Bullish KNL Weekly Chart, page-152

Euroz Securities came out with a Spec Buy on KNL on 15/06/16.

Price Target of $0.55/share.

Snapshot below:

Full report attached.

A high quality graphite project on the cusp of development

Kibaran Resources Ltd (‘KNL’) has a 100% interest in the Epanko graphite project located in Tanzania. It has spent the past four years working diligently to get Epanko to the cusp of funding and potential production within eighteen months - two years.
It has a number of differentiating factors which we believe will make KNL one of the few, new, successful graphite producers to emerge in the short-medium term. These include;

• High grade (rsv of 10.9mt @ 8.6% TGC (total graphitic carbon). Early production years  of +10% TGC,
• High purity  - average carbon grade of 96.3% C,
• Coarse flake - 85.7% of the resource has a flake size >106um and some 55.4% >180um. Larger flake = higher prices,
• Long life asset – current reserve support 25yr mine life,
• Good country - Tanzania is a well established mining jurisdiction with a long history of mining, a modern mining code and stable democratic government.
• Positive BFS with estimated operating margins of >50% and pre tax NPV10 of US$197m or A$263m,
• Capital cost of US$77m is ‘do able’ for a small company,
• Quality off take partners with 75% of planned production locked in binding agreements,
• Targeting European demand – alternative supply to the Chinese
• Indicative debt funding from German Govt and Nedbank for 70% of project capital,
• Excellent expansion potential with only 30% of the strike potential drilled,
• MOU with Sojitz Corporation gives potential access to the high growth lithium – ion battery sector,
• High quality management team.

KNL’s strategy has been about moving the project into production at a realistic production rate as the graphite market is a relatively small market, dominated by Chinese production.
It drilled sufficient resources to underpin a +25yr project life and whilst many of its peers were reporting +100mt resources, the reality is, the total flake graphite market ex China is only ~300kt pa. We believe this will ultimately prove to be the correct strategy.
We value KNL at $0.55/sh risk adjusted to 80%. We assume slightly lower price assumptions than the BFS and forecast first production in late CY’17/early CY’18 at a rate of 40kt for the first 15 years. We give a nominal $20m for its potential to supply the battery market and see this as a key area of growth.
We initiate with a speculative Buy recommendation and a PT of $0.55/sh and see a number of short – medium term catalysts and these include;

• Conversion of Sojitz MOU into a binding agreement,
• Debt funding secured,
• Optimisation of BFS,
• Further testwork/results to make battery grade product.