Thread by @MylesMcNulty

Happy with @Tirupatiuk's H1 results. The growth rate really is incredible, despite not being reflected to a great degree in the financials (yet).

When the acquisition of TSG completes (subject to Reserve Bank of India's approval), #TGR takes off.

1/20

voxmarkets.co.uk/rns/announceme…

Firstly, #TGR's upstream mining operations.

The very small 'proof of concept' Sahamamy plant - 3,000t pa.

It only operated at 2/3 of nameplate capacity in H1 (1,060t produced; 950t sold) owing to various Covid restrictions.

Even so, it achieved a gross margin of 54%.

2/20

The second plant, Vatomina, is three times the size, at 9,000t pa. It came online this Q.

A third plant, Sahamamy 2, is now under development, and is coming online within 6 months. It will have capacity of 18,000t pa.

#TGR's nameplate capacity as at 01.07.2022: 30kt pa.

3/20

#TGR has been achieving a basket price of £600 per ton. At 56% gross margin, at nameplate capacity, @Tirupatiuk would be entering H2 next calendar year on an annual run rate of £10m gross profit, on revs of £18m.

£3.5m for central overheads, puts TGR on a PBT of £6.5m.

4/20

From late H2 next year, #TGR will then be able to assess when to bring modules 2, 3 and 4 at Vatomina, online. These will each be twice the size of the now producing module 1, at 18kt pa each.

Critical to note: capex for each module will only be circa $6m.

5/20

At 84kt pa, assuming a basket price of £600/t and an improved GM of 62% (economies of scale), @Tirupatiuk will be generating GP of £31.2m on revs of £50.4m.

And that's just the Madagascar operations.

#TGR is in the process of acquiring further projects in Mozambique.

6/20

#TGR is acquiring two projects - Montepuez and Balama Central - for a mere £6.6m (£0.8m in cash, £5.6m in TGR shares - issued at a price of 103p, versus the current price of 68p!).

Montepuez is construction ready, and can be built in two modules...

7/20

voxmarkets.co.uk/rns/announceme…

...of 50kt pa each.

Balama Central will likely require a revised DFS for a 50 ktpa operation as well. As with Montepuez, BC already has a mining licence in place.

The acquisition brings 4 key benefits to #TGR:

1) Mitigating country risk (no longer relying on just Mad.)

8/20

2) Diversifying resource base. In Madagascar, the concentrate produced is comprised circa 80% large and jumbo flake graphite, 20% small and medium flake.

In Mozambique, it is a 30%/70% split (the other way).

Small/medium flakes are preferred for lithium ion batteries.

9/20

3) Bulking up resource base. The Mozambique acquisition would increase #TGR's in-situ resource tonnage by circa 500%, to 150Mt. Due to the much higher grade deposits than those in Mad., TGR's contained graphite would increase by 12x.

Key for company longevity.

10/20

4) Potential for scaling operations. Bringing the 150kt pa online in Mozambique along with the 84kt pa in Madagascar would put #TGR amongst the top 3-4 graphite producers worldwide, by output.

It would then have not inconsiderable influence in the market and on pricing.

11/20

However, with regards to today's announcement, the key item for me was that TSG had recorded revs of £1.3m in the six months.

In the period, only the 1.2kt pa Patalganga specialty graphite project in India was operating.

This is being expanded by 300%, to 4.8kt pa.

12/20

It is due to come online by start of July next year. Assuming the same run rate as H1 2021, Patalganga will be generating revs of £10.4m pa.

But #TGR is also developing two further speciality graphite modules in India - each with an output of 15kt pa.

The first is due...

13/20

...to come online before the end of next year.

Simply using Patalganga's H1 2021 rev run rate, we could estimate that the first 15kt pa module alone - once at nameplate capacity - will be generating revs of £30m+ pa.

14/20

We don't know what the product mix will be, so that fig can't be taken at face value. But the major upside for @Tirupatiuk evidently lies in the downstream operations.

Can #TGR find the demand for so much speciality graphite?

Given its partnerships with numerous major...

15/20

...players (#TGR has indicated it's been in discussions with multiple players - in multiple regions - in the lithium-ion battery and EV sectors), I'm very confident it can find the demand.

And finally, @Tirupatiuk's third business unit, TGMRC.

This isn't major upside...

16/20

It is genuine, blue sky upside for #TGR. For me, the division is impossible to value at the moment. It can already generate 1kg of graphene per day, which presumably is being shipped off all over the place to various potential customers.

17/20

voxmarkets.co.uk/rns/announceme…

It's been over 6 months since the Al-Gr RNS ⬆️, and I am hoping mgmt breaks its silence on it soon (I have pushed them for an update, and had hoped for one in the interims today).

As I was reminded, if things were NOT going to plan, #TGR would have informed the market.

18/20

When Rolls Royce (a partner currently experimenting with #TGR's Al-Gr comp.) is ready, the market will suddenly wake up.

In the meantime, I'd like to hear how @Tirupatiuk can safeguard this potentially multi-industry-changing material via patents (manufacturing process?).

19/20

To summarise: #TGR is a colossus in the making, in my view. The downstream operations completely set it apart from its peers.

Lack of BFSs (and thus NPVs on the upstream projects) have put some investors off, I feel; as have jurisdictions.

I'm comfortable with the risks.

20/20