So far, I did not have much time to read the Quarterly Report in depth and respond to it. I will do so now.
As a reminder, Talga needs the Vittangi big 4:
* Permits
* Financing
* Offtakes
* Partners (maybe)
Balance:
Lets first look at the financial numbers. They set the scene so to spreak. All values in $AUD. Ill read the balance sheet with commentary here and speculate how the next might look like.
At the end of the quarter, Talga has 13M in the bank, they started with 22M. From that alone, you know its gonna be tight. Lets go a bit further. They spend 2.8M on 'investments', that is land purchases and equipment for the EVA plant presumably. That is non recurring I hope. Talga also spend 6.3M on quarterly activities, of which 3.5M are exploration and evaluation. That are the drilling programs and their evaluation, feasibility studies like the FEED assessment, etc. While they need the FEED assessment, they dont immediately need new drill holes. So lets speculate and say they can reduce that particular part of the balance sheet to 1M without impacting the timeline of current activities. Development costs are 1.4M and include
"EVA plant commissioning and production ramp up, UK product development and German test facility operations". While I hope the EVA plant is fully paid for in Q2, we are not sure. So lets hope we can drop that down to 0.4M. The remaining costs of spending are 1.5M for personal and other running costs which cannot be reduced.
So lets say Talga dont need more investments and can reduce the current exploration and development costs by 3.4M. Then, the expenditures of next quarters would be around 2.8M at the very best. That are 4 quarters, but more likely only 3 quarters worth of funding left in the bank. This is very tight. Talga needs funding by the end of Q4, Q1 of 2023 at the very latest or its gonna be in trouble.
Ohh and dont forget, we have the message from some time earlier, that Talga was able to sell their EVA products for more than the Battery Minerals Report suggested, so for more than US$12k per tonne. That is very good for Talga. I think production was something about 5T per month? I dont remember correctly and cant find it unfortunately, but thats about US$100k, per month, not enough to keep Talga alive.
Project Financing:
According to the DFS, the Vittangi project requires
"US$484 million plus US$44 million contingency", i.e. US$528M. With inflation being what it is, more likely US$600M. Additional to that, we have learned, that Talga needs SEK400M, or about US$40M of securities in case something goes wrong.
Talga plans to finance this with 60% dept and 40% through
"strategic project equity partnerships". Meaning we will give 40% OF THE VITTANGI PROJECT to Mitsui or othrers. This last part is important as we might lose 40% of the Vittangi profits but not 40% of Talga, the company. So there will likely be no capital raise for the Vittangi project, rather money coming in from a partner that has a stake in the mine and refinery.
60% of US$600M are US$360M, which should come from the following institutions:
* Nordic Investment Bank
* Swedish Export Credit Corporation ("SEK")
*
"a leading European Bank"
40%, or US$240M would then come from project equity, i.e. Mitsui if they are still in the boat at the end of August. The financing page sais nothing about the grants we seek from the EU, or other authorities. I bet that any grant we receive will reduce the project equity funding. Also, as we will see when talking about customers, any advanced payment from customers will likey reduce the project equity before anything else. At least I would rather pay interest than giving up Vittangi Project fractions.
The FEED study (mentioned in a separate section of the Q report) is a prerequisite of project financing. I hope its the last box to tick. If that is the case, we might see project financing before permits. Not much of substance is written about the FEED study, just that its in review now.
Permits:
Everyones favorite topic. We are all very aware of the process and I dont need to chew through that in detail. So here is the status as we know it:
* Court site visit September 20.
* Norrbotten County Administrative Board no objections to Natura 2000 permit
* Extended commentary for environmental permits on request from 2 parties until September 12.
* Court hearing and final decision in Q1 2023
* Exploration and processing concession shortly after Environmental permit, i.e. Q1 2023 at the earliest
* Environmental permit for processing facility submitted (I wonder when that gets approved..)
We know it already, we will not see ink on the paper before Q1 2023 for any of the permits. In the process of which, the county board of Norrbotten has been replaced (the new board has approved our Natura 2000 process now) and also the head of Bergstaaten, which is responsible for our exploration permit (see
https://thestockexchange.com.au/threads/the-talga-bar.13637/post-111319 ) as 'voluntarily' resigned. This is probably positive for us as the old one might have dragged its feet on the processing concession. But the new one has to settle in as well, so chaos is guaranteed. Timelines uncertain.
Together with the low runway in the bank, this is a quite bleak picture for Talga, but we are not done yet. The positive things come now.
Talnode-C qualification
As you know, I find the quality of Talnode-C is illusive at best. So we have to read through the customer engagement process how good it is. In this, this quote reads quite positive:
"Pleasingly, following extensive test programs, Talnode®-C qualification has reached advanced stages with a range of parties.". With advanced tests, they mean customers have received samples from the EVA plant. Which is a costly process for any customer to go though and they wouldnt do that if the test samples of Talnode-C were not good. But it doesnt mean the Battery Minerals estimate of Talnode-C being worth US$12k per tonne is actually true. We will have to wait for that. Naturally, we would not hear about any customer who would not want EVA plant products... so our level of information is very limited.
Very positive indeed is the following sentence:
"Negotiation processes for commercial agreements are underway and Talga expects to conclude purchase agreements to underpin financing of the 19,500tpa anode operation over the coming quarters [...]". So there is at least one customer that went beyond testing and qualification and is now in off-take negotiations. Maybe off-take negotiations are in parallel to qualification, but it is a very positive sign and if it comes to fruition, and with the delays in permits, the first of the big 4 might be off-takes after all. However, we dont know how far off-take agreements have reached at this stage, so financing could come before.
Other Activities and Expansions
In short, not much to talk about as everything is as expected.
* FEED study completed and in review
* Trail mine mining
* Environment being monitored
* Exploration of more graphite is mentioned
Something interesting though in this sentence:
"The Vittangi graphite deposits remain open along strike and at depth, with further drilling planned to underpin continued resource growth. Talga’s expansion plans are justified by customers’ requests for volumes of Talnode®-C orders of magnitude beyond Talga’s currently planned production."
So this is definitely going to be a question of mine: Why the fuck does Talga stick to its plan to expand with Niska by a factor of 5 instead a factor of 20 or more as customers request for production increase would imply? Obviously, I will phrase it differently, but the lack of plans for increased production of Talnode-C by Niska or otherwise is a head scratcher for me. The 100ktpa Talnode-C plan for Niska is far too low for the timeline they are looking at. That needs to be 2 to 5 times larger. After all, they got the Niska Link for it. There could be one giant underground mine from Niska North through Niska Link, Niska South, Nunasvaara North to Nunasvaara East.
Also, they mention new exploration to discover the remaining resources.. but quite frankly, they dont have the funds for it. I hope they will hold off on that until this is sorted out.
UK, Silicon and other development
"Talga has successfully completed a study into the technical and commercial feasibility of producing conductive battery additives in the UK." Ok, we got the completion notice quite some time ago. But we all didnt really think much of it. Now read this:
"Strong market growth is expected in coming years for conductive additives, which are widely used across a range of battery types, most commonly in Li-ion battery cathodes and anodes to boost electrical conductivity and improve battery performance. Talga expects its conductive additive product to partially replace incumbent products such as carbon black."
So Talga is engaged in additives for cathode? Wow, I didnt know this. And want to replace carbon black? For your background, carbon black is the coating when we talk about coated anode. It consists of tiny, nm-scale particles of carbon that go on the surface of the graphite particles, which themselfs are in the um scale. Carbon black fills the void between the graphite particles and ensures electric conductivity. As you might imagine, applying nm sized particles to um sized particles is quite difficult to get right, thats why its so expensive and an art in it self. Talga is engaged in replacing part of carbon black, so .. that means they must have a better material for that. You know what is the best conductive material on earth? Graphene. Look at Talga, we have experience with graphene. I bet that they are experimenting adding graphene particles to the cathode and anode to increase performance. Maybe even make their silicon product viable in the first place. It would be a huge market if Talga could produce a battery additive that would improve battery performance on both sides of the separator. We will need to keep an eye on that. Its gonna be a beast!
Onto recycling:
"The RELOAD study will investigate the use of graphene produced from spent lithium-ion battery anodes as performance-boosting advanced battery material products such as conductive additives or as a carbon source for silicon-carbon composite anode material. " See the above. We know that anodes cant be recycled to new anodes (yet). But making graphene platelets out of these anodes is a good way forwards. Its going to feed directly into the above mentioned process.
Also they plan to use the silicon they find in their mined waste to produce silicon for anodes.. Not sure what to think of it, I would guess its cheaper and easier to source the silicon from a third party. Silicon is not magic stuff, its relatively cheap and very abundant. Not convinced what they say here helps in any way.
my post got copied on the
.. not sure what to think of it but it's for sure funny
