Walkabout Resources’ Share Price Up 35.5%, How Far Will It Go?

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African-focused graphite miner Walkabout Resources Ltd [ASX:WKT] has continued its stellar run this month, tacking on a further 10.53% to its share price to trade at 21 cents earlier this morning, up 35.5% in April. The current share price, at time of writing, is 20.5 cents.

Walkabout Resources' share price

Source: Trading View

WKT’s share price has been rising rapidly thanks to securing two binding agreements to supply graphite from its Lindi Jumbo project in Tanzania to manufactures in China.

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The two deals secure sales of up to 75% of planned annual production from its African project for the first three years. Walkabout said the two deals equate to 40,000 tonnes of graphite per annum, but has non-binding agreements in place for between 50,000 and 60,000 tonnes per annum.

Walkabout Resources’ Share Price Momentum to continue

Walkabout has continued its sales momentum, this morning releasing an announcement stating it had further secured the sale of a minimum 10,000 tonnes, up to a maximum of 30,000 tonnes.

The binding sales agreement with international commodities trading house Wogen Pacific Limited will guarantee the purchase of graphite from its Lindi Jumbo project over the next five years.

The agreement will see WKT receive advanced payment based on 80% of the value for each consignment of concentrate contracted by Wogen, to be paid following receipt of shipping documents.

Wogen will continuously develop graphite markets for Lindi Jumbo branded graphite products across their global network.

Walkabout’s executive chairman, Trevor Benson, said the deal with Wogen will save the company on expensive marketing expenses.

The Wogen agreement perfectly complements the Company’s strategy to outsource the major components of the Lindi Jumbo Project. As a result, Lindi Jumbo will not need to establish large and expensive marketing offices…

The agreement is a key element in de-risking the Lindi Jumbo Graphite Project and attracting development capital leading up to construction and the first period of production.

What’s next for Walkabout?

WKT completed its latest definitive feasibility study (DFS) in March this year in response to changing Tanzanian Government Legislation.

The study confirmed the project is technically sound with good economic returns even at potential softening price regimes for premium graphite flake material.

Payback period for the project is less than two years, with the DFS based on an annual production of 40,000 tonnes of graphite. This is with a high grade feed to the plant at an average of 230,000 tonnes per annum over the life of the mine (expected to be 24 years).

Graphite is a key component in lithium-ion batteries, commonly used to power electric vehicles. In 2018, demand for graphite continued to grow strongly, underpinned by the boom in electric vehicles, especially in the Chinese market.

Demand is expected to continue its strong trend this year, with the graphite market likely to receive a boost from growing consumption from industrial markets and the emergence of value-added applications.


Ryan Clarkson-Ledward,
For Money Morning

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About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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