Tirupati Graphite (LON: TGR) is joining the standard list this week and it offers investors exposure to an integrated graphite mining and processing business. The cash raised will help to finance increasing production.
Tirupati raised £6m at 45p a share and that gives the company a market capitalisation of £33.4m. There will be £5.4m left after expenses. The largest invest will be in the India processing facility, where £2.4m will go towards quadrupling capacity. There will be £1.3m invested in the mine and £1.2m in a new graphene centre. Management has decades of experience in the graphite industry.
Tirupati has interests in two projects in Madagascar. They are Vatomina and Sahamamy and the latter is already in production. The plan is to increase flake graphite production at Sahamamy to 21,000 tonnes per annum. Commercial production started in January and revenues were just over $1m until March 2020, which was nearly double the cost of mining the graphite.
There is growing demand for graphite. Current consumption is 1.2 million tonnes per annum and energy storage and electric vehicles will ensure that consumption will grow.
There is potential to generate revenues from selling sand that is the by-product of mining.
As part of the flotation, Tirupati is acquiring graphite processing operations in India. There is a 1,200 tonnes per annum plant up and running and the next step is to quadruple that capacity.
Tirupati manufactures its own flame retardant product under the Carboflamex brand. There are also third-party customers. The company has a technology that can produce high purity graphite without the use of hydro fluoric acid.
Longer-term, there are plans to establish a 24,000 tonnes per annum facility. A feasibility study has been completed.
A detailed feasibility study has been completed for a graphene facility. The first stage would produce 1kg/day. That could eventually be increased to 10kg/day.