This quarterly just reads so well, Talga are ticking all of the boxes and have so many irons in the fire, MT's strategic vision for a leading battery technology business is slowly but surely coming to fruition.
It's amazing to think that some of the previously perceived negatives have proved to work well in Talga's favour i.e. LKAB and Mitsui. The funding options and market position have only improving for Talga.
As already pointed out by Gvan, there were a few key standouts for me. Anode Refinery
Refinery is now fully approved and early works and equipment procurement are underway. MT has been rather conservative in cash conservation previously, but Talga are wasting no time to get this moving which is a strong indication of confidence in the project and funding.
Funding
"Talga aims to finalise the composition of the financing syndicate and obtain credit approved commitments in the coming months. Indications of credit appetite from proposed financiers exceeds Talga’s target debt requirement."
This is likely why, interest exceeds the debt requirements. What a great position, more cash available than we need. It suggests that Talga also know the interest for equity investment (and perhaps who and at what price) and have a very good understanding of the debt/equity mix they want.
Mine Permit
The delay seems to be related to backlog, rather than a complete shutdown or anything more sinister. I suspect this is why Talga haven't heard from the court and don't have any updates. The courts simply haven't got to the case, or are working through it with their existing workload before notifying the parties of the decision. The court's last decision was only posted on 21/07 so seems they are still working.
Tenements
"The Company staked three new tenements during the quarter to consolidate graphite at the Raitajärvi and Jalkunen projects, and to cover potential extensions of lithium-bearing pegmatites at Aitik East. These acquisitions relate to Talga’s value-accretive exploration strategy and advancement of its graphite and critical mineral battery metal projects."
Lithium? Once Talga get the anode business into production, the strong margins and cashflow will help to underwrite further diversification into other battery metal projects. Their experience as a miner will prove invaluable and they could well become a battery metals behemoth in due time. Imagine the value that could be added to the business if Talga are able to move into lithium/cathode production as well.
Talnode-Si
"Talnode®-Si, the Company's silicon anode product, has been performing well with customers and generating interest as a genuinely scalable, commercially compelling form of silicon anode technology. The pilot plant in Talga's German facilities is operating successfully and providing invaluable data for scale-up engineering and commercial plant design. The Company is seeking state and customer funding support to underwrite any potential development decision."
This could be a massive opportunity and seems to be progressing well. The Talnode Si pilot is in Germany, and we know that MT was considering Germany as a strong contender for the location fo the Talnode Si plant. Germany have recently announced up to 2 billiion euros of funding to secure raw materials for battery, including graphite and silicon. Could this be the state based funding? Which customers are trialling?
Graphite Pricing
"Natural graphite feedstock and anode prices decreased during the quarter due to current inventory levels of anode manufacturers and subsidy-impacted Chinese EV demand, as well as a decrease in synthetic prices out of China due to reduced feedstock and production costs. This represents a short-term softness in the market with indications that -100 mesh natural graphite (the preferred small flake size for anode production) is expected to enter a supply shortage in the near future. Talga’s coated anode pricing is negotiated under longer term contracts that are not impacted by the current short term raw material markets."
It looks like customers may be starting to wise up to the risks in their supply chain with increasing demand and current market distortions caused by Chinese supply. The highlighted sentence says it all.
(20min delay)