(Asx: TLG) | Talga Group Ltd (Updated 30.12.21)

Dec 30, 2021

Sentiment: Sideways

Type of Trade: High Growth

Industry: EV - Electric Vehicles - Anode Graphite

Sector: Materials

Highly Speculative stocks

Talga Group Ltd (ASX:TLG) is a highly integrated developing producer of lithium-ion battery anode products, technologies and industrial graphene additives.

The Company’s main focus is building an integrated graphite anode facility in Sweden running on 100% renewable electricity, to produce ultra-low emission coated anode for greener Li-ion batteries.

Customer tests confirm the high performance of Talga’s products, and qualification processes with battery manufacturers and automotive OEM’s is underway targeting commercial battery anode production in 2024.

Talga owns multiple high grade graphite projects in northern Sweden, which are the highest grade and largest JORC- compliant resources in Europe. These are advantageously located near fast growing battery ‘megafactories’, and benefit from established high quality infrastructure including low cost power, road, rail and ports.

The Company’s graphite ores are unique in allowing graphite and graphene to be liberated in innovative and extremely cost effective ways.

Talga also owns cobalt-copper-gold and iron ore deposits in Sweden, which are to be commercialised to provide funds for the core graphite developments.

✅ Talga is differentiated from its ASX listed peers by virtue of its full vertical integration in making coated anode and fully functionalized graphene products. The Company’s fully in-house technology capability ensures a unique 100% controlled deposit-to-product supply chain.

High Margin Advanced Materials Business – Talga’s flagship Vittangi Graphite Project will feed high grade flake graphite ore to Talga’s planned in-house downstream processing facility, producing a high-margin coated graphite anode product known as Talnode®-C to be sold to lithium-ion battery cell manufacturers

✅ Talga’s owns 100% of the Vittangi Project has JORC 2012 total Graphite Mineral Resources of 16.9 Mt @ 25.6% Cg making it one of the world’s highest grade JORC compliant graphite resource and providing a premium raw material supply for Talga’s downstream processing facilities. That is a High Grade Graphite Resource.

Product Qualification – As at June 2020 Talnode® in 36 active Li-ion battery manufacturer customer engagements including six major global automotive OEMs (see ASX:TLG 24 Jun 2020).

Unique  Deposits – Talga’s high-grade graphite projects have truly unique characteristics which enable higher yields and cheaper production.

Government stability is a critical external factor that needs to be taken in consideration when investing into a company such as Talga. We have seen many mining companies having significative trouble when operating undeveloped Countries such as in Africa and Asia. Talga is operating in a top quality jurisdiction on the doorstep of European markets. Extremely low cost grid hydro-power and direct road/rail options to customers.

Scalability – Largest graphite resources in Europe and massive growth pipeline of untested deposits.

Diversity – Multiple Talnode® and Talphene® (graphene) products span current and future product technologies, uncoupling Talga from sole reliance on any one market and enabling new growth opportunities.

✅ Top 20 Shareholders that are behind of this company.

✅ Market Opportunity in the fastest growing market in the world (Europe).

✅ Growing Partnership with European Li-ion battery manufacturers and six of the world’s major automotive OEMs.

✅ Absolutely emerging market

✅ Graphite Demand is set to soar

Full Investor Presentation (Click here)

🚩 There is no Income and Revenue, however a fully integrated supply chain for graphite should bring good growth to the stock price, as demand continue to skyrocket.

Oversubscribed Shareholder Purchase Plan rose A$30 million

(Updated) Cash balance of A$21 million as at 30 June 2021

Talga Growth Strategy and Potential for Share price movement facts

Company initially aimed to start production and commercialisation in 2023, however it is more in line to start in 2024 as per the update annual general meeting report.

Company’s Development Pipeline and Share price Sensitive news. Provide the company will successfully complete each of these steps during the next 15 months – 14 months, there is a strong likelihood of the SP movement during the announcement of each of these steps. Furthermore, as the whole industry sentiment emerges, could trigger investors to jump into these stocks and accumulate the most promising stocks over the next 24 months.

The Latest Updates

  • Talga Group (TLG) sees its letter of intent with Mitsui & CO Europe Plc and Luossavaara-Kiirunavaraa Aktiebolag (LKAB) lapse
  • In 2020, Talga penned the first letter with the two companies, hoping to see the co-development of the Vittangi Anode Project in Sweden through a joint venture
  • However, the parties were not able to complete a transaction within the time frame
  • Mitsui Extends and Expands MOU with Talga for Swedish Battery Anode Project, bringing back confidence to the stock.
  • In 13th of December Announcement Talga Managing Director, Mark Thompson, commented: “Talga is very pleased to continue and expand our relationship with Mitsui as a trusted strong global partner in our goal of sustainable battery material technology and products. Since starting to work together much has been achieved, and as demand for battery materials such as Talga’s has grown it is timely to expand our co-operation to also explore new opportunities and developments.”

Long term Prospect for 2022

Despite the sell off in the market during December month, the announcement was again positive, specific mentioning that both parties continue to advance their project development discussion under a separate MOU, followed by the announcement that Mitsui has extended the MOU, which means no change has been effect in the overall context. Hence, we remain positive about TLG within our last trade despite we have reduced our position as the stock has reached the stop loss area.

✅ Electric Vehicle Anode Plant Full commissioning on track for Q1 2022 – This is catalyst for the Stock Price. ‘

Strategy and Stock Price Analysis

Since we managed to lock i n 40% profit in our last trade in October and November, SP has recently been under pressure due the combination of the uncertainty in the market due Omicron and the delay on MOU with MItsui. The stock behaviour however is still performing excellent to trade in SP swings.

If you have invested on TLG 52 weeks ago, you would be holding the stock at loss of -6.30% today. Since this is an speculative stock and still have no fundamental value to take the next level, we believe the next level should be occuring once a signing deal with Mitsui is released in the market, or perhaps with another interesting party so the company can finally start developing its project in Sweden and start the path to commercialization in Europe market.

✅ SP is currently trading 6% under SMA, offering a technically discounted entry price.

✅ Emerging Sector with potential for investors jumping into these type of stocks at any time regardless the fundamentals.

✅ Two bullish intersection level 2 has held the SP above $1.5 confirming a potential bounce back towards the higher range.

✅ Emerging Sector with potential for investors jumping into these type of stocks at any time regardless the fundamentals.

✅ Talga is constructing an ultra-low emission battery anode production facility and integrated graphite mining operation in northern Sweden, using 100% renewable electricity to supply greener anode for lithium-ion batteries. According to a recent Life Cycle Assessment prepared by Hitachi ABB Power Grids, the production process of Talga’s flagship anode product Talnode®-C emits 96% less CO2 equivalent (CO2-eq) than the anode material most commonly used in EV batteries today. This is equal to a reduction of approximately 2.9 million tonnes of CO2-eq per million electric vehicles.

✅ Bulk natural graphite ore from trial mine to be refined into Li-ion battery anode in customer trials for electric vehicle market, also providing some short term SP sensitive.

You can see the latest AGM PRESENTATION using by CLICKING HERE

Provided this very strong demand for Anode materials continue to emerge and the scale of the project and the patterned technology that Talga has to offer the market, we believe it is just matter of time for this or another joint venture to take place. The ultimate risk for this company is not finding a financer for its project or a company that will be willing to join venture, it is unlikely but possible.”

Red Flag aspects that make this stock a risky investment and need to be watched closely

🚩 Company’s development pipeline holds compeilling steps however the production commencement only in 2023 will not longer occur as the latest AGM presentation, production was pushed to 2024.

🚩 Talga and Mitsui & CO Europe Plc initially had until the end of June 2021 to decide whether to proceed with a binding joint venture agreement to build Vittangi project,postponing the decision to end this until November 30, 2021. Yesterday, the company announced that still haven’t reached an agreement declaring to keep its negotiation under separate MOU.

Entry Details and Targets (Restrict to VIP member only)

We have already traded this stock few times and recently once again locking over 24% followed by another 42% profit.

Remember that despite the macroeconomic scenario to be favorable for stocks like TLG, the company is still pre-development phase and does not produce or commercialse any material yet, hence making this a very speculative and risky trade.

Note that use of stop loss is highly recommended, however it is to everyone discretion. This stock is a speculative stock and the SP is driven by market announcement and EV Battery store industry movement. Hence it represent higher risk on the trade as the company does not yet generate any revenue until 2023 with higher net loss.

Investors and traders will need to watch closely whether the company accomplish all the development steps as proposed. Provided that the company is able to delivery such as steps, there are huge upside potential for this stock.

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