(MENAFN- ProactiveInvestors)
( FRA:FMK) has moved out of a trading halt after signing a 10 year off-take agreement with German industrial goliath ThyssenKrupp (ETR:TKA) to sell at least 20000 tonnes a year of graphite to the industrial company.
In a massive achievement for the junior with a market cap of A$31 million the €11 billion capped ThyssenKrupp has an option to acquire five more years of product from the company’s Epanko Graphite Project in Tanzania.
This will account for 50% of Kibaran’s planned 40000 tonne a year graphite production from Epanko.
This takes to 75% the planned graphite production at Epanko that is now supported by binding offtake and sales agreements.
Kai-Norman Knötsch chairman of the management board of ThyssenKrupp Metallurgical Products said: “Graphite is an extremely good fit within our Mineral Unit portfolio.
"The collaboration with Limited will enable us to further expand our activities in the refractory industry in Europe Russia and Korea."
While Kibaran managing director Andrew Spinks added: “The signing of the agreement involving the sale of Kibaran’s graphite products is a milestone event in Kibaran developing Epanko and becoming a graphite producer.
"This is the company’s second off-take agreement and we are in continuing discussions with other sophisticated targeted customers worldwide.
“We are extremely pleased to formalise our relationship with ThyssenKrupp given ThyssenKrupp’s expertise scale and international business standing.
"We are also pleased that ThyssenKrupp is assisting Kibaran with securing project funding which will be a key component of our overall project financing plan following the positive results from Epanko’s recently completed Bankable Feasibility Study.”
The long-term commercial agreement for the sale of Kibaran’s natural flake graphite products will see the refractory grade natural flake graphite sold into Europe Turkey Russia Ukraine and Korea once the project is developed.
Germany invented battery grade spherical graphite and partnered with the Japanese.
Analysis
Securing firm off take sales agreements for 75% of future graphite output holds the key for de-risking and fast tracking development of Epanko.
The agreement is a significant milestone and provides a sound platform to develop the company's graphite projects on several fronts and the key implication is Kibaran's ability to secure debt finance on the back of it.
Today's agreement should see a further re-rating of Kibaran's market valuation from the previous share price close of $0.17.
The project economics are impressive generating an annual EBITDA of US$33.6 million for 15 years with 40000tpa and returning project capital in less than 3 years and an impressive pre-tax IRR of 51%.
Kibaran is the only listed company globally with a binding offtake agreement with a partner outside of China.
Kibaran also has a fully sponsored secondary listing on the Frankfurt exchange (FRA:FMK) and currently 5% of the company is owned out of Germany.
This is expected to increase following the ThyssenKrupp agreement.
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