Graphite and gold explorer and developer Volt Resources (ASX:VRC) Limited has announced its acquisition of 70% of the Zavalievsky group of companies is on track after it entered a binding agreement with the group just last week.

The deal will set up Volt Resources (ASX:VRC) to be one of the few ASX-listed producers of graphite.

It will also help transform Volt from an explorer and developer into a producer of the in-demand battery mineral.

The stock picked up speed last week after announcing it had joined the European Battery Alliance (EBA). The EBA’s members include 600 industrial, innovation and academic institutions and the European Investment Bank in the European Union linked to the battery industry.

Graphite is running hot at the moment as it is an essential element in the production of lithium ion batteries used in electric vehicles, sales of which are starting to outstrip traditional ICE vehicles in Europe.

The Zavalievsky (ZG Group) graphite mine and processing facilities are next to the town of Zavallya, about 280km south of the Ukraine capital Kyiv, and 230km north of the major port of Odessa.

ZG Group has existing production of graphite products to supply traditional European industrial markets including refractories, electrodes and lubricants.

It also has the potential to become a producer of spherical purified graphite (SPG) for the lithium-ion battery market, with plans to install a processing plant and equipment to start production of SPG for the European market within the next 12 months.

(Some context: Each electric vehicle requires up to 60kg of graphite – more than twice the amount of lithium needed.)

Volt says the acquisition of these already up and running facilities will position it significantly ahead of most of its Australian peers because it won’t face the usual time and risks related to greenfield project financing, construction, commissioning and ramp-up.

Completion of the deal remains subject to satisfactory completion of Volt’s due diligence reviews, which are now underway, by next Friday (or later if the parties agree). However, so far nothing has identified that would prevent the acquisition going ahead.

Until then, Volt intends to finalise its arrangements to fund the first instalment of US$3.8 million of the proposed US$7.6 million purchase price. This may be in the form of equity, debt or a combination of the two.

Volt says the deal has other advantages including:

  • Further exploration upside at a multi-decade producing mine
  • An existing customer base and graphite product supply chains which Volt expects to be able to leverage as it develops its existing Bunyu graphite project in Tanzania
  • An experienced workforce which can assist with training, commissioning and ramp-up for the Bunyu development, which could materially assist the ability to finance the Company’s Bunyu graphite project development
  • Co-products of quarry stone for the domestic market and garnet for the European market that could generate cash flow for relatively low capital and operating costs; and
  • A 79% interest in 636 hectares of freehold land, with the mine, processing plant and other buildings and facilities located on that land.

Volt’s share price rose 4 per cent on the news today.



Volt share price today: