New Discovery Sends Talga Resources’ Share Price Up 6.20%

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Mineral explorer and developer company Talga Resources Ltd [ASX:TLG] tacked 6.20% onto its share price this morning, to trade at 60 cents per share.

TLG, headquartered in Western Australia, focuses on enabling stronger, lighter and more functional graphene and graphite enhanced products for the global coatings, battery, construction and polymer composites markets.

The company owns graphite, iron, copper/gold projects in Sweden and gold projects in Western Australia. However, it is currently divesting its Australian gold projects to focus on its Swedish projects.

FREE report: Why ‘Nano Metal’ could soon be Australia’s most valuable export.

How big is the new find?

Results released this morning indicated a high grade graphite discovery at TLG’s Niska prospect in the Vittangi project in Sweden.

Drilling at Niska focussed on two discrete areas, Niska North and South, separated by approximately 1300m that remains to be tested. Highlights of the drilling included 135.6m at 25.75% graphite in the north of the project and 33.27m at 26.31% graphite in the south.

The results to date at the project have confirmed a significant discovery and extension to the Nunasvaara graphite deposit, which runs through the Niska project.

Talga managing director Mark Thompson said today’s results give Vittangi potential to scale up to become a significant graphite province, for Sweden and Europe, and provide the basis for a long-term technology mineral industry far greater in scope than their most recent pre-feasibility study. Ore reserve estimates currently forecast 1.9 million tonnes at average grade of 23.5% graphite.

The graphite mineralisation intercepted at Niska is understood to be direct extensions of the Nunasvaara North graphite units that host the higher-grade portions. This is based on stratigraphy, geophysical signature, exceptional high grades (up to 44.5% graphite).

While investor reactions to today’s results were positive, it is difficult to tell by how much the new drillings will improve the current known resource.

What’s next for Talga Resources’ share price?

In TLG’s most recent pre-feasibility study places the value of the project at US$1.056 billion before tax, with an internal rate of retune of 55%. Life of mine currently stands at 22 years of fully purified, shaped and coated li-ion battery graphite anode product to the emerging European battery supply chain.

Today’s high grade discovery has the potential to push the value of the project even higher. Margins for the project currently stand at an estimated US$1,852 per tonne, but higher grade ore — indicated in today’s results — has the potential to push these costs down and push margins higher.

Talga will commence stage 1 of its definitive feasibility study in mid-2020, with production expected in early 2021.

More to come.


Ryan Clarkson-Ledward,
For Money Morning

PS: If you want to get our extended look at the graphene/graphite sector, be sure to download our free report, titled ‘Three Stocks to Profit from a Versatile Material: Graphene’.

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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