Advanced graphite explorer Triton Minerals (ASX: TON) has received a significant cash boost in the form of a proposed $19.5 million investment from Jinan Hi-Tech, a major state-owned enterprise in China.
Jinan conducted a significant period of due diligence before committing to the deal but must wait for the deal to be approved by Triton shareholders – as well as Australian and Chinese regulators – before it can be finalised.
The terms of the deal stipulate that Jinan will pay $8.5 million for 207.3 million fully paid ordinary shares at $0.041 each, in the form of a “strategic placement” and will acquire Shandong Tianye Mining’s (STM) 19.3% shareholding in Triton for a total consideration of A$11 million, or $0.062 per share.
In addition to its 34% investment in Triton, Jinan has also agreed to provide financing support for the EPC package debt funding and has already undertaken significant work with the Chinese banks on this financing.
Triton said it expects this funding to be provided on attractive terms and intends to make progress “as soon as practical”.
According to Triton, funds raised from the strategic placement will be used to commence “early construction activities, detailed engineering and placement of long lead time orders for the project”.
As and when the deal is completed, Jinan’s shareholding in Triton will rise to 34%, thereby triggering a meeting of Triton shareholders to vote on the strategic placement.
To better position its shareholders into making an objective decision, Triton will also publish an independent expert report that will delve into whether independent experts consider the proposed deal to be fair and reasonable, and in the best interests of Triton shareholders.
The Ancuabe project is in the proven graphite region of Cabo Delgado in north-eastern Mozambique.
Ancuabe is adjacent to the producing AMG Graphit Kropfmuhl (GK) graphite mine and has proven resources locked up within it.
A Definitive Feasibility Study (DFS) completed in 2017 confirmed Ancuabe is a high quality, long life, high margin graphite project and was underpinned by a maiden JORC compliant ore reserve of 24.9 million tonnes at 6.2% total graphitic carbon that supported a 27 year operation.
The broader region is considered to have the highest concentration of high-grade jumbo flake graphite in the world which has attracted a cavalry of both junior explorers and mature miners into the region over the past decade.
“The board welcomes the investment of Jinan in Triton and its commitment to provide both technical and commercial support for the building of the Ancuabe graphite project,” said Peter Canterbury, managing director of Triton Minerals.
Mr Canterbury added that “through this agreement, we have now secured the cornerstone equity component of the development funding with a commitment to finalise the debt funding for the Ancuabe graphite project, which we will look to finalise as soon as possible.”
Triton’s managing director also explained that progressing the Ancuabe project would be an important step towards supplying the flame-retardant building industry, currently undergoing growing interest given the increased focus on improving building construction methods.
One of the most high-profile reminders of the importance of suitable flame retardation in building materials was the Grenfell Tower fire – an incident which claimed the lives of 72 people in London back in 2017.
Following the fire, the UK’s Department for Communities and Local Government released results of fire safety testing on the cladding panels used at Grenfell Tower, carried out by the Building Research Establishment.
Investigators conferred the building’s polyethylene filling a category three rating, while also stating that the tower block had a “total lack of flame retardant properties”.
Shares in Triton soared 20% to reach $0.06 before midday.