Eight weeks on the bourse is long enough for analysts at Peloton Capital to whack a Speculative Buy on International Graphite (ASX:IG6).

The newly dual-listed junior graphite firm has made an immediate impression on Peleton’s Ian Spence and his team, who gushed over key differentiators which “distinctly sets IG6 apart” from its competitors.

After listing on the Frankfurt stock exchange in April, IG6 has already caught the eye of the German Institute for Asset and Equity Allocation and Valuation (DGWA) which represents the company in Europe. At the time of the dual listing, DGWA CEO Stefan Müller said International Graphite was ideally positioned to leverage against a growing long-term global opportunity.

“The tailwinds for downstream graphite companies in Europe are significant as car makers and OEMs attempt to lock in long-term supply agreements and investors seek companies offering sustainably and ethically sourced battery metals and materials, such as from International Graphite’s future production,” he added.

With its vertically-integrated Springdale Graphite Resource and planned downstream Collie processing facilities, both located in the house that rocks built, the world-leading mining centre of WA, Peloton has been quick to recognise a potentially significant return on investment (ROI).

“We envisage early exploration success from current drilling at Springdale in the second half of 2022 coupled with expected good news on the progress of Collie which should be sufficient to justify a series of incremental positive share price re-ratings,” Peloton noted.

Analyst Ian Spence had time for the company’s ambition, structure, timing, location, assets and possibly above-all: knowhow, calling it essential for  the company which is aiming to become WA’s first fully integrated ‘mine to market’ graphite company.

“IG6 is not aiming at just becoming a standard graphite miner and producer of export grade concentrate, but instead is focussing on its shareholders additionally benefitting from the development of a commercial downstream graphite processing business, which will treat domestically mined (Springdale WA) graphite concentrates, producing finished graphite products for specialised industry applications and Battery Anode Material (“BAM”) for the growing global demand for Lithium Ion batteries.”

“IG6 has a substantial competitive advantage over its peers in that the Company’s key principles Mr Phillip Hearse (Chairman) and Mr David Pass (Director) could arguably be described as possessing unique innovative experience in graphite production and downstream graphite processing.

It’s certainly true both Hearse and Pass are recognised graphite geeks of a terrifying, global stature – they’ve been owner operators of a top unlisted graphite metallurgy and process engineering firm with a track record for successfully guiding listed and private graphite companies undertake Definitive Feasibility Studies (DFS) on graphite production and downstream graphite processing as well as providing and advising on key marketing intelligence.

Peloton was effusive in its praise for the IG6 executive team – and attributed the very timely emergence of the business as a formidable new graphite entrant – down to the collective experience of the board.

“Complimented by additional mining experience provided by board members Matt O’Kane and Andrew Worland, we consider the current board of IG6 to be well positioned to spearhead the development of IG6 as an Australian domiciled vertically integrated graphite business, capable of mining domestic raw graphite and applying leading edge graphite processing technology, precipitating in the production and sale of high end, high value, graphite products to multiple specialist graphite industries and the BAM market.”

Fair enough. It is pretty unlikely that getting the IG6 band together at this extremely opportune time, was mere coincidence. Not at a time when seemingly everyone wants a piece of graphite. It’s now critical in a variety of battery applications including EVs, static storage and specialist industry.

Peleton forecasts this demand will exceed well beyond the current global supply capacity from next year.

The world’s urgent need to diversify graphite and graphite product supply chains away from China’s near total global dominance also can’t be overemphasised.

The opaque processes of the Middle Kingdom, its startling environmental track record and not least its recent diabolical reliance as an open, safe and transparent business jurisdiction bestow the strategic value of IG6 attaining ‘Supply Chain Custody,’ hugely positive upside.

WA’s emerging SW renewable energy and battery hub is considered one of the worlds most stable, responsible and just terrifically mining friendly jurisdictions and it’s still attracting a ton of private support, funding and government grants.

Peloton says IG6 recognised that providing assurance to its future customers is critical to the supply of battery raw materials.

Customers and governments need to be able to trust the ethical sourcing, processing, carbon footprint and the ESG (environmental, social and governance) applied during their creation. This is where and why the dual-listing makes clearer sense.

“We place a Speculative BUY on IG6 anticipating that we will see a steady flow of positive news over the coming weeks as the Company provides updates on the progress of the development of the Collie R&D operations with commissioning slated next quarter,” Peloton wrote.

 

 

 

This article was developed in collaboration with International Graphite, 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.

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