Norwegian rich-lister along for the ride on ASX graphite play
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Following Mark Creasy — the Australian explorer who built a $600 million fortune from gold and nickel discoveries — is always a good plan.
Even if it means trekking to the other side of the Arctic circle in northern Sweden for exposure to graphite.
It’s not far from Sweden’s famous Kiruna underground iron ore mine in the Norbotten County of Lapland, that Creasy has invested a small portion of his fortune in an ASX-listed graphite stock, Talga Resources (ASX:TLG).
Interestingly, and in keeping with a “follow-the-rich” investment approach, Creasy is not alone on the Talga share registry — nor is he the wealthiest.
The title of richest goes to the Smedvig family of Norway, once best-known for its shipping, oil service, and sardine canning businesses, but now focused on an investment portfolio managed from a London office headed by a fourth-generation member, Anna Margaret Smedvig.
Alongside other investments, such as a marketing technology developer, an ocean freight tracking company, and a London short-term rental business, Smedvig has emerged in top spot on the Talga share registry with a 12.6 per cent stake. Creasy has a more modest 3 per cent interest.
What brings the Smedvigs and Creasy together is the appeal of an exploration company which has made a world class graphite discovery which could have cracked the code leading to success in the very crowded business of developing graphite deposits.
One of the fast-growing family of battery metals, graphite has several other features which should alert (and caution) investors. They are:
Over the past five years, since Talga underwent a conversion on the road to Kiruna from an Australian gold explorer into a Swedish graphite/graphene company, its share price has been marching higher, up from 5c in 2012 to a peak in April this year of 92c, and recent trades around 63.5c which values the business at $124 million.
Investment banks which follow Talga see a higher share price coming. The Canadian-based Canaccord Genuity is tipping $1.15, assuming production gets underway as planned.
The key to Talga is a series of graphite deposits which were discovered as far back as 1898 when they were earmarked for steel-making using Kiruna iron ore.
Talga entered the scene when its chief executive, Mark Thompson, opted to exit the gold exploration business and jump aboard the graphite express being driven by forecasts of a rapid increase in demand for batteries and graphene.
Rather than become a simple digger of graphite in region a surrounded by wandering reindeer in a northern Swedish forest (and that’s exactly what the area around Talga’s graphite looks like) the business plan is to become a specialist provider of graphene.
Product development deals have already been signed with big name European industrial companies such as Heidelberg Cement (for smart concrete, believe it or not), Tata Steel (stronger steel), Jena Batteries (polymer flow batteries), and Chemetall (part of the giant German BASF group, for ultra-thin, printed batteries).
Gee-whiz as some of those uses for graphene might sound they are actually in the research and development phase, using Talga-produced graphene, which is either a short trip by ship from the port of Lulea in northern Sweden, or by road across the Oresund bridge linking Sweden to Denmark and the rest of Europe.
Location, in mining-friendly Sweden, ore quality at 25% graphite, a focus on graphene, and growing business ties to major European manufacturing companies is what attracted Creasy and the Smedvig family (along with other rich Europeans), and why Talga is very much a stock for Australian investors to watch.
Tim Treadgold’s The Explorer column appears weekly in Stockhead