Battery Minerals secures US$30m funding to advance Montepuez graphite project

Battery Minerals (ASX: BAT) has secured US$30 million in much needed funding to progress development of its flagship Montepuez graphite project in Mozambique.

Under the agreement with Resource Capital Funds, Battery will borrow US$25 million from the lender, with the loan attracting a 10% per annum interest rate.

Battery will also issue Resource Capital 333 million five-year options that are exercisable at A$0.10 each.

To make up the remaining U$5 million, Resource Capital will subscribe for US$5 million-worth of fully paid Battery shares.

Battery managing director David Flanagan said the deal was a “significant milestone” for the company.

“We are particularly pleased that an investor of the calibre and experience of Resource Capital wished to invest in us and they had confidence in the team, as we strove be producing graphite concentrate and generating substantial cash flow in less than a year,” Mr Flanagan added.

To meet its November commissioning target, Battery has secured the mining licence and has installed a temporary construction camp on site. The construction water dam has been established and is full, while the crushing circuit is in transit to site.

Contracts have also been awarded for supply and construction of the permanent camp, as well as other requisite processing equipment.

Montepuez graphite project

Stage one development expenditure for Montepuez is expected to cost Battery about US$42.3 million, with a two-year project payback period.

During stage one, up to 50,000 tonnes per annum of 96.7% pure graphite concentrate is forecast to be produced. The feasibility study predicted net operating cash flow of around US$20 million per annum.

Montepuez has proven and probable reserves of 41.4mt grading 8.8% total graphitic carbon at a 2.5% TGC cut-off. According to Battery, the reserves underpin an initial 10-year mine life.

A stage two 100,000tpa development at Montepuez has been planned with the doubled production pencilled to start in 2020.

Additionally, plenty of upside exists at other deposits within the project, with the Elephant deposit recently returning surface or near surface intersections of 37m grading 13.49% TGC and 24m grading 16.07% TGC.

In the coming months, Battery hopes to lock-in the outstanding cash required to finish developing Montepuez and secure an offtake partner for the remaining 20% of its planned initial production.

The company has already cemented offtake agreements with other parties for 80% of its planned stage one production.

Despite the positive news, Battery’s share price had slipped more than 6% to A$0.059 by late afternoon trade.