TLG - Media, page-13694

@BlackBeak thanks for the fat tail info. For some reason I can't quote your post.

I understand a broader recommendation to preserve capital in this market. Where I would disagree with the fat tail assessment is Talga specific.

If you think financing will make Talga's projects unfeasible then you are effectively saying there will be no natural graphite anode production in the EU and probably none in the Western world.

Here's why I think one leads to the other:

-Talga are at the bottom of the cost curve for production in the West. This is thanks to the extraordinarily high grade graphite, extraordinary recoveries, and hydro power. Cash cost of production for Tal-C forecast to be US$2,363/t. NMG about US$3,400 for anode (excl the flake and fines). SYR $3,023/t for Vidalia. RNU are forecasting US$1,850 to produce SPG before even getting to the coating stage, which is the difficult bit (eg Talga's coating plant capex is 2x the cost of the purification)

-Emission profile. The LCA Talga released said 92% reduction in CO2e than China. Talga's forecast of 1.7kg of emissions per kg is up against China synthetic of 24-40kg/kg, natural 14kg/kg (China) and 6kg/kg (Vidalia)

-Debt funding consortium has already been selected which would take care of ~60% of the financing. EIB as cornerstone and the other financiers have done extensive due diligence, using independent "leading consultancy groups" which would have had access to the latest sales price, opex and capex numbers that the market might not have seen. And they still want to go ahead, just waiting on appeals and approvals which should be resolved within the next 2 months.

-EU CRMA states that 40% of natural graphite processing must be done domestically. There's no one else in the EU close to being as advanced as Talga

-EU Battery Regulation ie the battery passport will put into law the following (these are direct quotes with my underline added):

• ensure...the carbon footprint of battery manufacturing, ethical sourcing of raw materials and security of supply
• it is necessary that their overall life cycle have a low carbon footprint
• The maximum life cycle carbon footprint thresholds should be future-proof. Therefore, when adopting a delegated act determining the maximum life cycle carbon footprint threshold, the Commission should take into account the best available manufacturing and production processes[Rhythm34: I think this means that Talga's life cycle numbers should set the benchmark of what everyone else is compared to. First time I've read this, and it's actually an amazing positive for TLG]

So given those points, if Talga doesn't get funded, who will?

The alternatives to a company like Talga not getting funding is that 1) No more EVs made in EU 2) EU doesn't have enough anode material and EV production is massively reduced 3) 100% synthetic / non-graphitic anode is used. 1 & 2 are not happening. Is 3 feasible? It goes against everything the EU are (slowly) trying to do.

I think Talga is still positioned at the very front of the queue when it comes to anode production in the west, so if you believe in the narrative of resource nationalism or reducing dependency on China then it still stacks up. If the fat tail boomer subscribers are on board with the green transition being dead then they are welcome to their coal investments and making their grandkids cry. Talga isn't for them.

Some short term pain with the share price and potentially a bit more dilution because of it, but the long term the Vittangi project is happening and will be expanding to at least 5-10x Vittangi. 200ktpa anode = conservative EBITDA of >$1bn pa