Battery Minerals inks third binding offtake agreement in a month for Montepuez graphite

Battery Minerals ASX BAT Qingdao Black Dragon Graphite offtake agreement

Battery Minerals (ASX: BAT) has inked its third binding offtake agreement in a month for its advanced Montepuez graphite project in Mozambique – with 60% of anticipated stage one production now contracted.

In this latest agreement, China-based Qingdao Black Dragon Graphite will purchase 10,000 tonnes of graphite concentrate per annum for a minimum three-year period.

“Montepuez is rapidly gaining momentum, as demonstrated by the fact that we now have three binding agreements covering 60% of our forecast annual production,” Battery executive chairman David Flanagan said.

He added the company was finalising its mining licence which it expects to be granted by the end of the current quarter.

Battery aims to commission Montepuez by December and ship its first graphite concentrate by the end of the March quarter next year.

Under planned stage one production, Battery will export up to 50,000 tonnes per annum graphite flake concentrate grading 96.7% total graphite carbon.

The company also plans to expand Montepuez production to more than 100,000tpa of graphite concentrate by 2022.

Morgans boosts Battery’s target price in latest report

Equity analyst Morgans released a report a few days ago putting the company’s target price at A$0.26 per share.

At this morning’s A$0.069 price that equates to a substantial 276% increase. Morgans takes into account the value engineering study for Montepuez, which outlined a scalable strategy to bring the project into production as soon as possible to reduce initial capital costs.

The analyst also points out Battery owns the Balama project in Mozambique, which has returned higher grades and larger proportion of large and jumbo flake sizes than nearby Montepuez.

A feasibility study is underway at Balama and Morgans anticipates, if results are positive, Balama will add 100,000tpa of graphite concentrate for Battery. The analyst predicts project construction for Balama will begin in 2021.

However, Morgans points out Battery will require up to A$80 million to bring Montepuez into production.

Battery currently has about A$22 million in cash reserves and the analyst cautions the company will need to source the A$58 million to meet its planned production schedule of kicking off mining at Montepuez by December.

After an early morning run, by mid-morning trade, Battery’s share price had slipped back to A$0.69, unchanged from yesterday’s close.

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