MRC powering up Norwegian graphite assets with spin-off plans
Mineral Commodities plans to demerge its Norwegian graphite assets into a separate company focused on downstream battery anode production.
This follows a strategic review which found that creating a pure-play, integrated, battery anode material company – Ascent Graphite – concentrated on European “Sustainable Anode” development represented the best option to realise value from the assets.
Mineral Commodities (ASX:MRC) noted that while its Skaland graphite mine has been in operation for over 100 years and is the highest grade operating flake graphite mine in the world, the transition to downstream anode production for the electric vehicle and energy storage markets would require a step-change in investment over the next 18 months.
This increase in investment is required to support demonstration-scale activities for the production and qualification of anode materials and delivery of higher quality concentrates from Skaland while the timing is driven by the significant growth of European battery cell manufacturing.
“MRC’s Norwegian graphite assets are of leading quality: located within a Tier 1 jurisdiction, with a rapid increase in battery demand,” chairman David Baker said.
“Our value generation is characterised by well-advanced studies and development plans, including for vertical integration.
“Skaland, as a permitted, operating mine in Norway with its high-grade ore and hydropower electricity, is ideally positioned to supply anode materials to Europe and the demerger will assist in accelerating this process. ”
The review had found that a combined entity with the company’s Tormin mineral sands operations and graphite assets in Norway and Australia was more complex than for peers who operate a single commodity-focused business strategy.
This is further compounded by the downstream processing and marketing requirements of the anode graphite business in comparison to conventional mining and processing.
Mineral Commodities added that the market currently undervalues its graphite assets and that separation should address this as battery material companies are achieving high valuations globally.
A pure-play, integrated, battery anode material company concentrated on European “Sustainable Anode” development based in Norway was also found to be attractive to clean energy and sustainability mandated investors.
This led to the decision to separate the Norwegian graphite assets into Ascent Graphite, which will be incorporated in Norway, and have an independent board and operating structure to provide an optimal platform to attract funding and increase value.
Ascent will seek funding via an equity issue to investors as part of a planned capital raising.
The company is also considering an initial listing of the spin off on a European stock exchange while retaining a significant equity holding in the near-term to capitalise on any value creation resulting from the demerger.
Mineral Commodities’ group corporate development manager Peter Fox will take up the position of chief executive officer at Ascent while veteran metallurgist Dr Surinder Ghag will be its chief development officer.
Other appointments include Skaland Graphite general manager Christoph Frey as its chief operation officer and Baker as a non-executive director.
This article was developed in collaboration with Mineral Commodities, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.