Tirupati Graphite plc (LON:TGR), the fully integrated, revenue generating, specialist graphite producer and graphene and advanced materials developer, has provided Final Results for the year ended 31 March 2021. A copy of the Report and Accounts will be available shortly on the Company’s website, www.tirupatigraphite.co.uk.
HIGHLIGHTS – DURING & POST PERIOD END
Madagascar operations further strengthen value building from primary flake graphite projects
· Sahamamy 3,000 tpa plant achieves 57% operating margins, up from 48% in the previous year.
· Vatomina 9,000 tpa plant commissioned in September 2021, production now ramping up to full capacity.
· Construction activities for second 18,000 tpa module at Sahamamy underway which will uplift production capacity to 30,000 tpa by Q1/Q2 2022, 10x from the previous year that is set to grow to 84,000 tpa by 2024.
· Buyers for the Company’s high-quality flake graphite from Madagascar including large corporates from the US, EU and Asia are lined up with market development activities ongoing in advance of Company’s expanding production.
· Company’s transition to renewable energy to substantially meet its energy needs commenced with development of its first hydro power project at Sahamamy, affirming its commitment to green energy and sustainability.
· Company well positioned to benefit from post pandemic recovery and capture economies of scale as it increases production capacities from its Madagascan projects.
· Revenues of £1,123,426 and Operating Profits of £635,342, representing 57% operating margins.
· Negative EBITDA marginally higher at £(896,239) compared to £(684,872) in 2020, despite extensive corporate and business development and accelerated project development activities post admission.
· Successfully raised gross proceeds of £6 million at 45p per share at IPO in December 2020 and a further £10 million at 90p per share in April 2021. The Company is now fully funded through to end of 2022 for its stage 1 developments across its portfolio of business units (see RNS dated 16 April 2021).
· Emphasis remains on controlling CAPEX and OPEX to maintain its demonstrated low-cost advantage, generating early revenues to minimise pre-production investments and maximising margins from operations.
Speciality graphite and graphene & technology divisions under TSG continue to evolve
· 1,200 tpa plant at the Patalganga project continued to develop and deliver niche expandable graphite products for a variety of applications, continuing to create new markets and buyers ahead of the large scale speciality graphite project coming into production in 2H 2022.
· Spheroidization technology evolved in collaboration with a German equipment manufacturer with yields of up to 68% as compared to average c.35% using existing Chinese manufacturing technologies.
· Company’s non-energy intensive, zero hydro-fluoric acid purification technology for its high-purity graphite continues to receive significant interest from buyers for its green and sustainability advantages.
· First stage development at Tirupati Graphene and Mintech Research Centre (“TGMRC”) the Company’s state-of-the-art R&D and technology centre commissioned enabling graphene manufacturing, advanced materials developments and mineral processing technology consultancy activities to advance and come into first revenues.
· TGMRC developed ground-breaking graphene-aluminium composite (“Al-Gr Composite”) and is working with a suite of companies including a FTSE 100 company engaged in the manufacturing of conductors for advanced applications including aerospace, green mobility, sub-sea transmission etc.
Highly favourable current and long-term demand profile across business units
· UBS suggests a 700% growth in demand for flake graphite to 5.9 million tonnes per year by 2030.
· Graphite designated as a critical raw material by US and EU, making it a key contributor to the green energy transition and electrification of mobility.
· Diverse applications for graphite including thermal management in electronics, fire safety, metal manufacturing and forming, fuel cells, polymers, composites and in other advanced materials.
· Graphene is leading the development of 2D and advanced materials and set to fuel the upcoming Advanced Materials Revolution.
Continued corporate evolution focussed on the Environment, Sustainability and Governance
· Admitted to the official list of quoted companies on the main market of the LSE and accredited with the Green Economy Mark for companies who contribute to climate change mitigation and adaptation, waste and pollution reduction, and the circular economy.
· Active member and regular contributor of the Quoted Companies Alliance; Critical Materials Association; and The Graphene Council.
· The Company has voluntarily adopted the QCA Code for Corporate Governance as far it is practicable given its size and stage and Corporate Governance Report is included in the Annual Report.
· The Company has also voluntarily adopted the GRI standards for ESG reporting and will be releasing its maiden Sustainability Report adhering to the GRI standards in the coming weeks.
· Kept shareholders and markets informed of significant developments of the Company through regular RNS’s, road shows, investor meetings, conferences and other investor networking platforms
Raised profile as a sustainable, high-quality, technologically advanced ex-China source for flake graphite to global customers
· Reach registration accorded for Company’s suite of expandable graphite products in the EU
· Marketing MOU signed with Hanwa Co. LTD., a leading Japan-based global trading and investment company and one of the larger traders of battery chemicals and steel products in the Asian region
· Status as a sustainable supplier of flake graphite continues to develop as buyers start to recognise the Company’s proprietary environmentally friendly processes compared to peers, provided critical advantage and access to new markets for its suite of primary and specialty graphite products
Focused on enhancing the Company’s global resource base and diversifying supply of high-quality graphite
· Commenced Stage II Exploration and Drilling Programme in Madagascar targeted at upgrading current Mineral Resource Statement, anticipated to complete by end of 2021.
· Signed agreement to acquire two advanced-stage, high-grade, complementary graphite projects in Mozambique from ASX listed Battery Minerals Ltd, adding c.6x of JORC (2012) Resources and c.12x of contained graphite.
Key appointments made to strengthen and support rapid growth of the Company
· Appointed additional independent Non-Executive Director, Mr. Lincoln Moore.
· Appointed several eminent technocrats and scientists specialising in the fields of flake graphite, speciality graphite, graphene and advanced materials and mineral processing technology and over 30 engineers, geologists, and specially trained technicians across all three business units.
First, may I extend a very warm welcome to the hundreds of new shareholders in our Company, and hundreds of stakeholders too, the Tirupati Graphite (“TG”) family has grown from strength to strength in this eventful year. It is also my privilege to present to you the first Annual Report as a quoted company and the fourth since inception. We find ourselves to be fortunate – being in the right space at the right time – contributing to the global cause of mitigating the risks of climate change.
The year gone by was monumental, providing us the opportunity to extend our gratitude to the Financial Conduct Authority (“FCA”) and The London Stock Exchange Group (“LSE”), and all of our advisors who helped us complete the process for admission of our ordinary shares on the main board of the LSE. The successful capital raise at our Initial Public Offering (“IPO”) paved the way and the oversubscribed follow-on placing completed in April 2021 further strengthened our resolve and conviction to fast-track the development of our three business divisions in Madagascar and India. We stand tall and the Company is proud to be the only fully integrated graphite producer and developer publicly quoted in London.
During the year under review, I am pleased to report that considerable progress was made towards achieving our goal of becoming the pre-eminent supplier of sustainable graphite, graphene and advanced materials. Our focus on graphite and graphene is strategic, based not only on our team’s track record of working in the sector for decades, but also on what we believe to be a highly favourable long-term demand profile of a critical material that is a substantial contributor to the global clean energy revolution and therefore, an opportunity for us to become a contributor to the evolution and advancement of new age materials for a greener globe.
You do not have to look far to see just how ubiquitous and important graphite has become to our everyday lives. Not only is it central to the green energy transition and electrification of mobility, but it is also increasingly used in the fire safety, thermal management, composites and advanced materials industries amongst many others, helping to reduce emissions, increase energy efficiency and reduce fire hazards.
According to a report by Battery Metals Review, most commentators are forecasting electric vehicles (‘EV’) sales to be in the range between 30-40 million per year by 2030, from the circa 2 million EVs sold in 2019 resulting in an 1100% increase in current flake demand for batteries to c.3.1 million tonnes per year by 2030. And that is for usage in batteries alone. Factoring other industries into the equation and the figure is likely to be substantially higher with the likes of UBS suggesting a 7x growth in demand to 5.9 million tonnes per year by 2030.
Notably in our opinion, not all graphite projects currently in production produce sustainable high-quality flake graphite. Much of the current volumes used in electric vehicles reaching the market comes from mines in China which tend to use significant amounts of hydrofluoric acid in their processing methods to produce high purity grades of graphite, a practice which we believe is counter to global sustainability goals in the long term.
As we have successfully demonstrated at our two Madagascan projects, Sahamamy and Vatomina, the Company is able to produce large flake, high-quality graphite using unique and importantly sustainable processing techniques which not only means that our graphite is greener, but that we can deliver it at very high margins. With our first 9,000 tpa module at Vatomina now commissioned at the upgraded capacity, and having raised additional funds in April 2021, we are accelerating our development plans and anticipate total capacity across both projects to reach 30,000 tpa by Q1/Q2 2022. This will represent a ten-fold increase since becoming a listed company in December 2020.
Concurrently, we have been pushing ahead with the redevelopment of the existing hydro power facilities in Madagascar which is targeted to meet most of the power requirements for the current Sahamamy operations. We have also initiated the studies on the use of renewable energy which is aimed at substantially powering our projects in Madagascar when we reach the 30,000 tpa capacity build out under our medium-term development plan (“MTDP”).
In addition to our significant achievements under our existing development plans, the icing on the cake for us was entering into a conditional acquisition agreement for the Montepuez and Balama Central projects from ASX listed Battery Minerals Ltd. The acquisition requires approval from shareholders of Battery Minerals Ltd as well as approval by the Ministry of Mineral Resources and Energy in Mozambique. The Montepuez Project is a construction ready project with substantial reserves and resources, while the Balama Central Project is an advanced feasibility stage project with a combined JORC Code (2012) resources of c. 152 million tonnes @ 8.5% TGC. Post completion of the acquisition, the projects will provide us with additional resources to expand and diversify our supply of high-quality graphite as the markets evolve driven by growing demand from EV and other segments. The other advantages of the acquisition for us include diversification of our country risks; access to higher grade deposits; and a complementary type of graphite (i.e. more of the smaller flake variety) which is demanded by the EV sector. The acquisition demonstrates our team’s ability to achieve our stated strategic objectives both operationally and corporately. The team are now working with the vendors side to complete the acquisition and have already began re-working the development plans for Montepuez using our in-house expertise and experience; it is our intention to advance into construction and first production in the shortest available time to take advantage of the favourable tailwinds of the graphite markets. We will continue to update the market on the progress of the acquisition and developments as they advance.
Our Patalganga project continues to evolve at a good pace. We continue to create new markets for our range of expandable graphite products and provide the backbone for the creation of markets for our larger downstream specialty graphite project which is under construction. The integrated, multi-product speciality graphite project will provide throughput of all variants required for high-tech graphite applications, thus making us one of the very few companies globally, which can boast the capabilities of providing ‘any type of graphite’ required to our customers. We have continuously differentiated and evolved our processing technologies for these niche products, distinguishing our manufacturing processes from the conventional processes used by most of the current Chinese sources of specialty graphite, minimising our footprint on the environment and ensuring our projects are sustainable.
In tandem with the growing expectations on sustainable supply chains and the opportunities this presents, we see ourselves evolving as a frontrunner in the energy storage arena, alongside fire safety and thermal management and composites and advanced materials applications of speciality graphite products.
Lastly, but not least, our Graphene and Mintech Research Centre which is our state-of-the-art R&D and technology centre designed to house our manufacturing facilities of graphene and other advanced materials, has completed the first stage development; this is a commendable achievement that truly sets us apart from any other company in the UK and possibly the world. This division of the Company has been making huge strides forward including the creation of manufacturing capabilities for Graphene Oxide (“GO”) and Reduced Graphene Oxide (“rGO”) at a significant and commercially viable kilogram per day scale; taken on a number of consultancy engagements for process development projects; and has made its first significant in-roads into the new world of metals and 2D composite materials.
The successful development of our ground-breaking aluminium graphene composite (“Al-Gr Composite”), which has the potential to replace copper in many weight-sensitive applications, puts us into the category of other advanced materials technology companies which is an achievement that every stakeholder should take pride in. It is also testimony to the leading efforts and capabilities of the Company in the world of advanced materials. Not surprisingly, we have been receiving a lot of interest for our Al-Gr Composite product and we are now working with a suite of companies to develop it further and pave the way to commercialisation.
To conclude, I again share our principles of value creation, which we have adopted since inception of our Company, and which continue to remain our guiding principles:
● Value creation for the planet and for future generations:
By developing unique materials which have many ‘green’ applications contributing towards a more sustainable and greener planet for future generations and developing technologies and processes to minimise emission and waste generation.
● Value creation for our employees:
By providing opportunities for performance and learning, achieving corporate goals and personal development, to inspire quality delivery on the objectives and values we strive for.
● Value creation for the local communities we operate in:
By looking after our employees and their families and providing healthcare, education and recreational facilities and support for local communities, helping bring communities together and improving their general quality of life.
● Value creation for our shareholders:
Through well considered and crafted business strategies and plans, implemented with persistence and determination, and adopting a culture of cost prudence, hard work, and delivering on targets.
You will observe that in our journey to date, we have performed on each of the four pillars of value creation we set for ourselves at the outset:
1) Providing materials for the green economy and developing novel new age materials;
2) Nurturing human capital and developing a team that delivers;
3) Improving the quality of life of thousands of people in the communities around us; and
4) Delivering on a prudent business plan and creating values for our shareholders reflected in our share price growth.
We are proud of our long history of innovation, our reputation as a respected, well-governed and safe place to work, and the role our products play in the green revolution. At the heart of this success is our team spirit of ‘together we can and will achieve our goals’. As the Company continues to grow at a monumental pace, we look forward to maintaining this ethos and upholding our sustainable values to deliver measurable success on every level be it economic, social, or environmental.
Executive Chairman & Managing Director