Tirupati Graphite PLC (LSE:TGR, OTCQX:TGRHF) said it has agreed to acquire three additional mining permits close to its existing projects in Madagascar for a total of about £167,000 in cash, pushing the group’s shares up almost 14%.
Due to the proximity to its existing operations, Tirupati said it believes it can progress the acquired projects in a “timely and cost-effective manner” alongside its other Madagascan projects.
While no JORC-compliant mineral resource estimates are available for the permits, historical geological data and initial ground assessments made by the company suggest that the new permits could have the potential to add two or three 18,000 tonnes per annum (tpa) to the company’s flake graphite production, it said.
“It is our priority to increase ground in Madagascar alongside other locations to preserve our long-term capacity targets and resource security, and these acquisitions can help us enhance our overall output from Madagascar by up to an additional 48,000 tpa in due course,” said Tirupati executive chairman Shishir Poddar in a statement.
The three permits, covering a total area of 31.25 square kilometres, could significantly add to the company's currently planned 84,000 tpa capacity across the Vatomina and Sahamamy projects, Tirupati said.
The acquisition aligns with the company's strategy of acquiring resources to grow its primary flake graphite operations to about 8% of global demand by 2030, estimated to be in the range of 400,000 tpa.
“Our intention is for c.50% of that capacity to be in Madagascar to take advantage of the favourable flake size distribution its deposits possess,” said Poddar. “Acquisitions like this will be instrumental in enabling us to achieve our aspiration to become one of the most significant players in graphite as global demand increases for this critical energy transition mineral."
The cash consideration will be paid as milestones are reached during the process of transferring the permits to Tirupati.
Under the agreement, Tirupati’s subsidiary Tirupati Madagascar Ventures SARL (TMV) will retain the right to conduct studies in the permit areas during the transfer of the permits.
Tirupati said there was no guarantee when, or even if, the transfer will complete, but it noted that the process was the same when it acquired Vatomina.
Tirupati's shares were up 13.75% at 45.50p in early trading.