Marvel Gold Ltd (ASX:MVL) (OTCMKTS:GRXMF) (FRA:GR2) is considering various options to unlock the value of its Chilalo Graphite Project in Tanzania including a possible demerger and IPO.
The company has spent more than A$21 million on exploration and project development of the project, a fully permitted and world-class graphite asset.
A definitive feasibility study completed in January 2020 resulted in a post-tax NPV8 of US$331 million over the 18-year mine life.
Numerous investor enquiries have been fielded and the company will take all measures necessary to ensure any transaction will maximise value for shareholders.
Focus on Mali gold projects
Marvel managing director Phil Hoskins said: “Chilalo is the forgotten sleeper within Marvel’s asset portfolio.
“Since re-positioning the company in March last year, our focus has quite rightly been on advancing our exciting gold projects in Mali, where the Tabakorole Project has grown to a near one million ounce resource with resource expansion drill results expected imminently.”
Graphite demand outlook
The graphite market outlook is very strong with electric vehicles forecast to drive over 700% growth in natural graphite demand by 2025, according to Roskill.
Global demand for ex-China graphite supply has increased since the onset of the COVID-19 pandemic and a strict focus on ethically sourced supply chains.
As China historically accounts for around 70% of global graphite supply, this is a compelling opportunity for projects with product quality such as Chilalo.
Hoskins said: “Notwithstanding that focus, Chilalo remains a quality asset, and the company has continued to entertain interest from strategic investors, industry partners and project financiers.
“The graphite market is now primed for new entrants as the electrification of the world grows from concept stage to mainstream acceptance.“
Investment interest
The DFS completed in January 2020 demonstrated that Chilalo is a robust project based on a probable ore reserve of 9.2 million tonnes, underpinning an estimated 18-year mine life producing approximately 50,000 tonnes per annum.
The project already has all necessary clearances including environmental approvals, a granted mining licence, community relocation arrangements and compensation agreed and approved.
Construction could start as soon as financing is secured and the company is discussing with potential financiers and strategic investors, who view Chilalo as a quality graphite project having significant economic potential.
Hoskins said: “Chilalo, as a world-class graphite project permitted for construction, is strongly positioned to secure development finance.
“Investor enquiry has recently intensified, and we are pro-actively assessing transaction options for Chilalo that optimise value to Marvel shareholders.
“The company intends to finalise the preferred path as soon as possible and we look forward to providing updates as this develops.”
Debt owed to Castlelake
According to an agreement reached with CLV Investment Solutions LLC, an entity managed by Castlelake LP, the company agreed to undertake a sell-down or refinancing of the Chilalo project, to enable repayment of the debt to Castlelake, which stands at US$7.37 million.
Repayment of the debt owed to Castlelake is a central element of any Chilalo transaction.