STTCOMP BAT, FA LONG Market cap $61.85M, cash $7.7m (as at...

STTCOMP BAT, FA LONG

Market cap $61.85M, cash $7.7m (as at 31/12/17)

Battery Minerals Limited

Managing Director, David Flanagan wants to get this show on the road!



Graphite Development in Mozambique. Two projects Montepuez and Balama are part of a strategy to grow from approx 45ktpa of graphite concentrates in 2019 to over 200ktpa in 2023.

Mining license granted, 4 binding offtakes for 80% of initial production, port allocation secured, key plant purchased, construction underway, commissioning in Q4 2018, first shipment in Q1 2019.

We can expect management to keep kicking goals. Market may be waiting for existing unlisted $0.10 options to be in the money as this will provide for over AUD $30M of funds when options are exercised.

For a market cap of $100M, share price will need to be approx $0.131. This may be where institutional money starts flowing in. BAT have a strong management team that is the right size for a company in a key phase of development / growth. The board was restructured in January to improve governance and position the company for transitioning to production.

T20 hold 44.27% (from 2017 annual report issued March 2017).

Valuations / targets:

• $0.29- Morgan’s Research (issued January 2018)
• $0.26 - Hartley’s Research (issued March 2018, 12-month target)
• $0.258 - BAT should be at $0.258 now just on in-situ value of Montepuez and Balama Graphite Resources. See table below, explained here.
• Long-term ( see production and peer-based analysis below )
  • $0.40+ in 2020
  • $0.70 to $0.80 in 2021
  • $1+ by 2022

Significant De-risking:

• Mining licence granted for Montepuez Project 26 March 2018
• Port allocation secured
• 80% of Stage 1 Montepuez covered by 4 Binding Offtakes
  • Keshuo (22 January 2018) - 10,000tpa for 3 years
  • Black Dragon (19 January 2018) - 10,000tpa for 3 years
  • GEM (18 January 2018) - 10,000tpa for 3 years
  • Urbix (19 December 2019) - 5,000 tpa with option to bid for another 6,000 tpa, 3 year term with option to renew for 3 years
• On-track / on-schedule for commissioning in November 2018
• Key plant purchased; crushing circuit, ball mill, camp, dryer, float cells
• First shipment Q1 2019
• Value Engineering Study - Low CAPEX (USD $42.3M) and low technical risk for Montepuez Project, < 2 years payback period

Upcoming catalysts:

• MoU with Japanese Meiwa Corporation anticipated/expected for conversion to a binding offtake
• Exercise of unlisted 10c options (expiry 31 July 2018) will provide approx $32.5M funds contributing to mine development
• Construction commencing Q2
• DFS for Spherical Graphite in H2 2018 ( pilot plant work has already been completed )
• DFS for Balama Project due mid 2018
• Commissioning and ramp-up commencing in Q4
• First shipment in Q1 2019

The Five Year Plan:

Assuming ramp-up of Balama over 3 years from 55ktpa (2021) to 165ktpa (2023), total production can theoretically grow from 50ktpa in 2019 to as much as 265ktpa in 2023. This will position Battery Minerals as a significant Graphite producer.

( source: BAT March 2018 Investor Presentation )



A couple of methods are used below to estimate share price growth from two perspectives, one based on a peer analysis with Syrah and the other extrapolating Morgan's Research Analysis. Both have yielded estimates in a similar ballpark for each growth stage.

Estimates based on my extrapolation of Morgan’s Research Analysis:



Estimates based on my peer-analysis with Syrah: