Date of Report: 21 October 2024
Broker: Petra Capital Pty Ltd
Mining Licence Granted for Vittangi Graphite Project
Talga Group Ltd (TLG) has secured the exploitation concession (mining licence) for the Nunasvaara South graphite mine, part of the Vittangi project located in northern Sweden. TLG is among the first to receive such approval after recent legislative changes. The concession is a significant step forward, especially for a project that is strategically crucial for the EU automotive industry.
Appeals Process and Environmental Licence Update
Despite the mining licence approval, there is a 5-week window for appeals to be submitted to the Minister. If TLG prevails at this stage, the permit will come into effect, allowing mining to commence even if further appeals are made. Previously, TLG was granted an environmental licence in April 2023, but progress was delayed due to ongoing appeals, which are now being reviewed by a judge in the Supreme Court. This remains the key hurdle for full project development.
Local Land Conversion as the Final Step
The last regulatory requirement, after securing mining and environmental permits, involves converting land designation from forestry to mining at the local government level. This step is expected to be relatively straightforward compared to the lengthy mining and environmental approval processes already completed.
Strategic Integration and Production Plans
The Vittangi project is designed as a vertically integrated operation, featuring both a graphite mine at Vittangi and an anode production plant in Luleå. The first phase of the project will source material from the Nunasvaara South site. The Luleå plant, which is already fully approved, has completed preliminary construction works and is poised to handle an annual production capacity of 19.5 ktpa of anodes.
Financial Position and Recent Fundraising
As of 30 June 2024, TLG had AUD 14 million in cash reserves. The company further bolstered its funds by raising AUD 18.5 million at AUD 0.38 per share, which ensures sufficient funding to reach Final Investment Decision (FID) once all regulatory approvals are obtained and debt funding is secured.
Key Future Milestones
- March Quarter 2025: Binding offtake agreements and finalization of project financing.
- 2026: Expected commencement of first production of Coated Spherical Graphite (CSPG).
Financial Forecast and Valuation
Petra Capital has adjusted its price target for TLG from AUD 1.06 to AUD 0.85 per share, primarily due to recent share issues and anticipated future dilution. The reduced target still reflects a positive outlook, with TLG positioned to benefit from strategic demand within the EU.
Production Forecasts
- 2025: No significant production.
- 2026: Production forecasted at 42.8 million AUD in revenue.
- 2029: Significant increase, projecting 588.6 million AUD in revenue, driven by full-scale operation of the integrated graphite mining and anode production.
Conclusion
TLG’s advancements in securing a mining licence for the Vittangi project mark a crucial development, reinforcing the company’s strategic importance to the European battery supply chain. With ongoing efforts to clear remaining regulatory hurdles, the project is set to play a vital role in the EU’s push for local sourcing of critical battery materials.
