(Asx: TLG) | Talga Group Ltd (Updated 31.05.2022)

May 30, 2022

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.

Latest Updates

31/05/2022 – Talga commences graphite trial mine at Niska. According to the company’s Managing Director, the final phase of Talga’s Niska South trial mine is an important step in establishing our European vertically integrated green anode business, which we believe will become a significant supplier to this key battery and EV market. The feedstock from the trial mine will be used for advanced qualification trials at our EVA anode plant with a range of global customers as we scale up towards commercial production in 2024. Furthermore, by commencing the trial mine at Niska, Talga can secure the prospect commercial agreements that should soon be announced as result of the various samples sent to battery manufacturer for customer qualification in early 2022.

27/05/2022 – Talga announces that Vittangi Graphite Resource boosted by 54%, adding more than 10 million tonnes to Europe’s
largest graphite resource, a critical mineral for lithium-ion batteries. This Graphite resource growth is a key pillar in Talga’s mine-to-anode strategy and scale-up to become a significant supplier of the world’s greenest lithium-ion battery anode at lower cost than Novonix.
• Further resource update planned for late H2 2022 following recently completed drilling program

22/04/2022 – Environmental permit application for development of a graphite mine and concentrator at the
Nunasvaara South deposit of the Vittangi Graphite Project formally announced and progressing to a Court hearing.

• This is a significant milestone in the Swedish permitting process, with relevant authorities having completed rigorous scrutiny of submitted application documentation and the Company having supplemented the application in accordance with requests made by the authorities. There is still a risky involved in this application and need to be tracked for investors holding position on TLG.

✅ On 02/02/2022 – Talga group has reported further assay results from recent drilling at the Company’s Vittangi Graphite Project in northern Sweden. The 2021 drill program tested multiple zones of natural graphite at Vittangi, the Company’s most advanced source of raw material for its low emission Li-ion battery anode products. Drilling at its Vittangi Graphite Project delivers further spectacular grades over substantial widths, with all deposits remaining open along strike and at depth.

24/02/2022 – Talga produces Europe’s first battery anode during EVA plant commissioning of its Electric Vehicle Anode qualification plant in Sweden. More than 20 battery manufacturers and automotive customers engaged to receive Talnode-C from the EVA production for large-scale EV battery qualification and procurement processes. EVA plant project executed on time and and within budget with full commissioning expected to be completed late March 2022.

“It is likely we see some off take agreements coming through within the next few months once Talnode-C is validated by these 23 battery manufacturer engaged. Despite the negative sentiment towards growth stocks at moment, the demand for anode materials is very high and that should help the stock price to outperform. Nevertheless Talga is still a risky investment since there is no Income and Revenue, however this latest EVA plant commissioning and a fully integrated supply chain for graphite should bring good growth to the stock price, as demand continue to skyrocket.”

✅ The EVA facility is understood to be Europe’s first Li-ion battery anode plant. The maiden production of Talnode®-C, as part of kiln commissioning, represents a significant step for Talga and the emerging green European battery industry. Talnode®-C has the lowest CO2-eq profile in the world for coated anode (ASX:TLG 12 August 2021). Following the completion of plant commissioning, Talnode®-C will be shipped to battery cell makers to undergo next stage commercial testing. As mentioned above, Talga has received engagements from 23 battery manufacturers and major automotive OEMs for Talnode®-C produced at the EVA plant.

Company overview

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)

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.” ‘

Strategy and Stock Price Analysis

Since we managed to lock in 40% profit in our last trade in October and November, the SP of most of EV stocks has been under pressure. SP is definitely sitting into a buying area, however, investors and traders need to be caution in the current macro-environment as pressure in this type of stocks (non profitable) can remain for a quite some time, slowing down the trading cycle. In the last 52 weeks we have seen a great level of consolidation on TLG stock price ranging from $1.2 to $2.2, as result the stock has given a negative growth of -8.52 in the last 12 months. This negative growth has strength our confidence in TLG and it was natural after over 600% rally in the previous year.

✅ SP is currently trading 7% 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.

✅ SP has been held above the current levels for the last 12 months as shown in the support in yellow.

✅ 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. Furthermore the 23 candidates that are validating Talnode-C will most likely.

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 is also subjected to have its anode materials validated by the prospect off takers.

🚩 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.

🚩 Further degradation on the stock market can bring most of non producers EV stocks to a lower level than antecipated.

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 and production set to start in 2024 with higher net loss. We expect that commercial agreements are going to be announced along 2022, nevertheless it is still speculation.

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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