Battery anode and graphene additives company Talga Resources Ltd (ASX:TLG)(“Talga” or “the Company”) is pleased to report its activities for the quarter ending 31 March 2020. The following content is as reported by TALGA.
March 2020 quarter activities included:
COMMERCIAL & PRODUCT DEVELOPMENT
• MOU agreement signed with Mitsui for joint project development
• Successful 60 tonne pilot graphite concentrate program supports anode market development
• Talga in Bentley Motors electric drive project (subsequent to the period)
• 33,000 tonne ship trials push graphene-coating demand
MINERAL PROJECT DEVELOPMENT & EXPLORATION
• Environmental approval received for Vittangi Stage 1 Mining Operation, Sweden
CORPORATE & INVESTOR RELATIONS
• COVID-19 operational update and cost reduction measures
• Cash balance of A$6.6 million as at 31 March 2020
Managing Director, Mr Mark Thompson: “Amid the challenge of the COVID-19 outbreak, the Talga team achieved significant milestones this quarter, advancing our goal of becoming Europe’s next commercial scale Li-ion battery anode producer.
During this period we partnered with Mitsui, one of the largest global investment and trading companies, and gained approval of our Stage 1 mining permit in Sweden, while responding rapidly to the pandemic in line with government directives across all our countries of operation.
I am heartened by the positive way our team has adopted the measures we have had to take, and thank everyone involved in responding so well to the unfolding situation.” COMMERCIAL AND PRODUCT DEVELOPMENT
Joint Anode Project Development MOU Agreement executed with Mitsui Mitsui & Co. Europe Plc, the subsidiary of Mitsui & Co., Ltd., one of the largest global trading and investment companies based in Japan, and Talga executed a Memorandum of Understanding (“MoU”) during the quarter to evaluate joint development of the Vittangi Anode Project in northern Sweden. The MoU outlines the intention to negotiate and enter into definitive agreements to form a joint venture with respect to the financing, construction and operation of the Vittangi Anode Project, subject to a series of technical and commercial evaluation stages.
The execution of the MoU follows the completion of a Pre-Feasibility Study (ASX:TLG 23 May 2019) outlining the strong economics of the Vittangi Anode Project and a period of undertaken due diligence.
The potential joint development offers substantial synergies in establishing a European anode supply chain, securing a strategic source of anode products for Mitsui customers (ASX:TLG 20 March 2020) and growth in the battery materials business.
Completed 60 tonne pilot flotation program supports Talga anode development
A Talga pilot-scale processing program of 60 tonne Vittangi graphite ore, forming part of the Stage 1 DFS for the Vittangi Anode Project, was successfully completed during the period under review (ASX:TLG 30 January 2020).
The pilot processing program employed continuous test conditions for numerous key processing steps using advanced, industrial scale equipment at a Scandinavian toll milling and testing facility.
The program achieved the desired product targets using equipment up to 20x larger than that of previous programs. The successful scale-up demonstrates the suitability of the Pre-Feasibility Study process flowsheet for planned commercial production (ASX:TLG 23 May 2019).
The graphite concentrate produced has progressed to next stage refining into Talga’s flagship anode product (Talnode®-C) for on-going anode market development and customer qualification programs.
A lithium-ion battery ‘pouch’ cell with 100% Talnode®-C anode being tested at Talga’s lab in Cambridge, UK.
Copper windings of electric motors used in passenger vehicles
Talga engage in Bentley Motors e-axle development co-funded by Innovate UK
Subsequent to the quarter, Talga announced its participation in the Innovate UK co-funded “OCTOPUS” project, aiming to deliver the ultimate single unit e-axle solution designed specifically to meet Bentley Motors performance specifications (ASX:TLG 27 April 2020).
Under the project Talga will develop and provide graphene materials for the high performance electric motor windings to deliver an aluminium-based solution aimed at outperforming, and ultimately replacing, the copper windings currently used. For automotive manufacturers this could reduce vehicle weight and increase performance, safety and driving range while retaining sustainability and economics.
The improved motor windings form part of the project’s aim of developing next generation lightweight high performance component systems that integrate the latest advanced materials and manufacturing techniques. The components are to be tested at sub-system and system level for an integration route into future e-axle designs.
Lightweight and high performance automotive components complement Talga’s range of Li-ion battery anode products, and success in this program would open opportunities to replace copper wire in many large-scale applications globally.
Commercial-scale ship coating trials push demand for Talcoat® samples
In the previous quarter, Talga released details of a Talcoat® product, a graphene additive for maritime primer coatings, applied on two 33,000 tonne ocean going vessels at sea under large-scale trials (ASX:TLG 4 November 2019 and ASX:TLG 17 December 2019).
Subsequent to the publication of the trials additional parties across several sectors of the global coating industry have engaged with Talga and received Talcoat product samples. These are now undergoing testing by manufacturers and applicators, varying in size and jurisdiction, with positive initial test results.
Negotiations towards purchase agreements are underway with some parties and details will be released as and when any definitive commercial agreements are reached.
MINERAL PROJECT DEVELOPMENT AND EXPLORATION
Stage 1 Vittangi mining operation receives environmental approval
Environmental approval for Stage 1 mining operations at Talga’s 100% owned Vittangi Graphite Project in northern Sweden was received during the period under review (ASX:TLG 3 March 2020).
The trial mine environmental permit was issued by the Environmental Review Committee within the Norrbotten County Administration Board and is valid for three years.
The permit allows for the extraction of up to 25,000 tonnes of graphite ore for planned processing into concentrate and refining at Talga’s downstream anode refinery to produce Talnode®-C, the Company’s flagship Li-ion battery anode product developed to provide a sustainable and cost competitive choice for battery manufacturers.
The permitting process included comprehensive test work and studies to minimise the environmental footprint of the operation and upon conclusion of Stage 1 mining the site will be rehabilitated using the successful measures from the Company’s 2015-2016 trial mining campaign.
Preparations for site works and contractor selection is underway with operation planning to commence following completion of further statutory compliance, Stage 1 refinery permitting and financing activities.
Environmental and statutory permit applications for Stage 2 mining and concentration operations, with a processing capacity of 100,000 tonnes per annum of graphite ore, are nearly complete but now expected to be submitted in Q2 2020.
In full-scale production the graphite concentrate will feed Talga’s planned downstream refinery in the coastal city of Luleå, 250km to the south, to produce 19,000 tonnes per annum of Talnode-C as per the design parameters detailed in Talga’s May 2019 Pre-Feasibility Study (ASX:TLG 23 May 2019).
As required by ASX listing rule 5.3.3, refer to Appendix 1 for details of Talga’s interests in mining tenements held by the Company. No new joint ventures or farm-in/farm-out activity occurred during the quarter. Some non-core project tenements were rationalised or relinquished during the period under review.
CORPORATE AND INVESTOR RELATIONS
Share Registry Update
During the quarter Talga’s share registry changed to Automic Group. The change took effect from 20th January 2020 (ASX:TLG 20 January 2020).
Measures implemented to manage effect of COVID-19 on Talga operations
Subsequent to the period under review, the Company proactively implemented a range of measures to manage the effect of COVID-19 on its operations (ASX:TLG 2 April 2020). The policies and procedures put into effect focuses on the well-being of Talga’s people, partners and customers. Where possible, Talga staff across the UK, Germany, Sweden and Australia continue working remotely to deliver corporate, operational and product marketing functions.
Dealings with customers are ongoing and development of the Vittangi Anode Project is proceeding with minor interruptions. The Stage 1 DFS finalisation and Stage 2 permit application submission are now targeting Q2 2020.
Activities at Talga’s test facility in Rudolstadt continue, subject to government precautions and at a reduced rate, with priority placed on finalising samples and materials already in production. The Company’s current stocks of Talphite® and Talnode® products are considered sufficient to meet demand in the short term.
Talga’s participation across Innovate UK electric vehicle technology projects and customer graphene programs also continue subject to quarantine restrictions.
To maximise the Company’s capital position, Talga has implemented a group-wide cost reduction programme to reduce fixed and variable costs. As part of the cost reduction programme, the executive team, senior management and the board will undertake significant salary reductions, ranging 20% - 50%, for the remainder of the financial year.
Cash outflow during the period included some major but temporary costs relating to accelerated development of the Vittangi Anode Project in Sweden. These development activities, although ongoing to an extent, have largely been completed and the Company expects to have materially lower cash outflow going forward.
Talga closed out the 2020 March quarter with A$6.6 million cash-in-bank and was capitalised at ~A$76 million (based on closing price 29 April 2020). Currently the Company has 243.6 million quoted ordinary shares and 11.8 million unlisted options on issue.
This announcement has been authorised by the Board of Directors of Talga Resources Ltd.