Test results have encouraged Battery Minerals to immediately kick off a definitive feasibility into its Balama Central Graphite Project in Mozambique.

A  concept study found the project could produce higher-value, “very coarse” flake size graphite, with more than half classed as large and jumbo graphite flake grading at 97 per cent total graphitic carbon (TGC).

The results prompted Battery Minerals to begin a more in-depth feasibility study which it aims to complete by the middle of next year.

The news saw the stock (ASX:BAT) gain as much as 8 per cent to 6.7c before cooling to 6.2c in lunchtime Thursday trade.

The results were strong evidence of the company’s potential to become a significant graphite supplier to the lithium battery industry, Battery Minerals executive chairman David Flanagan said.

“It is now clear that Balama offers substantial growth potential for Battery Minerals shareholders,” Mr Flanagan said.

“These results follow the findings of the value engineering study completed on our flagship Montepuez Graphite Project earlier this month.

“We are now in the enviable position of having two emerging graphite projects at a time when demand for graphite is forecast to soar on the back of demand from lithium battery manufacturers.

“This is against the backdrop of a market capitalisation of less than $30 million and a host of news flow to come from drilling, project development, feasibility studies, offtake [sales] discussions and funding agreements.”

Balama has a mineral resource of 16.3 million tonnes at 10.4 per cent TGC for 1.7 million tonnes of contained graphite. This includes an indicated mineral resource of 8.9 million tonnes grading at 9.3 per cent TGC.

Exploration Target at the Balama comes in at 43Mt to 78Mt at 9 per cent to 13 per cent TGC which indicates significant exploration upside remains at Balama.

Balama is Battery Minerals’ second graphite project in Mozambique.

Its flagship project is Montepuez, where it has recently completed an engineering study which found the project would deliver strong financial returns.