Company Overview

Date: 21 October 2024
Broker: Petra Capital

Talga Group Ltd (TLG) is involved in the mining and production of graphite, with significant operations centered around the Vittangi Graphite project in Sweden. The company aims to supply critical materials to the European auto industry, particularly for electric vehicle production.

Mining License Grant

TLG has successfully received approval for its exploitation concession (ML) at the Nunasvaara South graphite mine. This milestone represents one of the first approvals granted following recent legislative changes in Sweden, marking an important step forward in the development of TLG’s mining operations.

Environmental License Progress

While TLG was granted its environmental license in April 2023, the company has faced delays due to appeals that have sent the matter through the Supreme Court of Sweden. However, TLG has reported positive news, indicating that a judge has now been appointed to assess these appeals, bringing them closer to overcoming this key permitting hurdle.

Local Land Conversion

The final step in the approval process involves converting the Land Designation from forestry to mining at the local government level. This conversion is expected to be a relatively straightforward process compared to the extensive approvals for mining and environmental licenses.

Project Details

The Vittangi project is designed to be vertically integrated, consisting of a graphite mine at Vittangi and an anode plant located in Luleå, which is expected to produce 19.5 ktpa of anode material. The first phase of the project will mine material from Nunasvaara South.

Financial Outlook

As of June 30, 2024, TLG had A$14 million in cash and recently completed an A$18.5 million capital raising at A$0.38 per share. The company is positioned to reach a Final Investment Decision (FID) once all approvals are secured and debt funding is committed.

Key Dates Ahead

• March 2025: Binding offtake and project financing are anticipated.
• 2026: The company aims for the first production of coated spherical graphite (CSPG).

Investment Recommendation

Petra Capital has retained a “BUY” rating for TLG, with a revised price target of A$0.85 per share, adjusted from a previous target of A$1.06 per share. This adjustment reflects the recent share issues and anticipated future dilution.