotrope of carbon, the only non-metal which is a good conductor. It has a crystal structure and cannot be dissolved by acids or alkalis. It’s also stable at very high temperatures.”

All told, it’s a material with very diverse properties, that’s much in demand for steel making, batteries, fire-retardants, friction materials and much else besides.

Small wonder then that in recent years markets, especially in Australia, have got hot for graphite. True, some people then got burned, as on the whole the graphite market is relatively small and bubbles can be short lived

But if you know what you’re doing, as Poddar does, it can also be very lucrative.

“We’ve been in graphite for 25 years,” he says.

Tirupati is just the latest iteration of that. It’s got operations in Madagascar, one of the world’s pre-eminent graphite destinations, and in India where value-add can be applied relatively cheaply in processing factories.

It’s also got aspirations to list on the London market in the not-too-distant future, although the precise details of that have yet to be fleshed out.

Central though, are the assets in Madagascar.

“Madagascar has the best crystals and a higher flake size,” says Poddar.

He plans scalable operations on two main projects, the Vatomina project and the Sahamami project.

“At Vatomina the licence is granted, the environmental permit is in place and we’ve finished our first drilling,” he says.

The plan is to construct a plant with capacity for 6,000 tonnes per year, and then to scale that up with several more iterations. The first iteration, a production rate of 6,000 tonnes per year, ought to be in place by April 2019. Come the fourth quarter of 2019, the rate should have risen to 18,000 tonnes. So this will be a rapid transformation, with the aim to get production up to a chunky 60,000 tonnes by 2021.

That production rate will surpass by some margin, the existing production Tirupati’s other project, where the goal is to ramp up to a somewhat more modest 21,000 tonnes.

“Shahmami was producing at 20 tonnes per month when we acquired it,” says Podder. “But it has a licence for 3,000 tonnes per year, and we are now expanding up to that level.”

The total resource, as outlined in Tirupati’s competent person’s report amounts to between 28mln and 29mln tonnes, so there’s plenty of room for any planned further expansion in production.

Most of this expansion in capacity will be funded internally, and the bills aren’t likely to be on the large size.

The capital is already in place to put an initial 3,000 tonnes per year plant into production, and 40% of the finance is in place to construct the 6,000 tonnes per year plant.

Nevertheless, more cash will be needed to get things properly going, hence the plans for the London listing.

This looks set to coincide with a significant fundraising that may raise as much as £20mln, although realistically Tirpuati may do this in more than one shot.

Around £9mln of that money will be allocated to working capital and capital expenditure in Madagascar, with the rest allocated to India to build the technology graphite plant and to set up a graphene centre that might well have the largest graphene production capability of any facility in the world, at 10 kilogrammes per day.

Margins on the graphene production are purely speculative at this stage, but it is possible to put some reasonable guesses together for the other parts of Tirupati’s operation.

In Madagascar, allowing for a basket selling price of around US$1,000, margins should reach a chunky 50%. That’s because the mining is free dig, the recoveries are excellent at around 96% and the orebody is consistent.

The value add operations in India, which will create technology graphite, will also turn in a healthy 30% in margin.  

So, all told the outlook is rosy for Tirupati. It will be interesting to see how the market prices the new shares, and how widely they’re traded. But if the company can build up a track record of success, the value uplift could be substantial.

 

Tirupati Graphite advances graphite exploration in Madagascar amid global...

Tirupati Graphite PLC (LSE:TGR, OTCQX:TGRHF) joint managing director Puruvi Poddar joins Proactive's Stephen Gunnion with details of an exploration programme at the company's flake graphite projects in Madagascar. The programme, differing from prior approaches, involved over 5,000 diamond...

5 days, 21 hours ago