Battery Manufacturing Facility Study

I had a re-read of the Battery Manufacturing Facility Study today:



Based on the study's assumptions, EBITDA from the facility would be approximately: $USD18 million per year (15,000 tonnes multiplied by the margin between Base Price Assumption and Cost/Production) after initial capital expenditure of US$35 million.

Adding $USD18 million to the Bankable Feasibility Study's estimated EBITDA of USD$33.6, we could now be the owners of a business in 3-5 years that's earning USD$51.6 million (AUD$74.70 million) in EBITDA per year.

Referencing this table from the latest company presentation:



73,000 tonnes of natural graphite feed creates 37,000 tonnes of spherical graphite. We know that Epanko can produce 100,000 tonnes of natural graphite feed and that 40,000 tonnes have been allocated for sale as is. This leaves 60,000 tonnes at Epanko that can create 30,000 tonnes of spherical graphite or its equivalent (based on the yield ratio from the table above).

I'm drawing your attention to this because the Battery Manufacturing Facility Study is based on Stage 1 production in 2-3 or 4 years of 15,000 tonnes of spherical graphite or its equivalent. But Epanko will be able to produce double this with its excess of 60,000 tonnes of graphite yielding 30,000 tonnes of spherical or its equivalent. The Study has a pre-tax NPV of US$115 million but we can produce double this amount! From Epanko alone, not having to build new mines at Merelani-Arusha or Tanga.

Assuming that all 30,000 tonnes of spherical or its equivalent could be sold, the EBITDA would be closer to $USD36 million before adding our existing EBITDA from the 40,000 tonnes at Epanko ($USD33.6 million) to give a total EBITDA of $USD69.6 million or AUD100.88 million per year.

So it looks like Stage 2 (which is not priced into the Study) can happen solely from Epanko not needing new capital for a mine at Merelani-Arusha:



If Andrew Spinks pulls this off it's going to be epic. I'm so encouraged that he's shooting for a 90% minimum debt/equity ratio looking after shareholders. It appears that he really wants to drive Kibaran into the ASX 300 as a growth company in the next 5 years re-investing all capital rather than paying dividends. I'm also encouraged that the Manufacturing Facility is diversified between lithium-ion battery inputs and expanded graphite for Neophit/Ecopor so that if graphite insulation proves a bigger growth market than batteries we're in the box seat.

It's really good to have a CEO with such a large amount of 'skin in the game' because he acts and thinks like a shareholder and how to drive maximum returns over the long term. If you read this forum Mr Spinks, thank you for your hard work to date, and thank you for thinking like a shareholder, I really appreciate it.