Special Report: There is a significant opportunity for investors in Battery Minerals on the back of strong progress at the company’s Mozambican graphite project, says broker Hartleys.

In a new research report, analyst Paul Howard has upgraded Hartleys’ recommendation from neutral to buy and increased its price target from 3.6c to 5.6c, well ahead of the current price of 2.6c, following a visit to the Montepuez graphite project.

“The company has commenced construction on site and is awaiting further funding to complete the build,” Howard says in his report.

“On site, a 100-person camp exists along with the tailings storage facility, crusher and foundations for the processing plant.

“All approvals are in place and Battery Minerals could potentially complete building the plant and mining ore upon finalising a financing deal, which on our numbers could be in the region of A$100 million and may comprise a 50:50 debt:equity split.

“Our valuation, assuming development, is 11c per share and our 12-month price target is 5.6cps. If the company can deliver a funding solution, it will be cause for a re-rate of BAT.”

And according to Battery Minerals’ latest corporate presentation, strong progress is being made towards securing funding.

The Independent Technical Report on Montepuez has been completed and the Independent Marketing Report, which examined the graphite market and the company’s offtake and price forecasts, is also finished.

As a result, a dozen potential financiers have signed confidentiality agreements with Battery Minerals and are now in the project data room.

Importantly, Battery Minerals has already exchanged four non-binding indicative term sheets with potential funders.

The company says it will complete project construction within 12-15 months of funding being secured.

This should position it to capitalise on an increase in graphite prices, which is expected to stem from growth in lithium battery production.

Montepuez is a low-cost, relatively simple project which will focus on maximising margins and financial returns rather than just tonnages.

The outstanding capital cost is just US$39.4 million and has a payback period of less than two years.

Annual EBITDA is forecast to exceed US$30 million and based current Ore Reserves and annual production of 50,000 tonnes of graphite concentrate, mine life stands at more than 50 years.

This story was developed in collaboration with Battery Minerals, a Stockhead advertiser at the time of publishing.
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