Volt Resources (ASX:VRC) discusses its graphite project in Tanzania and outlook

Interviews

by Carolyn Herbert

Volt Resources (ASX:VRC) CEO, Trevor Matthews, talks about its graphite project in Tanzania, offtake partners and outlook for graphite prices.


Volt Resources is an ASX listed company. It has a market capitalisation of about $40 million fully diluted. The company, as its main project is Tanzania graphite project called Namangale, located in southeast Tanzania. We have just developed a new strategy. So our vision is to be a top three global supplier of graphite, natural graphite, by 2020. And as part of that strategy, we aim to be in production in 2018.

The size of the Namangale resource currently is 461 million tonnes at 4.9 per cent TGC, which is total graphitic carbon. That’s one of the biggest resources in our peer development group. And we also have the largest reserve, ore reserve of all of our peer development graphite producers at 127 million tonnes, grading at 4.4 per cent TGC. The company’s finished a prefeasibility study in December 2016, which showed really strong economics. In fact, had an NPV of about $US890 million.

So based on that strong economics and also test work that was conducted over the course of 2016, showed that we had a graphite product that was suitable for a number of, or nearly all the graphite markets. So we revisited our strategy and we’ve been looking now at developing the project in two stages. So a smaller 20,000 tonne per annum project to be in production by 2018, and a larger expansion to be in production by 2020.

So as part of that process, we’ve been in China and South Korea recently and completed a number of agreements. So we’ve announced recently two co-operation agreements with Aoyu and China National Building Materials. Early this year, we also completed an offtake with NanoGraphene in the graphene space, that’s a binding agreement. So over the course of the rest of the year, we’ll be working on funding for the development of stage one. Project approvals should be completed in terms of mining licences being approved, in the next quarter. And by the last quarter, we will be commencing construction on the stage one development.

We’ve got products that are suitable for a number of different applications. So NanoGraphene, who I mentioned earlier on, they’re a graphene producer. So that’s quite a small market, but requires quite high quality graphene products. We have also Aoyu, which is more interested in the battery anode materials concentrate supply. And we also have China National Building Materials, which is fundamentally based on supply of expandable graphite for the, in particular, fire retard insulation foam market.

We didn’t start the year with a lot of cash. So we’ve been working on strategies around how to move forward with funding, for the stage one development. So part of my part of the things I’ve focused on, is looking at funders for the stage one development. And coming up with a total strategy that sort of looks at short-term and long-term funding. The company also has in the money options at the moment, maturing at the end of this year, which will deliver about $4.8 million in cash. So think we’re looking fairly sound from a financing perspective.

The company’s raised money through placements and basically through financial markets. But going forward, what we’re looking to do is introduce a funding partner that can help facilitate the stage one development. But also be part of the stage two funding as well and there’s a number of parties we’ve been speaking to, in the Middle East. And also that recently announced agreement with CNBM also includes, the ability for us to work together on financing for both stage one and stage two.

Volts in a great position, it’s got a world-class asset. As I mentioned, the size of the resource is the second largest of all the peer development groups, and it’s open as well. So can grow even further with more drilling. We’ve got a very strong management team and Board, chaired by Stephen Hunt. So we’ve got a great asset with good management and from there, it’s really about now delivering on our vision.

The company’s ambition is to be in production within 12 months. So we’d love to be, also plan to be in production by mid-2018 and delivering products to the various customers that we’ve got in place by that stage, in a number of different markets. And then longer term, to deliver on that vision to be in the top three global suppliers of natural graphite, by 2020.


Ends