A month after recommissioning its wholly-owned Graphmada graphite mine in Madagascar, Bass Metals (ASX: BSM) will exercise A$4.5 million-worth of options to boost its cash reserves while Graphmada continues ramping up.
The cash will also be used to pursue Bass’ growth strategies at Graphmada and Millie’s Reward.
Of the A$4.5 million ASX: BSMOB options, A$2.5 million will be exercised immediately after Bass received commitments from directors, management and other company long-term supporters within its shareholder base.
“This is a pleasing outcome and allows Bass to continue to pursue its overall strategy to become a substantial producer of industrial concentrates,” Bass chief executive officer Tim McManus said.
According to Bass, some of the cash will be directed towards working capital expenses to ensure the ramp up of Graphmada continues smoothly.
Drilling will also be undertaken in proximity to Graphmada’s existing 382,000 tonnes of contained graphite resource. At the same time, Bass will begin preparation work for stage two development at the project.
Funds will also be diverted to a “substantial” drilling program at the company’s Millie’s Reward lithium project, which is also in Madagascar. During its due diligence period, Bass uncovered lithium mineralisation grading up to 7.08% at the project.
“We look forward to leveraging off all the hard work and experience gained from stage one to move to stage tow of the upgrade and expansion at Graphmada, whilst conducting advanced exploration at some of our highly prospective tenements, in particular, Millie’s Reward,” Mr McManus said.
Graphmada graphite mine
Following several months of downtime for expansion and refurbishment work, Graphmada was recommissioned early last month. Once at full capacity, the mine will produce 6,000tpa of graphite concentrate under stage one.
All 2018 production has been pre-sold to offtake parties, with Bass preparing to receive first revenue from the mine shortly.
The company is hoping to expand production to 20,000tpa of large flake graphite concentrate via stage two by the end of 2019.
As part of the company’s expansion strategy, it will process its graphite into expandable graphite to target the mounting flame-retardant, foil, radiation shield and electromagnetic pulse markets.
According to Bass, China’s flame-retardant market alone is anticipated to consume up to 2 million tonnes of graphite by 2027.
“To have achieved an outcome where we will now have A$6.5 million cash and receivables, zero debt, 100% ownership of all our assets and near-term cash flow from operations is pleasing,” Bass executive director Peter Wright said.
Bass shares soared more than 7% to reach A$0.03 by midday.