Battery Minerals Limited

BAT Details

BAT signs MOU With Urbix:Battery Minerals Limited (ASX: BAT) is an Australian company with two world-class graphite deposits in Mozambique, being Balama Central and Montepuez. The market capitalisation of the company stood at $11.86 million on 14^th October 2019. BAT announced that it had signed a Memorandum of Understanding (MoU) with Urbix. The MoU with Urbix lays the foundation for the establishment of the joint venture (JV) which would develop environmental-friendly graphite purification facility in Mozambique. It is expected that the facility will get its graphite concentrate from Battery Minerals’ Montepuez graphite project and potentially toll-treat graphite from other mines in Mozambique and will use the proprietary Urbix purification method.

Battery Minerals Appoints ThirdWay Africa: Battery Minerals Limited has appointed African funding specialist ThirdWay Africa to help the company in securing project finance for its Montepuez Graphite Project. ThirdWay has specialisation in securing funds for African projects, which includes access to government-provided development capital.

As part of the company’s financial strategy, Battery Minerals has applied a range of cost reduction actions to ensure that it remains funded throughout the project financing process.

Growing Demand for New Independent Graphite Supplier: Battery Minerals Limited continues to position itself to capitalise on the quality of its Montepuez Graphite Project and the widely expected increase in graphite demand on the back of the Lithium-ion battery boom.Currently, almost 100% of the processed graphite required to produce battery anode for EV’s and energy storage is sourced through China. With the expansion and development of larger battery plants across Europe, Korea, Japan and the US, the market is demanding sustainable source of graphite from new geographies and diversified supply chains.

The company’s Managing Director, Mr Jeremy Sinclair, said that while there are short-term headwinds in the graphite market, there are indicators that point to the prospect of favourable long-term market fundamentals.There have been numerous developments, recently in the lithium-ion battery and EV space, which strengthen the forecast demand growth for graphite.

The company’s analysis of the current graphite market shows some instances where producers are receiving lower prices than those quoted by the independent forecasters.Despite the growth in the EV sales, primarily in China (sales of EV’s rose 88% in 2018, and production rose 22% year to date to end May 2019), it is evident that LiB supply chains are still not at a point where they can meet forecast demand for the battery raw materials. However, it was added that future market fundamentals have been gaining momentum.


Graphite Demand by Sector (Source: Company Reports)

Stock Recommendation:As per ASX, the company’s stock price is trading near its 52-week low level. The company has reported a CAGR growth of 18.92% in its total revenues in a time period of last five years, i.e. from FY14 to FY18; thus, it can be said that company is growing with a decent pace, which might attract the attention of market players. Asset to equity multiple stood at 1.04x, lower than the industry median of 1.83x. Therefore, considering the above-stated facts, we give a “Speculative Buy” rating on the stock at the current market price of $0.009 per share as on 14^th October 2019.

 
 BAT Daily Technical Chart (Source: Thomson Reuters)

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