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Special report: Kibaran Resources shareholders could make a strong profit in coming months as the company gets set to build its Epanko graphite project in Tanzania, a new research report says.

The report by Independent Investment Research senior analyst Mark Gordon paints a bright outlook for Kibaran and its shareholders, tipping the price to run from its current level of 19c to 64c within six months.

The report — which was commissioned and paid for by Kibaran — cites three strong tailwinds for the stock:

— The crucial Letter of Guarantee provided to Kibaran recently by the Tanzanian Government means the company can now finalise project funding and progress Epanko to development and construction

— Expansion of Kibaran’s graphite processing business, which uses the company’s proprietary environmentally-friendly EcoGraf technology to process third-party graphite

— Strong forecast growth in graphite demand and prices on the back of its use in lithium batteries

“Kibaran is well down the path to implementation of a vertically integrated graphite business supplying a number of markets outside of China,” Gordon says in his report.

“This includes traditional uses and the developing lithium-ion battery anode market, the latter of which some forecast will result in an eight-fold increase in demand for natural flake graphite for batteries by 2025.”

Importantly, Epanko is fully permitted and has binding sales agreements with German and Japanese customers for some 44,000tpa of the planned 60,000tpa of proposed high-quality graphite concentrate production.

“Kibaran is now working towards finalising financing following a hiatus (now ended) in the development of Epanko, with the potential for first production by 2021,” Gordon says.

Delays resolved

The report says delays due to conforming with the rigorous bankable feasibility study and other requirements of the project’s European funders have been resolved.

“Satisfaction of these requirements has resulted in a rigorous study and robust, financable project,” Gordon says.

Delays were also caused by the well-publicised changes to Tanzanian mining law, which affected numerous ASX-listed companies, including Kibaran.

Kibaran has now been issued with a Letter of Guarantee which effectively extends the life of the Epanko Mining Lease from 2025 to 2035. This is a requirement of the senior debt financiers and paves the way for the completion of financing negotiations.

The second key part of the strategy is downstream processing of graphite to purified spherical graphite for use in lithium batteries.

“The development of EcoGraf has continued in parallel with Epanko, with a pilot plant now operating in Germany,” Gordon says.

“The nature of the business is that plants will have the flexibility to be able to be set up in locations to suit the markets and with the potential to be able to be developed in association with strategic partners.”

Ready to go

Gordon says Kibaran is now “ready to go”. “With the recent Letter of Guarantee on the Mining Lease, Kibaran is now in a position to finalise funding and progress Epanko to development and production,” he says.

“EcoGraf is currently underway, with the Company now considering attracting a strategic partner to help fund the commercial development of the SpG process.

“Binding offtake [sales] agreements are in place with quality partners. This includes a 20,000tpa agreement with Thyssen-Krupp that could supply about 30 per cent of the German refractory market, 10,000tpa with a German trader and 14,000tpa with Sojitz, a major supplier to the non-Chinese battery markets in Japan and South Korea.

“Graphite markets are forecast to grow very strongly over the foreseeable future, largely driven by the growth in electric vehicles.

One outcome of this is that end users will be looking to supply outside of China, which currently controls the market.

“We expect to see milestones being met over the near to mid-term, thus leading to material news flow.”

 

This special report is brought to you by Kibaran Resources.

This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice. 

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