Tirupati Graphite Plc: A compelling investment case (LON:TGR)

Tirupati Graphite plc (LON:TGR) Executive Director Alastair Bath caught up with DirectorsTalk for an exclusive interview to discuss his appointment to the Board, the recent business development update, overall strategy, the dealing announcement, and a message to shareholders.

Q1: Alistair, having recently been appointed to the Board, could you just tell us a little bit about yourself and your role at Tirupati Graphite?

A1: So previously to being at the company, I started my career in financial services before moving into international commodity trading, where I specialised in the trade of niche and base metals and non-ferrous alloys.

Upon joining the company in the middle of last year, I joined as an Associate of Corporate and Business Development,  for then taking on responsibilities as an Executive Director earlier this year, a couple of weeks ago.

My responsibilities as an Associate continue as part of my role as an Executive Director, and they range from, on the corporate side, handling matters related to our market listing, investor relations, capital markets engagement, and on the business development and project development, strategizing and handling interested parties who are interested in our current status and our development.

On the business development side, I’m actively responsible for assisting the company, reach out to customers, engaging customers, supporting negotiations around potential supply agreements, facilitating site visits, and actively supporting the whole ecosystem for ensuring that the relationship with customers is well managed, and relationships and supply arrangements are actively built upon and pursued further.

I also, as part of that, engage quite heavily with local governments and conduct lobbying activities for the company where necessary, with local missions to support business activities on the ground to ensure operations are smoothly run as possible and to help lay the ground for our future expansion plans.

Q2: What can you tell us about the announcements, the business development update?

A2: So, the announcement we made earlier this week related to our business development update, focused strongly on the company’s achievement of the next stage, entering the final stage of the qualification process of high-grade large jumbo flake graphite at a purity level of 97%.

This customer is based in Europe, it’s a German-based customer, and early last year, we announced the initiation of the commercial production of high-grade materials such as this, and that we had started work with a customer.

The announcement on Monday confirms to the market that our prequalification work was a success. We’ve now entered the final stages whereby the company has supplied on normal commercial terms as well, importantly to note, a commercial container load full of material for this potential customer’s final qualifications processes. If this step is successful, then the company expects to receive monthly orders from this customer.

It’s quite an exciting development because this is a technically challenging grade to produce, rarely replicated elsewhere outside of China, which is validation of the hard working team on the ground who are doing very well operating the projects and getting these sort of grades.

As well as that, as mentioned in the RNS, this particular grade of graphite attracts a pricing level of around over 25% of the well-established prices that we achieve with our other typical grades produced out of Madagascar, that we sell globally.

Whilst of course, this announcement concerns what we’re doing with a customer based in Germany, I can assure the market and anyone watching this interview that this isn’t the only customer that we’re working with along these lines, and that we’re actively pursuing customers based in North America, elsewhere in Europe, Central Asia, India and East Asia.

If we are to be successful in furthering our work along these lines, and successfully achieving commercial orders from this customer, it will validate our process strongly and give a good sign to these other potential customers that we’re able to be a reliable supplier and be someone who they would want to work with.

Q3: How does this link to the overall strategy of Tirupati Graphite?

A3: Well, it links to the strategy of TG in multiple ways.

From day one, the company has sought to supply ex-China markets and not be reliant on the Chinese market, and it has built its projects quickly and, in a manner, it has done, in order to shorten the gestation period that we see, which is the length of time it takes from being a developer, constructing your project and then starting that initial qualification work from your initial production. The length of time it’s taken between the last announcement in April I think of last year, up to today, is indication of how long gestation periods can be.

TG is a current producer, so that means it’s able to supply larger scale, larger volumes of material earlier on and faster, which gives us an advantage for helping to develop markets in the ex-China space. Furthermore, while this is a high-grade large jumbo flake graphite product vital to certain segments, which are traditional to the graphite industry, there are further segments upcoming, such as flame retardants and expandable markets globally that we are seeking to deploy this material to and build markets for. Madagascar is renowned for this large flake material.

Meanwhile, we have Mozambique as well as part of our project portfolio, which is endowed with the project that are endowed with our smaller to finer flake style material, which is more typically used in the energy transition sectors, such as for precursor material for the anode side of electric vehicle batteries and other such factors.

Today’s announcement indicates that we’re a current producer, we’re able to construct our projects, build our projects and sell from them, and we’ll seek to replicate that in Mozambique.

So really, it correlates quite nicely with the overall strategy, and I can say that our business development activities continue pretty strongly.

Q4: I noted this morning that you made an announcement to the market, a dealing announcement, you must feel strongly about the company then?

A4: Yes, I do feel strongly about the company. I think there’s a very compelling investment case to be made, and that’s why I made my purchase.

Those following the story of TG may have seen my appointment announced and would have seen I was actually already a shareholder of the company so I thought it would be wise both from a personal level, but also from a company level to indicate my confidence in the company going forward, from the position that I now occupy as a director on the Board.

There’s a host of reasons that make the business a compelling investment case, apart from the ones that I’ve just listed related to our abilities regarding business development.

TG is a current producer outside of outside of China, it has one of the highest production capacities outside of China, and it’s possibly, I think, in the top three producers by production capacity outside China among market listed companies. The company has one of the lowest OpEx figures for a current producer, it has, I’m very confident in saying, one of the lowest capital intensity requirements of a current producer or even other developers who haven’t built projects yet as is seen by our spending in Madagascar.

So, all of the above at the same time as the geopolitical tailwinds that are pushing and evolving the markets and the effects of which we’re already seeing.

The graphite export restrictions brought in recently in China to compete with American interests or Western interests, shall we say, are having a real effect, as are the domestic policies of the likes of the US with the inflation reduction act. We’re really seeing a shift whereby consumers are actively and urgently seeking to reassess and evaluate potential immediate alternatives to Chinese supply and TG occupies that space very well, and a lot of consumers are looking for reliable sources that will be able to source high volume from.

So, for all of the above, I believe TG makes a compelling investment case and my purchase today speaks to that.

Q5: Just before we go, do you have any final remarks to investors or potential investors?

A5: I suppose my final remarks to anyone watching this would be just to reemphasise that I provide the company a board-level Executive presence in London and I am based in London.

So, for anyone watching this interview, whether it’s prospective investor or current investor or anyone else, I’d like to make it known that I’m based in London and I’m happy to discuss further anything related to Tirupati Graphite or the graphite market, to help bring some clarity around the company and what we’re trying to do.

I’m more than happy to meet with anyone face to face, should they wish.

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