Battery Minerals (ASX:BAT) jumped as much as 37.5% today after signing a Memorandum of Understanding (MoU) with US graphite processing specialist Urbix with the aim of establishing a joint venture in Mozambique.
The MoU with Urbix, which has been a long-time technology partner of Battery Minerals, lays the foundation for establishing a JV which would develop an environmentally friendly graphite purification facility in Mozambique.
It is envisaged the facility would source graphite concentrate from Battery Minerals’ Montepuez graphite project as well as potentially toll-treat graphite from other mines in Mozambique and utilise the proprietary Urbix purification method.
Since December 2017, Urbix and Battery Minerals has been working together to establish a strategy combining Urbix technologies with Battery Minerals’ graphite concentrates to generate graphite products for the refractory, composites, lithium-ion, and nuclear markets.
In addition to the reduced capital cost that results from contractors providing their own equipment, the company is also testing the potential for key contractors to participate in funding for the project.
Based on preliminary discussions with potential contractors, there is interest in this collaborative approach. Requests for quotes and tenders have been issued to the market, as required by Mozambican law.
Battery Minerals believes a switch to a contracting model could reduce the current Montepuez project funding requirement of US$55 million by up to US$6 million.
However, Battery Minerals Managing Director Jeremy Sinclair said the reduction in funding requirement that comes from a reduction in capital, combined with the participation of contractors in the funding solution, will need to be weighed up against possible increases in operating costs which may result from this shift toward a contractor model.
“There is overwhelming evidence that the demand for graphite is going to soar as the take-up of lithium batteries gains speed.”
“The proposed processing JV with Urbix is aimed at ensuring we are well positioned to capitalise on the demand for not only graphite concentrate but also the higher-margin processed product which is essential to the battery manufacturers.
“At the same time, we believe there is excellent potential to reduce the cost of developing Montepuez through a partnership approach with contractors.
The strong outlook for the project is also reflected in the fact that some contractors have expressed an interest in being part of the project funding package,” Mr Sinclair said.