Tirupati Graphite plc (LON:TGR) the specialist graphite producer and a supplier of critical minerals for the green transition economy, has provided an update on operations and business development for its flake graphite projects in Madagascar since the start of this financial year on 1 April 2023 and production figures for Q1FY24 (period ended 30 June 2023).
Operations in Madagascar
· Production ramp-up continues following the completion of the Vatomina and Sahamamy projects, combined capacity of 30,000 tons per annum
o development included strengthening of infrastructure to manage local weather conditions
· Production for Q1 FY24 was 2,371 tons (Q1 FY23: 822 tons), an increase of 188%
· Sales for Q1 FY24 were 2,772 tons (Q1 FY23: 803 tons), an increase of 245%
· The Company remains focussed on reaching monthly production and sales minimum target of 2,000 tons and expects to achieve this important milestone in Q3 FY24 having focused this year on:
o Increasing market reach for its products and aligning operations to meet stringent specifications from clients;
o strengthening both local and expat management teams;
o conducting extensive training for the streamlined processes developed over the previous year;
o strengthening production processes including water resource management;
o optimising power generation and fuel supply arrangements; and
o improving overall efficiencies in both mining and processing operations to minimise operations downtime and improve head grade in Vatomina
Market Development
· Graphite demand growth continues on the back of the energy transition and is rapidly absorbing China’s historical over-capacity
· Established graphite buyers are engaging with Tirupati to diversify supply sources
· The Company has significantly benefitted from its leadership team’s decades of experience in and reputation in the sector, helping to secure a growing order book and sales
· As a result, Tirupati is now holding and executing annual orders with average monthly volumes of c.1200 tons, in addition to various short-term and spot orders it receives on a regular basis
· The order book aligns with the Company’s market development strategy and production estimates allowing optimisation of working capital
· Long-term market demand forecasts remain buoyant and are expected to result in supply shortfalls in the medium-term
Cashflow and Liquidity management
· Tirupati is managing its operations within the available resources while ramping up sales and production, and expects to reach c.50% capacity utilisation in the current quarter and c.75% in Q3 FY24
· The Company is tightly managing cash resources following a period of investment: project development, building infrastructure, acquiring Suni Resources and building inventory for the expanded operations
· Given the strong sales and revenue performance during FY24 to date, we expect to exceed the production and sales revenue achieved in the full year FY23 (FY23 £2.89m) before the end of August
· In the meantime, the Company continues to engage in securing non-dilutive working capital arrangements to improve cash resources on the back of its strongly improving performance and order book
Shishir Poddar, Executive Chairman, said:
“We continue to evolve the Company’s business to align with our aim to be a leading player in meeting the growing global needs of flake graphite, a critical mineral supply of which is identified as one of the key risks to meeting energy transition targets. Adoption of electric vehicles is growing globally with the world’s largest economies pushing hard for renewable energy backed transformation of mobility. While at the current time there is no supply-deficiency of flake graphite, it is clear from forecasts that supply will increasingly fail to keep up with the growing demand.
“We chose the tough but prudent path of refraining from a dilutive equity raise in the current subdued capital markets, managing our operations and growth within our available resources. With the establishment of consistent and growing production we are progressing to our next target of hitting a positive bottom line at corporate level in the foreseeable future.
“We will continue to update our shareholders on further developments and we are confident about both our short and long-term outlook.”
